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Monday, January 21, 2019

What You Need To Secure Rental Property Loans

All lenders are slightly different and have a variety of criteria required to qualify for a loan. But the criteria for Rental Property Loans in Arizona are very similar from lender to lender.

Securing Rental Property Loans in Arizona is a bit more challenging than getting financed to purchase a home that you are going to make your primary residence. But the added obstacles are certainly worth the effort to create a passive stream of revenue to increase your personal wealth and secure your future. Understanding how to be an attractive borrower and meet lenders criteria for Rental Property Loans in Arizona can greatly reduce your stress level and increase the speed of your loan processing and approval.

Down payments are critical when purchasing a rental property or any investment property. There is no mortgage insurance on investment property loans so you will need to make a down payment of 20% or more to secure most rental property loans. But if you can make a larger down payment, that will work in your favor. You will have instant equity in the property and that will make lenders more eager to loan you the money that you are requesting. The equity represents great security for you and for the lender as well.

Credit scores are always important when seeking traditional financing. And borrowers can get a loan for a primary residence with a score as low as about 600. But investment property loans require a higher credit score to secure at a reasonable interest rate. A rate in the 700’s is certain to get a borrower a respectable interest rate and favorable loan terms. If your score is lower than 700, you might want to wait to invest in a rental property and focus on increasing your credit score by lowering your debt to income ratio and increasing your savings.

Cash Reserves

Cash reserves are always important when you are financing an investment property. The lender wants to know that you have accessible cash to cover mortgage payments in the case of a vacant property and no revenue coming in. The lender also wants to know that you can afford to make any needed repairs should issues arise. Without the reserve to cover unexpected repairs, the property could sit empty for months with no rental income, making it very difficult to pay the mortgage, taxes, and insurance.

Real Estate Investing Experience

Having experience in the real estate industry is also a big benefit for borrowers. Lenders want to know that a borrower understands all of the potential issues that can arise with a rental property or an investment property. Borrowers who understand these potential challenges will be prepared for them and will not fail to make mortgage payments or allow the property to fall into disrepair and become worthless as collateral on the loan. For new investors, it can be very helpful to create a business plan for the rental property and to submit that document to the lender with the loan application to demonstrate that you have a well thought out plan for managing the property and remaining profitable and successful.

Dennis Dahlber Broker Ri CEO Level 4 Funding LLC Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com
Dennis Dahlberg Broker/RI/CEO

About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

What Are The Best Arizona Fix And Flip Loans?

A traditional loan is not the best choice for a fix and flip project. But there are some options that are options that are great for Arizona Fix And Flip Loans.

Fix and flip projects are normally short-term projects that real investors look for to turn a fast profit on a property that is not in perfect condition. The investor purchases the property with the intention of renovating and repairing issues so that the property becomes more desirable and more valuable. The key to success is finding the right property at the right price and quickly purchasing it before another investor becomes interested and a bidding war ensues.

The speed of Arizona Hard Money Loans make these privately funded loans perfect Arizona Fix And Flip Loans. The time frame of a hard money loan is normally six months to a few years but that can vary depending on the needs of the borrower. Being that the lender is a private individual or lending group, the terms of Arizona Hard Money Loans are much more flexible than those of a traditional lender. In many cases, private lenders can fund a fix and flip loan in as little as 15 days.

In addition, hard money is an asset-based loan, meaning that the loan qualification is based primarily on the value of the property and not on the borrower's person creditworthiness. This allows borrowers with lower credit scores or no credit history to obtain a fix and flip loan to begin a new career in real estate investing. The borrower just needs to know the value of the property that he or she is purchasing as well as the cost of the needed renovations to create a realistic fix and flip budget and to determine the down payment needed for the project.

Refinance Your Home

Because investment property loans, including Arizona Fix And Flip Loans, do not offer mortgage insurance borrowers will need to have 20% or even 25% of the purchase price to make the down payment. One of the easiest ways to secure that much money is to refinance your personal home and liquidate the equity for the Arizona Fix And Flip Loans down payment. A home equity line of credit is another way to tap into the equity in your home to begin a fix and flip project.

The Nature Of Fix and Flips

Almost all fix and flip projects are designed to be very fast. The buyer does not want to carry the mortgage on the property any longer than necessary. So the repairs and renovations are carefully scheduled to be completed as quickly and efficiently as possible. Then the property is placed on the market at a competitive price in the hope that it sells quickly. Knowing this, investors are willing to pay the higher interest rate on a hard money loan because this loan funds quickly and allows for a fast purchase to begin the renovation project. Of all of the short-term options available, hard money is often the one which suits a fix and flip project the best.

