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Friday, January 10, 2020

The Pitfalls of the Past: Dodd-Frank and Arizona Hard Money Loans

How has the Dodd-Frank Act influenced Arizona Hard Money Loans during and after the Great Recession?

It’s the mid-2000s. The housing market is on the rise as the price of homes increases. Due to this favorable uptick, more people are looking to acquire loans to buy houses. Lucky for them, there are less banking restrictions, and many people with subprime credit are getting funded. It seems great. The housing market continues to boom. Prices continue to rise. The economy’s strong. All of a sudden, Freddie Mac won’t accept dicey, subprime mortgages. This decision leads to peril for some major lending institutions who find themselves unable to get returns on their investments. Bankruptcy soon follows. As banks struggle and closely watch subprime borrowers, indirectly, the value of homes begins to fall. More banks go under, the housing market collapses, and the stock market takes a nose dive. Cue the Great Recession. So, in attempt to learn from history, or avoid the fate of repeating history, what does the government legislate? Answer: the Dodd-Frank Act.

Dodd-Frank changes the lending game, especially regarding Arizona Hard Money Loans. A portion of the Dodd-Frank Act lays out the Mortgage Reform and Anti-Predatory Lending Act. This act restricts the circumstances in which Arizona Hard Money Lenders may lend money to individuals desiring to purchase personal residential property. Other restrictions for residential loans are added as well. Those giving out Arizona Hard Money Loans must verify if the borrower is able to repay their loan.

As a result of this, Arizona Hard Money Lenders shift to focus on investors looking to rent, sell, or commercialize real estate. Mainly because the Dodd-Frank Act does not limit businesses in regard to hard money, instead, it is interested in protecting the US economy from experiencing another subprime and residential lending apocalypse.

Post Dodd-Frank: Arizona Hard Money Loans

While this creates challenges for individuals looking to receive help after struggling with bankruptcy, subprime scores, or foreclosure, it has become a boon for real estate developers, especially where conventional lending was scares in the past.

Who are some of the main recipients of Arizona Hard Money Loans today?

So, post-Dodd-Frank, if residential lending is limited, who uses Arizona Hard Money Loans today? Well, to start, flippers use Arizona Hard Money Lenders to finance renovations on outdated homes. Many flippers use hard money to cover acquisition costs of property. Other flippers purchase property with their own money and use Arizona Hard Money Loans to cover the cost of renovation, or a particular portion of renovation such as roofing, cement, or plumbing. After completing the flip, the property goes to market, hopefully bringing in a good return.

The next category of individuals is those who are looking to renovate to rent property. These individuals, like flippers, use Arizona Hard Money Loans to acquire properties or finance costly portions of the renovation process. Once the property is completed, it is marketed to the public in order to rent. After this category of borrowers, there are contractors who look to build and sell property and businesses that look to expand their property or projects.

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

NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About: 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.
© 2019 Level 4 Funding LLC. All Rights Reserved.

Thursday, January 9, 2020

Where Banks Fall Short, Arizona Hard Money Lenders Close the Gaps

Arizona Hard Money Lenders offer more financing options to the public.

For most individuals, conventional lenders such as banks and credit unions are the primary means of acquiring property. Going through the real estate and mortgage process, finding the right sale price, agreeing upon a comfortable interest rate are all steps in the process. Acquiring a traditional residential property through the banks takes a 2-year work history, a decent to high credit, and a willingness to complete a long list of stipulations. Rigorous credit checks and paperwork required of potential borrowers. Months of negotiation between real estate agents, financing sources, appraisers, and loan originators. In the end, the reward for the wait is enticing: some of the lowest interest rates are available through home loans offered by banks. Acquiring a home loan in the low single digits is possible if the credit score, down payment, and market are right. On top of that conventional lending offers individuals long-haul financing, fifteen to thirty years are common loan durations.

