Showing posts with label commercial mortgage. Show all posts

Tuesday, May 29, 2018

Spotting a Business Loan Beware of Hidden Fees in Hard Money Loans ArizonaThat Is Too Good To Be True

Certain fees are to be expected when you borrow money. But there can be hidden fees that you will not learn about until the closing unless you are very thorough in reviewing your hard money loans Arizona documentation.

There is always a cost associated with borrowing money. And legitimate lenders will clearly explain the cost prior to the closing date. They don’t want to invest the time and effort in drawing up the documents only to have the borrower refuse to sign on closing day. But the less than reputable lenders will bury these fees deep in the documentation in hopes that the borrower never discovers them until after signing the loan documents.

Points are not considered a junk fee but are more the cost of creating the documents for hard money loans Arizona. But there are other fees such as document preparation fees, underwriting fees and clerical fees which do fall into the junk fee category. The best way to avoid paying any of these fees to to request a written list of all of the fees associated with the hard money loan. In addition verify which fees will be due at the closing. This will let you know exactly how much you will need to pay in addition to the down payment on the property.

Upfront Fee Scams

In addition to hidden fees that can get added into the loan documentation, there is a scam that includes upfront fees. In this situation, the lender explains that they require an application fee or they sometimes refer to it as an administrative fee to process your application. In essence, they are requiring you to pay them before they decide if they will fund your loan or not. In some cases they say that the fee will be applied to your points once the loan application is approved. But this is all a scam. They are not going to approve your loan application. They never approve any applications. This is just a way to collect fees from unsuspecting borrowers. When you try to call or email the lender, you never get a response and your application fee is long gone. You should never be asked to pay fees before you can apply for hard money loans Arizona.

Get a Second Opinion

No legitimate hard money lender would ever be offended if you ask for a copy of the loan documents so that you can have them reviewed by your accountant and lawyer. Hard money loans Arizona are not as tightly regulated as traditional loans so the legal documents can be very confusing to the average borrower. So it is a very wise choice to ask for a full list of all of the loan fees and a copy of the loan documents to have reviewed by a professional. A hard money loan is a serious investment and you should take every precaution to protect your financial interests. A lending professional will not be offended and will often be impressed with your candor for explaining what you are doing and why.

Monday, May 28, 2018

3 Requirements to Succeed Using Hard Money Loans Arizona

Understanding these three basic requirements of hard money loans Arizona will help to ensure that you can secure your loan. In addition, these tips will greatly improve your potential of success.

Real estate investors who are not familiar with hard money loans Arizona often have many questions about the process and how to best use a hard money loan to its fullest potential. The first question is always about the collateral required to secure a hard money loan. Borrowers want to know how much they can borrow and how that number is determined. All of this financial information is a huge part of the first requirement of hard money loans Arizona. Having a sufficient down payment is critical to securing a hard money loan. Lenders are only going to offer between 65% and 75% of the purchase price of the property. The borrower is required to provide the remaining 25% to 35% in the form of a down payment. This assures the lender that the property will almost always remain more valuable than the outstanding balance of the loan.

In addition to the cash to purchase the property, the lender is going to want verification that the borrower has the cash reserves necessary to pay the costs associated with owning the property such as the monthly payments, the taxes and insurance. If the property is in need of repairs or renovations, the lender might also want to see that the borrower has the means to make the needed repairs to protect the property value.

Be Prepared with a Detailed Plan

Real estate experience is also an important consideration prior to funding hard money loans Arizona. The lender is going to need to understand the borrower’s previous experience in real estate investing to know that they are a good investment. This experience can be demonstrated through past successful investments as well as a clear and detailed plan for the current project. Items such as a detailed timeline, tasks to be completed, comparable property pricing in the area and a plan for marketing and selling the completed property will all show the lender that this project has a great potential for success due to the experience and professional management of the borrower.

Professionalism=Success

As with any business deal, professionalism is going to be critical to the final success of the project. Not having a clearly defined plan and the money to act on the plan is a sure sign that the project is doomed even before it gets started. But having a plan and a detailed process outlined to achieve the goals will show potential lenders that you are experienced and well prepared to start and successfully finish this project. Not only will this preparation go a long way in helping you secure the hard money loan but it will also help to make the project run more smoothly and remain on budget and on time. The effort you invest before the project begins is equally as critical to its success as any time and effort you invest during the project.