What Are Arizona Private Money Lenders

Most borrowers are only familiar with traditional lending resources such as banks or other lending institutions. But there is another option which is to use are the numerous Arizona Private Money Lenders.

Traditional lenders are the banks and other lending institutions that everyone has been using since they opened their first savings account as a kid. These are businesses which make a profit by loaning money to borrowers for a fee, which can include interest, service fees, and even late fees. And as large businesses, they have a specific process for applications, approvals and the criteria needed to qualify for a loan. The reason for all of these processes is that the lender has determined them to select only the lowers risk borrowers. In short, it is a qualification process to ensure that the lending institution continues to make money. But these qualifications eliminate the opportunity to borrow for a large percentage of the population. This is why Arizona Private Money Lenders are becoming more popular.

Also known as Hard Money Lenders in Arizona, private lenders are non-traditional lenders, meaning not banks or lending institutions. This allows the lenders to set less stringent loan qualifications as well as tailoring the terms of the loan. These freedoms not only make the lending process less complex for the lender but they also offer many great benefits to the borrower.

Most borrowers who are not able to qualify for a traditional loan fail the application process because of a low credit score or no real credit history. A credit score below 650 will be required by many traditional lenders and will cause the borrower to pay a fairly high-interest rate. But Arizona Private Money Lenders are likely to fund loans for borrowers with credit scores as low as 550.

Less Red Tape

Private lenders eliminate a great deal of the stress that borrowers normally face during the loan application process. This is because private lenders are basing the loan on the value of the property being purchased and not the borrower’s credit score. Far less paperwork is required which is great for both the lender and the borrower. In addition, this lack of a long application process greatly reduces the length of time required to apply, be approved and get a loan funded.

Many Benefits, But At A Cost

Arizona Private Money Lenders are a great alternative for borrowers who have poor credit or no credit as well as borrowers who are in need of a fast application and approval process. What borrowers need to understand that is that private lenders are still in business to make money, and because it is a business, there will be interest and other fees for using the lender’s money. The interest rates are not regulated as they are with traditional lenders so rates can vary a great deal as can the other fees and terms associated with the loan. But the loan is still very legitimate and the loan agreement is legally binding. Though there are some differences, private loans are a good choice for someone who is not in a position to secure traditional funding.

Sunday, January 20, 2019

Tips For Negotiating With Hard Money Lenders in Arizona

Negotiating with traditional lenders is not always an option. But using a few tips, you can successfully negotiate with Hard Money Lenders in Arizona.

Arizona Hard Money Loans are unique because they are offered by private lenders who are often much more willing to work with potential borrowers. But it is important for borrowers to understand that these lenders are in business to make money. So borrowers must be savvy in order to take full advantage of the negotiation process with Hard Money Lenders in Arizona. If a borrower is not careful, he or she could end up paying way too much for a hard money loan.

It is important to know the lenders that you are working with and understand the criteria that each lender requires to fund a hard money loan. Doing some simple research will let you evaluate all of the potential lenders to determine which one will best meet your needs while also offering the best total cost on the loan that you need. Knowing the interest rate as well as any fees that the lender charges are the very least that a borrower should know. Asking about the repayment terms, any early repayment penalties and the determined time frame for a forfeiture are also important and should be researched.

What many borrowers do not understand is that Hard Money Lenders in Arizona are free to negotiate all of the terms of a loan, unlike a traditional lender. So borrowers can ask for the payment schedule to be amended, a grace period for late payments or even interest-only payments for the first few months of the loan. But the borrower must also understand that all of these custom terms can cost more than a traditional loan. But being able to easily afford the loan payments can be worth paying a little bit more interest.

Good Requests

Because Arizona Hard Money Loans are expensive, it is wise to negotiate as many points as your hard money lender is willing to allow. Always ask that there be no early repayment penalty. This can save you a great deal of money if you are fortunate and can pay the loan off early. With no penalty, you are actually saving the cost of some of the interest but the penalty is often as much as the savings on interest. In addition, ask for any administrative fees to be waived or reduced as that is just an added-money maker for the lender.

Give And Take

As you negotiate with Hard Money Lenders in Arizona, it is important for you to decide which is more valuable to you, time or money. If time is more important, then ask for a longer repayment schedule. But understand that you will be paying more interest on the borrowed money. If your budget is very tight, then ask for a shorter term on the loan to help reduce the amount of interest that you will be paying. Both you and the lender are in business to make money and the only way you will both accomplish that is to agree to some give and take in the negotiation process.

