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Wednesday, February 6, 2019

HOW YOU CAN BUY A NEW HOME BEFORE SELLING YOUR OLD ONE

Sam and Judy had just put their home, of 20 years, up for sale. As, people do, when they are selling their home, they began looking for a new home. Luckily, or so they thought, they found the ideal house only a few days after putting their house up for sale.

When Sam and Judy found the home, they wanted to purchase they were so excited. Their realtor said it shouldn’t be a problem for them to put an offer in because they could put a contingency in the contract. However, that served to be a great problem.

The house Sam and Judy had decided on was a popular one. It was a steal of a deal and had more than one offer in on it. Unfortunately, the seller felt a contingency wasn’t necessary due to the fact that there were cash buyers putting offers in on the home. Sam and Judy lost that home and were feeling a bit concerned. The home they were selling had repairs that were necessary, and their realtor had warned it may be on the market longer than they were hoping.

WHAT YOU CAN DO WHEN YOU CAN’T COMPETE WITH CASH BUYERS

When a seller doesn’t want a contingency in the deal a smart move is a Arizona bridge loan. A bridge loan, as the name suggests, offers a bridge that allows a buyer to purchase a new property by using the home they currently own as collateral.

A Arizona bridge loan is also known as a “gap financing.” They are there for home owners who want to purchase a new home before selling the home they are currently in. Unless you have a large nest egg of cash, most people cannot buy a new home before selling the old one—and in a competitive market most sellers frown upon a contingency. It is very difficult to qualify for two mortgages at one time let alone pay on two mortgages.

This is where a bridge loan can be a buyer’s saving grace. A bridge loan can come from a hard money lender. A hard money lender will loan the money to you and usually give you a few months before a payment is due. Once due, the monthly payments are interest only payments. When the old home sells, the borrower will pay the loan in full in what is called a balloon payment. This allows the borrower to purchase their new home and have time to sell their old home without carrying two mortgages. Once the old home sells, the buyer has money to pay off the loan and pocket the rest of the cash as profit.

Typically, a hard money lender will finance up to 80% of the combined value of both the new home and old home. The other 20% or so usually comes from home equity or savings for the new down payment. There are lenders that will lend more than 80% but be prepared to have the other 20% handy.

Bridge loans can be a life saver for borrowers wanting to purchase their new home without waiting on the old one to sell.

Bridge loans take a shorter time to process than a conventional mortgage. Typically, these loans are approved, and funds are released in two weeks or less. These loans will have a slightly higher interest rate than loans from a traditional lending institution, however, remember you will only be paying interest on the loan until the last payment—the balloon payment.

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.

Tuesday, February 5, 2019

WHAT TO EXPECT WITH HARD MONEY LOANS

Hard money loans are funded by individual investors when traditional lending institutions can not approve a borrower for what they need or a borrower needs quick financing.

A typical hard money loan will run between 7% and 15% in interest rates and cost anywhere from 4 to 7 points. Points are an upfront fee of the loan amount. Hard Money Loans in Arizona are short-term loans that generally run between six months and three years.

If you took out a loan with a bank for $1,000,000 you would be paying back approximately $6,000 per month—that is including interest. With a hard money loan you would be paying back approximately $8,700 a month. This is due to the higher interest rate of a hard money loan.

Many people will read this and think, why in the world would I take out a hard money loan if it is less expensive to take a loan from a traditional lending institution. Well, let’s take that $1,000,000 we were discussing above. If an investor finds a commercial property that is being sold for $1,000,000— but there is nothing there except empty rooms, however the investor has a clear vision of what they can do with that building. What do they typically do? They go to their bank. Well, because there is presently no income being generated the bank is most likely not going to approve any amount of loan. So, what does an investor do if they don’t have $1,000,000 laying around. They find a hard money lender.

WHY WOULD A HARD MONEY LENDER INVEST IN MY PROJECT?

Hard money investors are investors that choose to invest money into real estate rather than traditional investing such as stocks and bonds. They do this because they make money much faster than waiting around for the ebbs and flows of the stock market.

Texas Hard Money Lenders have money and they want to invest in a project they feel will be profitable for them, as well as you. And this is where they make their money. The borrower will present their project, and show that they will contribute anything they are able to contribute to the project—whether that be money down, showing ways to cut corners or having an active role in the project themselves—such as pouring their blood, sweat and tears into the project. The hard money lender is able to approve the loan within minutes and distribute the funds within days, unlike banks.

Where Texas Hard Money Lenders make their money is through points and interest—just like a bank. However, a borrower pays for the convince of quick loan approval and funding of properties that banks will not fund through a higher interest rate.

Although hard money loans cost more initially, it will give the quick funding required and allows you to prosper in the future.

It is important that when you take a hard money loan out you have a clear and realistic vision of your investment. Make sure that when you meet with your hard money lender you have a crystal-clear business plan that you believe in—your hard money lender can’t believe in an investment if you don’t.

HOW TO FIND A HARD MONEY LENDER IN ARIZONA

Read this article to find a hard money lender in Arizona and how to make sure your loan gets funded.

