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Thursday, March 21, 2019

Questions For Hard Money Lenders

(When you are comparing hard money lenders, you will want to ask all of the following important questions. This will help you to make the best selection to meet your needs.)

Hard money is a loan that is provided by a private lender which means that there are no real standards or rates that the lender needs to follow. That is not to say that Texas Hard Money Lenders are not regulated or forced to follow some guidelines, but most do not pertain to the rates and fee structures that they use. So all borrowers should have a list of questions for each potential hard money lender that they speak to. And the list should include all of the following questions.

The cost of the loan is a very big concern as that will have a hand in determining your profit, or loss, at the end of the project. Be certain to as what the interest rate and point for the loan will be. The rates can vary from 10 to 15% for interest and up to about 4% to cover points. Also, ask about any upfront fees to know the total cost of the loan. And the final fee that you should not is the early payment penalty that you would incur if you pay the loan off early.

The next major concern is about the other term of the loan. This can include things like the payment schedule, and the length of the loan itself. You should also ask if you have the option to extend the term of the loan or refinance it if you have not completed your project when the loan comes due.

Down Payments

The next question can vary a great deal because you are working with a private lender and each one has his or her own preference. But you need to know how large a down payment the lender requires. This is a way for the lender to add to his or her security because you have some of your own money tied up in the deal. The more risky the deal looks on paper, the higher the down payment is likely to be. Texas Hard Money Lenders like to know that the borrower has some skin in the game to remain focused and motivated to complete the project and repay the loan.

The Details

Your last questions for Texas Hard Money Lenders will revolve around the final details of the deal. You will want to know how long it would take each lender to be ready to close the deal and also how long until you will have the funding for the loan. In some cases, it is worth paying a little bit more in fees and interest to work with a lender who can close more quickly and have the money in your hands faster. The purpose of asking all of the same questions of all lenders is to have a fair way to compare each offer and to be able to determine which lender will best meet your needs on loan terms as well as the total cost of the loan.

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.

Eight Options for Arizona fix and flip loans

(The fix and flip market has become very popular with novice real estate investors as well as seasoned professionals. But the big question for everyone is where to look for Arizona fix and flip loans.)

As new real estate investors are searching for ways to turn a profit and grow their business, the fix and flip segment of the industry has become a favored investment option. But these new investors are often faced with many challenges as they look for Arizona fix and flip loans. Knowing the best resources for Arizona fix and flip loans can be a huge help in launching your successful career in real estate investing.

Working within your close circle of family and friends is often a great way to secure funding for your first flip purchase. These loans are normally less challenging and stressful but should still be taken very seriously as a debt that must be repaid in a timely fashion. A finance partner is also a good choice. This is much like a silent partner, who will provide the money while you invest the knowledge and labor on the job. Or if you own your home or have substantial equity in your home, a home equity line of credit is a great way to put your equity to work for you in your new business venture. But be aware that you are putting your own home at risk if the project fails.

Another resource that you could have from a previous job is your 401k retirement savings plan. Many of these plans are designed to allow you to loan yourself money for certain investments or expenses. Check with your plan administrator if you are not sure how your plan is structured. The biggest benefit here is that you will be paying the interest on the loan to your own retirement plan.

More Traditional Arizona fix and flip loans

A personal loan is another option if you have good credit and enough income to justify the added payment. The interest rate could be higher than some other types of loans but higher interest is better than no loan. In some cases, you might also get very fortunate and find a seller who is willing to offer you seller financing. This is a great option for both of you as you are likely to be able to pay the loan off in less than a year when the flip is completed and sold.

A Hard Money Option

Texas Hard Money Loans are also known as asset-based loans because they are secured by the property that you are purchasing. You make a large down payment of up to 30%, and then the property is used as the collateral for your loan. If you default on the loan, then the hard money lender takes possession of the property as payment for the loan. These loans are normally short-term which works perfectly for a fix and flip project and allows new investors to have a great resource for loans as they begin their new career.

The Best Options for Fix and Flip Loans

(Home flips are a very popular way to get into the real estate investment business. But the first challenge for most flippers is learning about Arizona fix and flip loans.)