Tips For Finding Quality Hard Money Lenders in Arizona

Getting a bank loan is complicated but finding the bank is never very difficult. But not many consumers know how to find good Hard Money Lenders in Arizona.

When you are looking for a traditional loan, it is as simple as a few minutes on the Internet or even looking at the snail mail that is piled on the table to find an ad from a local or national bank. But finding good Hard Money Lenders in Arizona can require a bit more work. But following just a few tips will ensure that you find the lender that you need and can move forward with your hard money request.

The Internet is a good place to start when seeking Hard Money Lenders in Arizona. But you will want to do further research before narrowing your pool of potential lenders. Especially new borrowers will want to be certain that the lender specializes in hard money loans. This is because you will want an experienced professional lender to guide you through this process a few times. Reputable lenders will want to work hand in hand with you to ensure that you understand the process. This is how they will forge a long-term relationship with you for continued business, and this is what will be your foundation for long-term hard money lending. Along these lines, a local lender is always your best selection when you are new to the process. This makes learning the loan process much easier for both you and the lender.

As with any business associate or service provider, you will also want to verify that the lender is licensed and is in good standing with the Better Business Bureau as well as past clients. Asking for a list of references can be helpful but you should also do a bit more digging in financial chat rooms or with other real estate investor groups. This first-hand knowledge from other borrowers is important.

Get Terms In Writing

It can be complicated comparing all of the different options for hard money loans. But you need to work through each lenders terms and fees to know the total cost of each loan offer. Any legitimate lender will provide you with a full fee schedule in writing to allow you to verify the loan cost. If a lender is not willing to provide this information, then clearly, you should seek other options.

Due Diligence

Selecting Hard Money Lenders in Arizona is just like selecting any other service provider. You need to invest some time and effort to learn about the lender, his or her business practices and the terms of the loan that is offered to you. Having all of this information will allow you to select the lender who will best meet your needs for affordability as well as the level of service being offered. As you gain experience in this form of lending, your need for hands-on service might diminish or you might even be willing to work with a remote lender. But always do your research to know who you are working with and what to expect.

Three Reasons to Use Hard Money Loans

Understanding the benefits of Arizona Hard Money Loan will help borrowers justify the cost of using hard money. There is a price to be paid for everything that offers this many benefits.

Arizona Hard Money Loan are certainly more expensive than traditional loans. And because they are more expensive, many borrowers question what could be a good reason to use hard money. And the simple answer is that there are several reasons that hard money is a great option for many borrowers. Arizona Hard Money Loans can eliminate many of the issues that borrowers face when working with a traditional lender.

Anyone who has worked with a bank or mortgage company to secure a loan will tell you that there is nothing fast or simple about the process. You are required to complete long forms and submit a huge pile of documents before the lending institution will even consider loaning you any money. But because the focus of a hard money loan is on the collateral and not the borrower’s credit rating, there is far less information and documentation required to apply for the loan. In addition, the application evaluation process is much faster. Lenders are not required to evaluate as much information and can decide on the approval much more quickly. And with the request approved, funding is normally completed in just a few days. All of this speed is definitely worth the higher cost of hard money loans.

Another complaint from many borrowers is that traditional lenders are not at all flexible. They follow a specific process and will write loans on their terms only. If you do not meet their criteria, or if you are looking for a slightly different set of terms, then they are not interested in working with you. But being private allows hard money lenders more freedom in their processes as well as the terms for the loans that they fund. This less than standardized underwriting process allows borrowers to negotiate terms with the lender and actually end up with a semi-custom loan. And as we all know, anything that is customized is worth paying more for.

Approval is Key

If you are unable to qualify for a traditional loan, then it is a simple decision to pay a little bit higher interest rate to secure hard money. Hard money lenders are even willing to work with borrowers who have a foreclosure on their credit history. So this is a great opportunity for borrowers to begin to rebuild their credit while also enjoying all of the other benefits of owning a property. The easier approval process and requirements are two of the benefits that most borrowers are happy to pay a little more for.

Added Benefits

When you have no other loan options, paying a higher interest rate and higher fees is a small price to pay to secure a loan. Borrowers who are in need of a fast loan process are also often willing to pay the higher rates associated with hard money to secure a great property. And borrowers who are seeking unique loan terms or who need to negotiate the loan terms are happy to pay a private lender for the ability to tailor a loan to fit their needs.