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Wednesday, April 10, 2019

Should You Be Using a Hard Money Lender for Arizona Rental Property Loans?

In what situations do Arizona Hard Money Lenders work well with rental property owners? And should they be used at all? Read more below to find out!

Most people are referred to Arizona Hard Money Lenders when they do not qualify for traditional loans from banks or credit unions. Arizona Hard Money Lenders are private, untraditional lenders who do not use the same approval process when determining what borrowers qualify for hard money. They focus on the property as an investment. Collateral comes before the borrower’s financial history. In this way, they are able to approve a wide variety of borrowers that traditional lenders cannot approve. However, just because they offer an easy approval, it doesn’t mean they are right for you. When it comes to using a hard money lender for funding for rental property loans, you really need to consider your timeline and budet because, generally, they are only used for short term projects.

Timeline and Budget

Arizona Hard Money Lenders have short repayment periods. This usually means they are great in cases of fixer uppers. They can get you money fast and, if you are able to fix, flip, and sell your property successfully, you are able to start repayment right away. So, when it comes to rental property loans, Arizona Hard Money Lenders are usually not a good idea. The profit you are making off your rental is coming in month by month—this usually is not enough to satisfy their financial requirements. Not only that, but they have high interest rates and fees. This is not a good combination if you are just getting started on a profit from your property. If, however, you need to fix something in the property fast, it may seem a good idea to turn to your local hard money lender. They can get you money usually within the week, if not sooner. That is fast compared to traditional lenders who usually take at least a month, if not more. Speed can be key in determining the outcome of some situations. If you’re between tenants on a property and need funds to fix an issue quick, Arizona Hard Money Lenders could be an option. They are known to offer loan extensions and, depending on the size of the loan and when your next tenant is coming in, the risk could be worth it.

Is Hard Money Right for You?

Generally, the answer, for long term options, is no. A better bet would be to go to your local bank for a traditional option for your rental property loans. Timeline and budget need to align and, with hard money lenders, they are not as flexible. High rates and short repayment periods don’t align themselves well with a long term project where a profit is coming in slowly. Despite a profit that is accumulating, it won’t fare well with the interest rates of your private hard money lender—extension or not. So, before deep dive into the housing maket, make sure you have all the info you need to be successful with your property and loan decisions.

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.

Which Arizona Rental Property Loans Are Best For You

Rental properties can be a great way to make extra cash, but how should you go about it? And what options are right for you? Read more below to find out!

You may begin by seeking out a loan from a traditional lender. Going to your local bank or credit union may seem like a great option. However, they have strict requirements when it comes to being approved for a loan. They are looking for great credit scores and debt to income ratios. Depending on your financial history, this may disqualify you. If it does, you may be turned to hard money lenders.

Arizona Hard Money Lenders are untraditional lenders. They consist of private companies and investors who focus on the collateral of your project. In doing this, they do not weigh your financial history as heavily. If you have rotten credit and need a loan fast, you may be tempted to turn to your local hard money lender for your rental property loans.

Choosing to work with a hard money lender on your rental property would be a mistake. While they can be great solutions when you need money fast, they work on short terms. Their repayment periods are meant to be paid back fast. They literally lend themselves to people looking to renovate fixer uppers because their goal is to flip the property and sell it as soon as possible. The money made from that sale can then go into repayment and the high interest rates of hard money lenders. Rental properties, however, gain profit over time. You want to work with a lender and obtain a loan agreement that literally agrees to the time period of your rental project.

Loans for Renting Property

So, what type of Arizona Rental Property Loans should you seek? Long term loans. These will generally come from traditional lenders that require down payments, cash reserves and mortgages. In order to qualify you would need to be able to afford a 20 percent down payment, a cash reserve of 6 months, and no more than 4 mortgages. There are other options if this doesn’t suit your individual situation. Federal Housing Administration FHA , Veteran’s Administration VA and equity line of credit are all other options to consider. Additionally, this day and age has made it extremely common to see funding via the internet. Not only that, but you could always consider personal connections you have, like family, friends and acquaintances who would like to invest in you project.

Moving Forward with Arizona Rental Property Loans

With the rising popularity of HGTV, inspiration comes daily—and sometimes the urge to create and find new sources of funding is all we need to evaluate our finances and see what it takes to invest in the housing market. No matter how excited you are, always be prepared to take a step back and thoroughly analyze what options are right for you. What is right for you may not work for someone else, and every situation has different needs that need to be considered.

How to Make the Most of Arizona Fix and Flip Loans

Making money off of fixer uppers may seem easy based on the endless stream of shows on HGTV. From Property Brothers to Flip or Flop, profit seems possible—and the inspiring renovations can be exciting! So, how could you make the most of a fix and flip without the glam of a film crew on your side?