When it comes to Texas Hard Money Lenders many people don’t really know what they are. They have been stereotyped as loan sharks trying to take your money, but in reality this couldn’t be more false. Texas Hard Money Lenders are simply private investors that want to work with you and make money with you.

Finding a hard money lender can sometimes be difficult—especially because Texas Hard Money Lenders vary just as much as borrowers vary. Stay away from anyone trying to make money off of you buy selling you a list of Texas Hard Money Lenders. It is simple—google: hard money lender in Arizona. Yes, it’s that simple.

HOW TO GET TEXAS HARD MONEY LENDERS TO FUND YOUR DEAL

First, make sure you have a deal. When you speak to a hard money lender, they can’t approve funds for a property that isn’t there. If you aren’t sure if a deal is good enough for a hard money lender to invest in there are resources on the web that can give you that information.

Once you find a property, make sure that you are organized. There are steps to be taken when trying to obtain funding for your deal—be professional. Create a presentation that includes pictures, a business plan, your experience and goals and prepare a document with all the expenses that will be necessary.

Texas Hard Money Lenders want to see that you are willing to take as much of a risk as they are. Although, lenders may finance 100% of the deal, be prepared to put some type of a down payment. If you don’t have the money to do this yourself come to the table with some potential ideas where that money could come from. Maybe a silent investor or a partner would be willing to help with the down payment. If you can’t think of anyone that could help fund the down payment, maybe you will be the one to do the repairs yourself. Therefore, the cost of hiring someone can be deducted from the original loan amount— be creative and think outside the box. Lenders just want to see that you are willing to work hard, and you have passion about your project.

Make sure that you communicate with your lender. If they ask for a document—make sure you are on top of it and that document is sent asap. If they call, answer the phone or call them back the minute you can. Don’t put them off. Be responsible and make sure your lender is comfortable with you and trusts you—remember this is their money they are risking. Make sure you follow through with your project as planned. This will help you when you need to take out another loan.

Texas Hard Money Lenders are individuals that are literally loaning you their own money.

Texas Hard Money Lenders need to see that you are professional, organized and have some skin in the game. Finding a hard money lender that you work well with is priceless—meaning you can make deal after deal after deal and have an investor that will fund you—which in turn means making a whole lot of money.

5 REASONS TO USE A TEXAS HARD MONEY LENDER?

Texas Hard Money Lenders can be a real estate investors best friend. They offer speed and flexibility on top of a plethora of other benefits.

1. You Don’t Have To Have Perfect Credit— If you fall into the majority of borrowers you have a ding or two (or several) on your FICO score. When it comes to traditional loans, the most important factor a bank looks at is that three digit score. If your score falls below their required number—no loan for you! Not only your credit score, but your monthly income is of just as much importance to them. If you fall outside of their criteria, you will not be approved. Texas Hard Money Lenders focus primarily on the value of the property that serves as the collateral on the loan. As long as the lender is comfortable with the loan-to-value ratio they are not overly concerned with a borrower’s credit score and income.

2. Quick Loan Approval and Funding— If you have ever applied for any type of loan at a bank you are familiar with the painfully slow process. There are countless documents that must be filled out and even once that is done the underwriting process is almost sloth like. It can be a month before a borrower is even approved and even longer to receive the funds. By this time, it is highly likely the borrower has lost the property to another real estate investor. The application process for a hard money loan is simple. Typically, a borrower only needs to fill out a standard loan application—and can be approved in minutes. Usually, the borrower can receive funds in 10 days or less.

3. Getting Financing For Additional Loans— Most banks cap the amount of loans a borrower can take out at four. It usually doesn’t matter how great their credit is or how much money they generate. Because Texas Hard Money Lenders are private investors they make their own rules. They do not have the same limitations on loans as do banks. Their main concern is the borrower’s equity in a property. Texas Hard Money Lenders enjoy working with investors that have multiple properties because the borrower can cross-collateralize their properties.

4. Making The Investor’s Offer Strong— Seasoned real estate investors are very familiar with banks pulling the financing during escrow—it is not uncommon. This can easily destroy the deal and the investor will lose the potential property. When an offer comes in from an investor using hard money sellers see this as a benefit. Texas Hard Money Lenders are not known to pull out of deals at the last minute. What that means is that an investor that is working with a Dallas Texas hard money lender in a competitive market is seen as preferential to the seller when there are multiple offers on the property.

5. Quick Close— Sellers want to close quickly—this is why cash buyers are a sellers dream buyer. Good news! Investors using hard money are viewed in the same light as cash buyers. Real estate investors can often negotiate a lower purchase prices because they can give a shorter escrow period and all that equals a quicker close.

There are numerous reasons for a real estate investor to work with a Dallas Texas hard money lender.

An experienced hard money lender is an expert in real estate investments and will work with an investor to make sure there are no issues that could hurt the project. At Level 4 Funding we have years of experience and are here to work with you. Please contact us at level4funding.com.