There are a multitude of television shows that depict fix and flip projects as fun and simple. But the truth is that it is a very serious business that requires a good knowledge base of finance to be sure to get the best loan to meet your needs. Understanding your options for the best Arizona fix and flip loans is the first step in a successful flip.

Hard money Arizona fix and flip loans are a great option because they are a short term loan that is secured y the value of the property that you are buying. Real estate investors normally purchase a property, renovate and resell within the term of a hard money loan which is around a year at the most. But if you are only doing minor repairs, you can request that the loan term be even shorter if that is what works out best for you. The private lenders are much easier to work with and can even create a custom payment schedule in some cases.

Cash out Arizona fix and flip loans require you to own another property. In this case, you are refinancing or taking out a loan on a property that you own outright to use that equity to invest in a property to flip. This could be refinancing your current home to use that equity or you could refinance another investment property that you have to make the purchase. But the concern is that you need to complete your flip to at least break even and not risk losing both properties.

HELOC Loans

Home equity line of credit loans also require that you own a property or have a great deal of equity in a property. For this loan, you secure a line of credit against the equity in your home or another property that you own. Again, you are risking that property if you fail to sell the flip and cannot pay the HELOC payment. But with a line of credit, the line of credit is somewhat revolving. So each payment that you make provides you with more options for reusing the line of credit to make purchases for materials for the renovations or other projects.

Know Your Options

There are many options for funding a fix and flip. But only after you have researched all of your options can you determine which loan will best meet your current needs. Some short term loans will require a large balloon payment at the end of the term while others can be refinanced to extend the term if you are unable to repay the full loan amount. It is also important that borrowers understand that using the equity in one property to purchase another property represents a far greater risk than using the property being purchased as the collateral for a hard money loan. Making a solid choice for your fix and flip loan will get you off to a great start on your real estate investment project.

Wednesday, March 20, 2019

Qualifications for Arizona Hard Money Loans

(If you have never used a hard money lender, then you will not understand the qualifications that are required. But following these tips can help you to secure Arizona Hard Money Loans.)

As compares to traditional loans, Arizona Hard Money Loans are very easy to qualify for. But there are certain things that a lender will look for when deciding if he or she will fund a loan and also the interest rate that will be charged for the loan. The primary concern is the value of the collateral property, but there is also some concern with regards to the experience of the borrower and knowledge of the real estate industry.

It might seem odd, but money is a major concern even when you are asking to borrow money. The lender will need to be sure that the borrower has the money to make the down payment which could be as much as 25% to 35% of the cost of the property. In the case of a commercial property purchase, the down payment could even be 40% of the cost of the property. In addition, the lender will want to know that the borrower has a cash reserve to fall back on in the event of an unforeseen issue.

Submitting the borrower's track record of successful projects is a great way to offer the lender some security in the borrower's experience and knowledge. It is important that past deals have been completed on time and on budget. This will help to keep the interest rates down as there is less possibility of a default on the loan. Being new to real estate investing will not preclude a borrower from securing a loan, but it should be expected that the lender will charge a higher interest rate and could require more documentation to demonstrate a well-conceived plan for the project.

Exit Strategy

Finally, the lender will want to see an exit strategy for the project. This is a detailed plan showing the borrowers plan for repaying the hard money loan. The short term of Arizona Hard Money Loans can make it very challenging to repay them on time. Borrowers need to have a solid plan to finish the project to make the final payment, or balloon payment, that is normally the close of a hard money loan. The exit strategy will also include contingency plans in the event of time overrun or budget overrun. Normally, it is the borrower’s cash reserve that is tapped to correct these issues.

Final Approval

Hard money loans are not as complex as they might initially appear. The lender simply wants to access the risk involved in the loan and to know that the property will have enough value to cover any outstanding balance on the loan should the borrower default. The information about work experience and past project experience is used more for determining the interest rate for the loan and the fees that will be involved in writing the loan. It is also important to understand that after completing several loans with a lender, the process can become even more streamlined and fast as you have developed a strong working relationship with the lender.

Who Should Use Arizona Hard Money Loans?