Tuesday, May 22, 2018

Tips to Secure a Business Loan Arizona

Securing a business loan Arizona can be challenging. But following a few tips can greatly improve your chances for a fast approval.

Securing any type of loan can be a very stressful process. But the application process for a business loan Arizona can appear extremely overwhelming. Unlike a personal loan application which is fairly simple and straightforward, a business loan application requires a great deal of information about the business and even the personal finances of the owners or principles of the company. To ensure that you are investing your time in a successful loan application, you will want to be sure to follow a few simple tips that have been found to produce successful results.

The business finances are critical to any loan approval as you might expect. The company should have been profitable for at least two years to have a good chance at securing funding. Having financial statements and credit reports in good order before requesting a loan is very important and will save you a great deal of time when completing application. Also having the owner’s information readily available will make the process less stressful.

In addition to financial information, lenders want to have a good understanding of the company, its history and the experience level of the owners and senior management team. This means detailing the birth and growth of the company as well as explaining the business plan and reason for the loan request. Simply stating that it is for growth or expansion is too vague. Explain what the funds will be used for, how they will benefit the company and the expected return on the investment. Details about how the loan will help the company achieve goals in the five and ten year plan will demonstrate strong and experienced leadership and increase the lenders confidence in your business.

Think Local

Unless you have a very large and well established business, a local lender might be a better option for a business loan Arizona. Local lenders tend to place more value on business history, involvement in the community and the local economy. Large national lenders work more from a very strict formula for loan approvals where a local lender has the ability to “bend” the criteria slightly to process loans that are less favorable. Knowing this though, be certain to have a very well prepared and detailed loan application for local lenders. They will be even more motivated to learn about your business and the professional history of the management team.

Be Well Prepared

When seeking any business loan Arizona, detailed preparation is your best tool for success. Detailed financial information and history about the business will help to establish the creditworthiness of the business. This information presented to a local lender in a professional format is going to create a good first impression for you and for your business. And though the process might take some time, you will find that you stand a much better chance of getting your application approved.

Wednesday, May 16, 2018

If You Want to Get Your Loan Approved, You Have to Become Desirable to Hard Money Lenders

When you are going to apply for loans with hard money lenders, you might feel like the “choice is theirs” or that they are in the driver’s seat of the scenario. However, Level 4 Funding shows you how to take control and become desirable to lenders!

For new business owners and those who are trying to grow or expand their businesses to the next level, the right loan can be just the thing to make this dream come true. However, instead of seeking lenders, why not turn the tables and make them want you? Level 4 Funding offers a few thing that hard money lenders look for when approving loans.

Credit score doesn’t rate. It’s good to know that credit score isn’t as important to short-term, alternative lenders as it is to conventional credit institutions and banks. Quite frankly, the biggest and best thing you can do to win over hard money lenders is to be prepared to pony up the collateral. The amount you will need all depends on the size of the loan, but if you have collateral to put up, lenders will want to help you.

In the case of short-term loans, having perfect credit scores and squeaky clean history is not super critical, as it would be in the case of a longer-term loan with a conventional lending institution, it’s still important to have your “ducks in a row.” For example, if you’ve repeatedly ducked out on payments with other creditors, your lender may get cold feet about taking a risk on you. So make sure your financial affairs are in order, and be prepared to explain any dings or mishaps along the way. Honesty is the best policy here in order to establish a mutual trust.

Show them why you want it.

In this world, passion goes a long way. People want to help people who have a dream and are inspiring to achieve success. This is no different with hard money lenders. Professional and reputable ones truly want to see your business succeed (and ultimately see their return on investment). So find not only a lender that you can trust, but one that believes in you, too.

Handle setbacks with a calm attitude.

It’s no secret that trying to secure a loan is a tough thing. Sometimes there are hoops to jump through and unexpected bumps and challenges along the way. How you handle these little challenges and surprises will show the lender how you will likely handle bumps and challenges that are sure to occur in your business down the road. So take a deep breath, relax and think through each problem with a clear head before reacting or responding. Just that simple shift can help you put things into perspective and approach the issue with clarity, and that is very desirable to many lenders who have been borrowers lose their cool — and that’s not cool.