Planning will be the first step. You will need to do research into your property and its needs. What renovations are required? What design decisions will contribute to its overall aesthetic? What kinds of things should you prepare for, and what teams are necessary to ensure everything goes according to plan? A lot goes into fixer uppers, and you need to be prepared to answer all the questions. After all, your loan lender will consider your financial history and your renovation abilities.

Building a portfolio is not easy—everyone starts somewhere, even if it is with an empty binder. Once you have your team assembled and the beginning of plans for a specific property, you may begin to seek out a loan lender.

Obtaining a Hard Money Loan in Arizona

When people think of loans, they may think of going to a traditional lender, like a local bank or credit union. However, traditional lenders have high expectations of their borrowers. From a great credit score and debt to income ratio, the last thing they are likely thinking of is your flipping abilities—excellent portfolio or not. If you are having trouble obtaining a fix and flip loan, you may be referred to Houston Texas Private Money Lenders who offer hard money. Private lenders are untraditional options, but they can approve more people than traditional lenders. Instead of focusing on your ability in regard to finances, they focus on collateral. What is your property? What are you plans? What team have you assembled to achieve success? They will be more focused on you as an investment. This doesn’t mean that they won’t consider you as a candidate based on your financial reliability—they will. However, it will not be the only factor. This means you have a higher chance of being approved.

Pros of Using a Hard Money Lender for Your Arizona Fix and Flip Loans

Arizona Hard Money Lenders are great options for fixer uppers. Not only can they qualify more people for their loans, but they can offer money fast—sometimes as soon as the day of. If not, they usually do it within the week which is several weeks sooner than traditional lenders. This is a great trait especially if you are working with a fixer upper and need to obtain a competitive property off of the market fast. Additionally, private Arizona Hard Money Lenders require short repayment periods. Depending on what you need your loan for this may not be a good thing. However, this is a great trait for fixer uppers because of the goal to have a smooth renovation and a quick sale with a profit. They do, however, have high interest rates and fees. For that reason they may not be for everyone, but, when working with fixer uppers, they may be the perfect solution as you are seeking out Arizona Fix and Flip Loans.

Tuesday, April 9, 2019

Are You Eligible for Arizona Hard Money Loans?

Not qualifying for a traditional loan from your local bank or credit union may send you to untraditional lenders. But, if you qualify, are they what’s best for you?

It’s a well-known fact that traditional lenders like banks have high expectations of their borrowers. They need to be reliable and have a solid financial history. This includes a great credit score and debt to income ratio. Not only that, but having thorough plans and research supporting your project is going to be of utmost importance. A history of successful fixer uppers is never a bad thing.

Still, the first step in success in the housing market is never easy. You will have to build good credit and, if seeking profits as a home renovator, gaining experience will only help build your portfolio and guide you through more successful fixer uppers. So, when is it time to turn to private lenders for your hard money loans? Is it ever a good time?

When Should You Turn to Hard Money Lenders?

The most common reasons people turn to Arizona Hard Money Lenders is speed and flexibility. Arizona Hard Money Lenders can begin the loan approval process sometimes as soon as the day of. If not, it can take as long as a week. That is short compared to banks and credit unions who can need as long as a month to get things going. In addition to speed, flexibility is another great offer. This refers to a few things, the first being approval. Private lenders who offer Texas Hard Money Loans focus on collateral. This means the project, the property’s potential, the plans and research. Private lenders want to invest in a project they believe in. While your financial history will come into account, it will not be the end all be all. Flexibility also refers to their individualism and transparency. For example, they generally will be direct with you if they do not believe in your project, and they will likely have no issue offering you an extension. Typically Texas Hard Money Loans are paid back within a year, but if your investor believes in your plans and projects, the extension can be made or an additional two to five years. If you turn to a hard money lender, it is because you need speed and flexibility. Cases like this are usually for fixer uppers and foreclosures, where the ability to obtain a property is the making or breaking point.

Should You Turn to Hard Money?

The question of whether or not you should turn to hard money depends solely on your situation. How fast do you need the money? Does your situation lend itself to hard money lenders? There are risks associated with hard money lenders. They require high interest rates, fees, and a short repayment period. Fixer uppers lend themselves to hard money because the goal is to renovate and sell quickly. Achieving this goal would help to ensure the loan is paid back timely. The costs of hard money may outweigh the costs depending on the stakes of your personal situation. If you have any questions about your private hard money lender, you can meet with a real estate attorney to go over the terms of your loan agreement so you feel confident in your decision, should you go forward with private hard money lenders.