(Arizona Hard Money Loans are not right for everyone. But for real estate investors and consumers with credit challenges, hard money is a great option.)

Arizona Hard Money Loans are a short termed, asset-based loan that holds some very special benefits for the right borrower and the right projects. For the most part, the loans are used for real estate purchases because it is the real estate that becomes the collateral for the loan. A borrower could request a hard money loan for another purpose, but he or she would need to own a property outright to use as collateral for the loan. This is not unheard of but it is unusual.

In most cases, the borrower on Arizona Hard Money Loans is involved in real estate investing. New real estate investors like hard money because the value of the property is enough to secure the loan. It is also not dependent on a long credit history which is good for a younger investor who might not have a lengthy credit background. More seasoned real estate investors will also use hard money, but more for the easy qualification as much as the fast funding time. A hard money lender will normally find a loan in a few days rather than the month or two that it can take to get a loan from a traditional bank or mortgage company.

Still, other real estate investors will elect to use a hard money loan because it is far less stressful than the long loan application process required by traditional lenders. There is little sense in investing all of that time in an application when you only need the money for a few months. And many sellers will look upon the hard money loan favorably when there are multiple offers in on a single property.

The Credit Challenged

There are many people who have been turned down for a loan at a traditional bank or mortgage company. The reasons can range from bad credit to no credit, but the end result is that they can’t get traditional financing. These borrowers then turn to a non-traditional lender for hard money. In most cases, they will use the hard money for a short time until they can find a way to secure a traditional loan to pay off the hard money loan. This allows the borrower to extend the payment term to the length of a normal mortgage and often lower the monthly payment.

Why Arizona Hard Money Loans?

There are many benefits to hard money such as fast funding and the easy application process. Different borrowers have different reasons or motivations for selecting hard money. But in the end, borrowers are willing to pay more to use hard money because of the convenience that it offers to them. And even in cases where the borrower is somewhat risky, the lenders are willing to extend the loans due to the potential to earn more interest on a high-risk loan. Both the borrower and the lender are providing something that the other needs, and the loan works out to be mutually beneficial to both parties involved.

The Best Types of Deals For Arizona Hard Money Loans

(If you understand Arizona Hard Money Loans, then you will know how to best use them. Some deals are tailor-made for hard money.)

Arizona Hard Money Loans can be a great tool for many investors and investments, but these are not a one size fits all type of loan. It is important to know what types of deals work best with Arizona Hard Money Loans so that you have the greatest potential of a high return on your investment. The following real estate deals are perfect for hard money due to the time frame or other parameters that are best suited for these asset-based loans.

Fix and flip projects are often very time sensitive. And that time crunch usually begins the moment that you learn of a great property. Private lenders are known for fast turnaround times on loan requests which are a must to secure a property that has great potential for a high ROI. This means that you can request a loan, get approved and have the cash in hand before a traditional lender will even have approval or denial ready for you. Land loans are also hard to get a loan for, as they have questionable value. But a hard money lender will provide the money for the land and the construction on the land so that you can then secure a mortgage on the improved property.

Construction loans are difficult for the same reason that land loans are a challenge. Most traditional lenders don’t want to take the risk on something that is not tangible yet. But Texas Hard Money Lenders are in business to profit from that high risk. Hard money will provide you the funds to purchase materials and pay construction cost. Then when the project is completed, you can qualify for a traditional loan and pay off the hard money loan.

Credit Issues

Arizona Hard Money Loans are great for borrowers who have bad credit as well. The loan approval is based on the value of the property being used as collateral for the loan, so the bad personal credit is not such a big issue. If the property holds value and the borrower has the ability to make the loan payments, then a hard money lender is going to make the loan. It is important to understand though, that really, really bad credit will mean that your interest rate is higher due to the added risk that you could default on the loan.

Many People Use Hard Money

Clearly, there are a great many people who benefit from hard money and from the services offered by hard money lenders. It could be a new real estate investor who needs a first loan or a seasoned professional real estate investor who needs fast funding to secure a great property. Or in other cases, it is just a consumer who has bad credit but is ready to purchase a home. What is important is that the lender understands the loan and the terms to make the payments and fulfill his or her responsibility.