Tuesday, May 15, 2018

How to Understand Repayment Terms for Business Loans Arizona

When trying to obtain business loans Arizona and decipher the sometimes complicated jargon in the agreement, it’s critical to know what is of expected of you in terms of paying back the loan. Level 4 Funding breaks it down.

You need to start with a clear reality about what it’s going to take to get a loan approved — and then be able to meet the repayment term schedule. Terms for business loans Arizona are totally different than home mortgage payments, for example, that you might have for 30 years. These loans at loan-term can range from five to 20 years, give or take, and at short-term, between three and six months to three years. However, the latter will also include higher interest rates.

The short-term business loans Arizona are designed for business owners that need cash and they need it now. This could be for a number of reasons (need to make payroll, want to purchase a building, need to do some important renovations or upgrades to pass inspections) — all of which are time sensitive. These loans can be approved and turned around with cash in hand for the borrower within as little as 48 hours, give or take. However, ultimately, these loans can be more difficult to pay off because of the shorter repayment time allotment plus the additional high interest rates.

With long-term business loans Arizona, the time frame for repayment stretches over a much longer course of time, and they are amortized loans, which means that the loan needs to be paid in fixed installments through the duration of the payment terms. This is similar to how homeowners pay their mortgage — with principle and interest all together. But sometimes there is a balloon payment required at the end of the terms, meaning the borrower much pay the remainder of the loan back in one large sum, which can be difficult as well.

Be sure you are aware of any penalties.

While you would think that paying your loan back early would be rewarded, it can actually work against you. Some loan agreements charge a penalty for early payment (likely because they would like to keep receiving that high interest through the term of the agreement).

Give a professional a call to help you understand the intricacies of repayment terms.

When seeking a loan and understanding all the ins and outs of this complicated application and agreement contract, it’s important to work with someone you can trust. Level 4 Funding’s lenders are professional, experienced and they care about finding you the right loan with the repayment terms that work for you and your business. Give us a call today and let us help you discover how easy and simple the loan process can be.

Thursday, May 10, 2018

How to Make Getting Hard Money Business Loans Quick and Easy

When it comes to getting approved to hard money business loans, it can be an arduous process. But Level 4 Funding offers simple “ABCs” to help you become eligible for loans and get approved fast!

When you decide you want to get hard money business loans for your company, there is a lot you can do to prepare before you ever even meet with a lender. For example, as with most anything, research can begin on the Internet. Do some digging about the types of loans available to business owners like yourself in your same industry and specific to you needs (for example, are you looking to purchase equipment or a building? – there are specific loans designed for each of those needs).

Once you’ve done some initial research about the types of loans out there, do your due diligence on lenders. While there online marketplaces that make getting a loan without ever leaving the comfort of your coach very doable, it’s also important to make sure you have the proper expertise and guidance — especially if you are first-time borrower. That comes from working with a professional lender.

Look for lenders that are local, have experience with loans in your specific industry and who can share their portfolio with you. Getting a good feel for your lender and moving forward on the same page makes the process of applying for hard money business loans much quicker and easier.

When you have made the decision on a lender, you can then decide if you need a short-term or long-term loan.

There are so many different ways to go about obtaining the loan as well as the kind of loan. Once you begin the application, you and your lender can work together on fine-tuning the right terms for your loans.

Once you submit your application, there are some evaluations that take place.

While with conventional banks and long-term loans, the process is much longer, requires a more complex application and proof of multiple forms of documentation, financials, credit reports and so on short-term loans with an alternative lender move much more quickly. The application process and fairly straightforward and the lender is mainly interested in collateral — and not much else. So if you want to move the process along, be prepare to prove what you can provide as collateral to secure the loan. It can even be the equipment or property that you intend to purchase with the loans. It’s a good idea to obtain legal advice when it comes to reviewing the term agreements. Be sure to take your time with all the documents that will require your John Hancock. These terms are binding with that signature. This is also a good time to review the entire contract with a fine-tooth comb to ensure that you haven’t missed any clauses about additional charges, fees or even pre-payment penalties. When you are ready to find a loan that’s right for you, call us at Level 4 Funding today.