How Houston Texas Private Money Lenders Can Help Borrowers with Rotten Credit

Being turned away from a loan by a traditional lender, may lead you feeling confused about what other options are available to you. If this is you, read more below on how untraditional lenders may provide the options you need.

Rotten credit score can be the bane of anyone, but especially those seeking out loans. A bad credit score and debt to income ratio can stop anyone from investing in new projects. Fortunately, there are other options available.

Untraditional lenders can be great options for people unapproved of by traditional lenders like banks and credit unions. They consist of private companies and investors who offer hard money. While they may seem like your saving grace, you should know a few things about them before you sign any loan agreement.

Risks of Untraditional Private Hard Money Lenders

The first thing you should know is that they have high interest rates. Sometimes they can be as five percent more than other rates on the market. Additionally, they can come with some hefty and, sometimes hidden, fees. Determining the legitimacy of your Houston Texas private money lender is a must. The last thing you want is a “lender” who doesn’t follow through on the loan in the middle of your plans. When you begin searching for a loan, you may begin to think of yourself as an imperfect borrower if your credit score or some aspect of your financial history is not perfect. However, it’s important to challenge your lenders. There needs to be mutual confidence and respect on both ends of borrower and lender. Another thing you should consider is the short repayment period of hard money. In combination with the high fees, hard money may be a bit of a risk. Before jumping in head first just because you were able to be approved, you need to evaluate if all the terms to the loan fit you and your situation.

Can Houston Texas Private Money Lenders Really Make Your Dreams Come True?

Depending on your situation, Houston Texas Private Money Lenders may be for you. For example, one universal need for them is when it comes to fixer uppers. The short term repayment period is ideal when it comes to renovating the home and putting it on the market for what is hopefully a quick sale. Additionally, Arizona Hard Money Lenders are generally transparent with you. They are focused on the property and the plans you have for it. If they don’t believe in an aspect of the plans, they will likely be very direct with you. This extends to other things, like extending the repayment period itself. Usually Texas Hard Money Loans are paid off within a year, but if a lender believes in your plans and understands a reasonable extension fee, they are likely to work with you and lengthen the repayment period. This can be anywhere between an additional 12 months or 60. If you have rotten credit and are seeking out a loan, Arizona Hard Money Lenders may be for you. The important thing is to feel confident in yourself, your plans and your lender. If you doubt persists, you can always hire a real estate attorney to look over your lender’s loan agreements and help advise you on whether or not your lender is right for you.

Expectations of Texas Private Money Lenders

Sometimes in order to be approved of a loan, you need to turn to untraditional lenders. But who are they, and what expectations do they have of their borrowers?

Ken and Hannah were looking to fix and flip a home. Ken was experienced in interior design, but neither of them had ever flipped a home. Needless to say, when they turned to their local bank, they didn’t qualify based on the hours of HGTV they had binged.

Ken and Hannah continued to put in research. Their credit score and debt to income ratio did not qualify them with their local bank, so they were interested in pursuing private, untraditional lenders. Before they dove in head first, however, they needed to complete their research to determine if untraditional lenders were right for them.

Who Are Texas Private Money Lenders?

Texas Private Money Lenders are untraditional lenders. They consist of private companies or investors who offer hard money. Untraditional lenders can be great options when you don’t qualify for a loan because they are able to approve more people by focusing on the property’s collateral. Banks solely focus on your financial history. Sometimes even a successful portfolio isn’t enough to sway them. For that reason, many people will turn to private Arizona Hard Money Lenders who focus on the property, the potential and the plans, all before considering your financial history. Your financial history is still important—they want to know you will be a reliable borrower—but it won’t make or break you in the long run.

Are Arizona Hard Money Lenders Right For You?

When Ken and Hannah met with their hard money lender, they quickly learned that there was more to them than meets the eye. They were excited to see that their property was one of potential, and because of it, they were anxious to grab it from what could be a very competitive market. However, a few things were holding them back. Arizona Hard Money Lenders have high interest rates and fees that they needed to consider. Because Ken and Hannah had limited experienced fixing and flipping, they wanted to be sure they could afford the high finances associated with private lenders. Additionally, they found there was a short repayment period. In some cases, this may not be a good thing, but because Ken and Hannah were looking to renovate a home and hopefully sell quickly with a profit, it fit the natural timeline of their fixer upper. Ken and Hannah realized that working with their private hard money lender may be a little bit of a risk with the extra finances, but they decided to go for it. Though, for some extra confidence, they did decide to have a real estate attorney look over the terms of their loan agreement. Sharon agreed with them and confirmed that their lender had a reliable history and that many professional home renovators work with Texas Private Money Lenders for the same reasons. Ken and Hannah were able to successfully renovate their home, and found the expectations of their private hard money lender to be reasonable for their situation, even if they may not be for everyone.