IF YOU CAN READ THIS ARTICLE, YOU CAN GET A COMMERCIAL REAL ESTAE LOAN

Both buying and renovating commercial real estate is the mark of a giant step for your small business. However, it can be extremely stressful. It is imperative you completely understand the process—this will take a lot of stress off of you.

Very few small business owners have enough cash on hand to support any type of project with their own money—they will have to take out a loan. Fortunately, there are Arizona commercial real estate loans that can help make the project go much smoother.

There are many options when it comes to Arizona commercial real estate loans. The decision you make will affect the success of your project. Some options take much longer to close, and some require a large amount of time spent of application and paperwork.

DIFFERENT TYPES OF ARIZONA COMMERCIAL REAL ESATE LOANS

What is commercial real estate? It is any type of property that is used for business purposes. Some examples are a shopping center, a movie theater or an office building. Actually, any building that uses 51% of the building for business can be considered commercial real estate.

Purchasing new or existing commercial real estate or rehabbing said property makes a borrower eligible for a commercial real estate loan. Commercial Real Estate Loans in Arizona can vary. There are multiple types of loans that vary in their application processes, rates, fees and loan terms.

The first loan that springs to mind for most borrowers is a traditional commercial real estate loan. These come from a bank or credit union. These loans generally fund the largest amounts of money at the smallest interest rate. However, these are very hard loans to get. Traditional Commercial Real Estate Loans in Arizona are generally given to businesses that have the best track record of profit and have the highest credit score. Even then, these loans are infamous for being painfully slow with tons of paperwork and documentation.

Hard money Commercial Real Estate Loans in Arizona are short-term loans from Texas Hard Money Lenders who are private investors. Private investors are not one size fits all. There are some who won’t give out amounts as large as a bank loan would—and others that can give out even more than a bank would. Texas Hard Money Lenders will charge a higher interest rate than a traditional lending institution. However, the payoff comes with the application process. These are much easier to qualify for than bank loans. Although, a hard money lender will look into your credit score—they will not base their decision simply on your credit score. These are loans backed by the property. Many startup businesses work with Texas Hard Money Lenders. You can typically apply for, be approved and receive funds in less than two weeks.

Real Estate Crowdfunding is a real estate loan platform. With crowdfunding many people lend small amounts of money to the business owner for their project. For example, instead of receiving a $100,000 loan from a bank or hard money lender you will receive many small loans that add up to $100,000. Real estate crowdfunding has similar terms as hard money lending does. However, you will be dealing with many people you have to pay back versus just one.

When it comes to Commercial Real Estate Loans in Arizona borrowers have many options.

Your options will depend on how long you have been in business, if you are startup business, what your credit score is and how much you can pay per month on your loan when it comes to deciding which real estate commercial loan will work for you.

Monday, February 4, 2019

EAGER TO OPEN AN ARIZONA MEDICAL MARIJUANA DISPENSARY?

If you have driven down any major streets in Arizona, you have seen medical marijuana dispensaries. Thinking of opening a small business? A dispensary may be a great option. But, how do you get a loan for an Arizona medical marijuana dispensary?

Even though there are many states that have legalized both medical and recreational marijuana—it still isn’t considered “legal” by the federal government. What that means to entrepreneurs looking to open a dispensary is a traditional bank will likely not lend to a borrower for this purpose. And, in all reality, it may be a very long time until banks will be willing to lend to this industry. It is a very gray area when it comes to the Feds, the banks and the marijuana dispensary industry.

Even if the Feds approved of lending to dispensaries—banks still feel there are a lot of risks involved and not enough protection. The guidelines are so vague, making lending too risky, for the banks to conduct any marijuana related business.

WHO LENDS TO ARIZONA MEDICAL MARIJUANA DISPENSARIES?

Non-Traditional lending institutions are able to give loans to borrowers looking to open an Arizona marijuana dispensary. Every startup business needs funding to succeed in their market. If a borrower is looking to open a boutique or a restaurant they can simply get a Arizona small business loan from a bank, but because of the ambiguous legal issues when it comes to marijuana related business federal banks won’t participate in lending. The Federal Deposit Insurance Corporation (FDIC) will not insure a bank that takes on what they view as excessive risks—these would include loans that may be in violation of federal law. A non-traditional lending institution does not have to adhere to federal requirements as do traditional lending institutions.

Many private investors are backing medical marijuana businesses Private investors will typically require that a dispensary is incorporated, has a monthly gross sales of at least $8,000, has a business banking account and have a minimum credit score of 500. Private investors use the equity of the property as the collateral to secure the loan. If you live in a state, such as Colorado, there are a few banks that will work with a marijuana based business. However, in Arizona it is only legal for medical use and banks will not lend to marijuana dispensaries. Using a private investor in Arizona will allow a borrower to not only get a loan for the real estate, but also to purchase equipment necessary for a startup business.

Securing financing for a medical marijuana dispensary can be quite challenging, but the potential financial rewards are huge.

Marijuana based businesses are rapidly growing. If you are looking for a small business that there is a high demand for—a medical marijuana dispensary is well worth looking into. Get yourself an Arizona private investor that will work with you and help you achieve your dreams.