While conventional home loans are great for those looking to live in the real estate they finance, they do not meet all the lending needs of the market. One of the main reasons for this is that conventional lending institutions often shun commercial borrowers. While conventional lenders are willing to lend on a property that is in great condition and that will be lived in, they tend to frown upon lending money on undeveloped or distressed property, property that individuals are unable to live in.

This is a tough pill to swallow for commercial borrowers who are looking to purchase property at wholesale value in order to renovate and generate a return. For example, a flipper may want financing to acquire a home, replace a plumbing system, and add coat of paint. By using financing, the flipper is able to make minimal renovations and maximize a property’s retail value by ameliorating its distressed status. However, banks will not lend on distressed property and another financing source is needed. Aside from the flippers, those who build spec homes to satiate general market appeal or those who renovate homes to rent fall in the same difficult category of acquiring conventional funding.

Arizona Hard Money Lenders Help Real Estate Investors Acquire and Develop Property

Where the bank fails to fund, another lending source has filled the void: Arizona Hard Money Lenders. By requiring different and simpler stipulations than the bank, Arizona Hard Money Lenders are able to furnish loans on distressed and barren property allowing commercial investors to acquire returns from business ventures.

Arizona Hard Money Lenders advocate those initially rejected by conventional lenders.

Hard money is quick and painless to receive. Arizona Hard Money Lenders allow borrowers to receive the money despite subprime credit, foreclosure, and bankruptcy. Talk to your hard money broker today at Level 4 Funding to see if receiving money from Arizona Hard Money Lenders is right for you or your business venture. Find the interest rate, term, and lien amount to set your profit-generating business idea into motion.

Wednesday, January 8, 2020

Why Arizona Fix and Flip Loans Are Becoming Increasingly Popular in 2018

With the upward trending of the real estate market, Arizona Fix and Flip Loans are on the rise.

According to a recent data study done by ATTOM Data Solutions real estate flip returns are down: “Homes flipped in the second quarter of 2018 yielded an average gross return on investment of 44.3 percent.” The article continues to state that these returns are “down from 47.8 percent in the previous quarter and down from 50.0 percent in Q2 2017 to the lowest average gross flipping ROI since Q3 2014.” In other words, flipping returns are at their lowest since 2014 according to recent data collections.

So, what is leading to the down turn in flipping returns? In answer to this, another publication from CNN states that “high home prices, hot competition and very, very few available homes to buy are combining to make this popular trade ever more risky.” In other words, the flipping market is getting oversaturated and there are not as many available houses as there used to be. Due to a limited supply of available housing, the market seems to be shifting towards building rather than flipping since retailing a spec homes can often hold a stronger return than flipping a home.

Adding to the difficulties for flippers, even the purchase of distressed property is down. Suggesting that it is harder to find these types of properties in the current real estate bull market. ATTOM Data Solution’s posting continues to iterate that: “32 percent of home flips purchased via distressed sale, down from peak of 68 percent.” Wow! That is a 36% drop in distressed purchases since 2010. This is concerning since the acquisition of distressed properties is often a great way to make a profit by finding real estate that needs minimal renovations to obtain favorable returns, rather than having to buy property at higher rates.

Why Are Arizona Fix and Flip Loans Becoming More Popular?

On the brighter side of things, financing is becoming more available to flippers which reduces risk and offers greater returns. ATTOM Data Solutions report goes on to state that in 2018 “39 percent of home flips [were] purchased with financing.” Over the past couple of years, the flipping market has seen an overall uptick in financing. The report reasons that this uptick in financing has to do with the fact that with higher market price for homes: “it’s now more difficult for investors to buy with cash than previously.” With the higher prices required to acquire property, it seems that it is more favorable for real estate investors to keep their cash flow and obtain Arizona Fix and Flip Loans from Arizona Hard Money Lenders.

Arizona Fix and Flip Loans help real estate investors to generate greater returns with less cash down.

While Arizona Fix and Flip Loans allow investors to maintain cashflow, this not the only reason real estate investors are financing. Real estate investors are getting consistent returns with less cash down. This means, according to ATTOM, that with the amount of cash to complete one flip, many flippers can net on average “$30,000 per flip after paying $5,000 to $10,000” in Arizona Fix and Flip Loans granting a net annual return of “$90,000.” Three for the price of one is not that bad!

Tuesday, January 7, 2020

Establish a Steady Income with Arizona Rental Property Loans

Use Arizona Rental Property Loans to start your business.

Anno Domini MMXIIV AD—Giovanni Concato moved to Southeastern Arizona to try his hand in the American mining business to make American money, good money—more money. For years of his life he had lived in northern Italy. He, like his father, grandfather, and great-grandfather, had come of age and worked in the marble mines in Carrara, Italy found in the northernmost part of Tuscany. His city was beautiful, nestled between the low mountains and the Mediterranean shore line. Cobblestone streets, stone cathedrals, and brick buildings abounded.

Upon reaching the age of 30, Giovanni grew tired of mining marble. He had neither a woman nor a child binding him to his town. Though he had few academic credentials, he could work large machinery, manage large groups of workers, and complete projects in a timely manner. His supervisors loved him. But overtime, Giovanni came in contact with an international contractor furnishing skilled labor for larger mining projects. Through this company, Giovanni found work in the copper mines of Arizona. A brisk application and relocation process followed.

Having learned English in grade school and possessing a working knowledge of and certification to run heavy machinery, Giovanni rose in paygrade quickly. Over the next few years he saved a considerable amount of that money and established citizenship. This was great. However, something irked him—Giovanni paid steep rent for such a small town, a town where general mortgage payments seemed to be considerably low. In fact, at the time, Southeastern Arizonan rentals nearly charged as much if not more than what a conventional, monthly mortgage was.

Arizona Rental Property Loans Help Establish Long-Term Rental Income

With his savings, Giovanni acquired a private lender offering Arizona Rental Property Loans. He paid 50% LTV on a property to be matched by the lender at the same amount. Giovanni’s investment grossed $25,000 a year less the $7,000 paid in hard money lending fees. He liked the return. He strengthened the return by refinancing the property with a conventional lender for a lower interest rate. Within a few years, Giovanni had paid off his investment and was receiving rental cashflow together with his mining income. The time came to acquire more hard money Arizona Rental Property Loans. After bridging these loans in favor of lower interest rates, his profits continued to grow.

Talk to your hard money broker to see if Arizona Rental Property Loans are right for you.

Eventually Giovanni hired a property manager to manage his property. Here and there, after paying off a loan or two, Giovanni took out more Arizona Rental Property Loans to receive more rental property returns. After a few more years, he had a strong side business that seemed as though it could last for years, establishing both rental cash flow and home equity simultaneously. Giovanni was happy with his business and with what he had built. Not only was he earning a good living working for the mine, but he was earning a good living with a business he had built from the ground up thanks to Arizona Rental Property Loans.

Monday, January 6, 2020

Get Money Now: Arizona Construction Loans for Suburban Families

Use Arizona Construction Loans to build the home you need today.

John and Sally were high-school sweethearts. They grew up in the same small town. They had similar friends, interests, and dreams about life. The year they turned 18, like any Nicholas Sparks book, John bought a diamond ring, staged an elaborate proposal, and asked for Sally’s hand. Sally was enamored of John. An autumn wedding in the White Mountains soon followed. The air was cool and crisp. The pastor read their vows and quoted forgotten words form an old book. Tears of joy fell from Sally’s face. John grinned. The honeymoon soon followed.

Years later, they are cramped in a two-bedroom house with three children. Thanks to Nicholas Sparks or some unseen deity—the cancer theme was removed from the plot—John and Sally, alive and well, still love one another, but it gets stressful at times with crying children, occasional disputes, and John working late nights trying to survive the contracting business. “John is a good man, he is a good man,” Sally muses. She knows that sixty to seventy-hour weeks are just part of getting a business up and running, just a part of the American Dream.

Sally feels like a sardine in a can, though. Add to the can clutter, screaming children, and diapers. Take from can John who is still at work and will get home late to stuff down a cold casserole that has been on the table for some time. The housing market is booming. John and Sally live in the Greater Phoenix suburbs. Sally sees her friends who have husbands working a nine-to-five, who come home to a nice dinner every once and awhile. Sally sees her friends taking out loans to buy three and up to four-bedroom houses. Each kid has his or her own room. Each couple has space to breath and spend an occasional tender moment together at night. A full-sized table to have dinner at. A walled-in yard for the kids to play in. A home to live a life in. A life they dreamed of.

Arizona Construction Loans Help Families Build a Dream Home

Sally remembers that they bought empty suburban lot after the last recession when prices dipped. John got a good deal on the property. “The land is paid off. John is a contractor. He could build on it, couldn’t he?” Sally is excited. Sally wants a home like her friends. Sally wants an ideal family and an ideal life for her and her sweetheart.

See if you qualify for Arizona Construction Loans today at Level 4 Funding.

John comes home. Sally talks about building on the land by using Arizona construction loans. John smiles. He has worked hard over the past few years. Business has done well, and their savings could handle a down payment. Lucky for them, John know a few private lenders who have financed previous projects and who might be willing to lend out Arizona construction loans. Within a year, John and Sally use Arizona Construction Loans to finance building their dream home. After completing the property, John and Sally bridge their loan from private hard money to conventional financing. They feel happy with their decision.

Sunday, January 5, 2020

Benefit from Arizona Bridge Loans: Invest and Receive Quicker Returns

Weigh the short-term and the long-term with Arizona Bridge Loans to find an ideal investment situation.

According to an article in Investopedia, a Arizona Bridge Loans “is a short-term loan used until a person or company secures permanent financing or removes an existing obligation.” This means that the goal of a Arizona Bridge Loans is to obtain some sort of short-term loan in order to secure an investment. In the case of real estate investment, the goal of a bridge loan is to acquire possession of a property within a limited amount of time in order to obtain a more favorable loan and interest rate later.

For example, a real estate investor may use hard money Arizona Bridge Loans to acquire a distressed property, a property that conventional lenders will not finance, for $100,000 at an interest rate of 7% to 15%. After the investor puts $50,000 of his or her own money into renovation on top of the $100,000 acquisition fee, the investor may be able to secure a long-term loan, which would greatly reduce the interest rate that the real estate investor is paying, say to 5% interest.

The long-term goal of a Arizona Bridge Loans is to acquire long-term financing because this would greatly reduce the amount of interest paid on hard money. Hard money is beneficial for the ease of acquisition it brings. But, on the other hand, hard money comes at a cost. It is expensive, with higher interest rates than conventional lenders. Paying up to 15% plus in interest for a long period of time can be crippling. However, if the end goal is to transition to a conventional loan at a lesser interest rate, then the burden of hard money can be greatly reduced.

Arizona Bridge Loans: The Short-Term and the Long-Term Perspectives of Real Estate Investing

For many, the ability to switch out from hard money to conventional lending is out of the question. This may be due to credit score, credit history, foreclosure, or bankruptcy. The things that typically scare conventional lenders off since they paint a negative image of whether or not a borrower is able to pay off his or her loans.

Less interest is more gross. Arizona Bridge Loans may be the business solution for you!

But, on the other side of things, if an individual borrower were to have a favorable credit situation and a stellar credit history, bridging to a conventional loan may be a favorable strategy. Not only would a bridge loan allow such an investor to acquire wholesale property at an accelerated rate in order to get an edge up on other investors chomping at the bit for coveted property, it would also allow such an investor to convert high interest into low interest until the desired property generates a desired return. For those that renovate to rent property, this is especially a benefit because a lower interest rate would guarantee lower annual payments to the lienholder resulting in higher gross.