Wednesday, May 9, 2018

If You Find Experienced Hard Money Lenders, You’ll Have an Easier Time Getting Your Loan Approved

When you are looking to get your loan application approved, working with professional and experienced hard money lenders will ensure a smooth process. Level 4 Funding offers the following tips to find the right lender.

In the world of loans, finding someone that has a reputable name and that you can trust can mean the difference between a smooth application and approval process and a… not so smooth one. When you are putting the fate of your potential new business or property in the hands of a lender, trust is never more important.

Do your due diligence before you sign on any dotted lines. Look for lenders that have experience in your specific niche, and that have testimonials or references they are willing to share with you. Look online or with the Better Business Bureau to see if you can find out anything about the hard money lenders that is not on their website. You want to make sure that the company has the professional experience to do what it takes to get you the best loan for your needs. This will ensure a smooth and easy transaction.

Give credit to the lender that thinks outside the box.

A fresh or different perspective on the way the loan should be done is always worth considering. If your hard money lenders are willing to get creative to get you the best loan, take that into consideration!

It’s not just about getting the best loan rates.

While rates and your repayment schedule are obviously very important, there are other things that are important too. Sometimes it’s true that you get what you pay for, and you want to make sure you feel good about the advice that your lender providing you with. Look for a local company that is available to speak with you and answer any questions until you feel comfortable with all aspects of the loan contract. Ultimately, it will come down to trust and your gut instinct. Oftentimes, just having a “good feeling” about someone is enough to make your decision about the right lender to get your loan with. The process should be a win-win situation for both the borrower and the lender and if you are both open and honest with one another, that is a great way to ensure the agreement is ideal for all parties involved. So depending on your needs, it’s not always experience, or a local company or fresh creative thinking that wins the day — it’s more about trust and who you really feel can get you the best loan for your needs. Level 4 Funding is a reputable and trustworthy company that would love to be your reliable hard money lenders. Level 4 agents are available for online live chats or give them a call to see how they can be of help to you as you navigate the sometimes unchartered waters of trying to obtain a loan.

Monday, May 7, 2018

Try These Tactics if You Want to Get Your Hard Money Business Loans to Close Quickly

There is nothing like the painstaking process of waiting to see if your loan application has been approved by a conventional lender. Instead of playing the waiting game, Level 4 Funding offers ways to get your hard money business loans to close and fast!

Traditional loan applications are known for being super-complicated to complete, and then the process for the bank or lender to approve can be an even longer, more complicated process! When you’re in need of a loan, time of often of the essence, which is why hard money business loans are the way to go if you need cash in hand and you need it… like yesterday! There are some things you can do to ensure the process goes even quick and more smoothly, even with a short-term loan application which are known to be less cumbersome than conventional loan applications.

For example, being prepared can help get the process off on the right foot. Be prepared to put up some collateral. That is typically one of the most important things you can do to ensure your hard money business loans get approved, and fast! If you are prepared to show that you have the value of the loan (or more) in personal assets (such as a home or car) or you can use the property or business that you are intending to use the loan for as the collateral, that is usually a sure-fire way to ensure a quick process, too. While you likely won’t need to have you credit report, score or a lot of financial statements, it’s a good idea to have those items in order, just in case that documentation becomes needed for the application process.

Working together with your lender to get your hard money business loans approved is another way to ensure a quick turnaround. Remember that although the process can seem daunting, unfamiliar or even a little intimidating, your lender is on your side and there to help you get the loan you need. So work together to get all you ducks in a row or provide the proper documentation he asks for to move the process along. If you are helpful and make the process easy for him, he’ll want to make the process as easy and successful for you, too.

Find a reputable lender

It’s also a good idea to take some time to research some lenders to ensure that you are starting the process of right – with the right lender. You would hate to get down the line with an untrustworthy lender only to have to scratch the process before the loan is approved and start fresh with another lender. Work smarter, not harder! Find the right lender, and the right loan will follow.

Finally, call Level 4 Funding!

Level 4 Funding offers the professional, experienced lenders that will help make the loan process quick and easy. We know that time is crucial when waiting for a loan approval and we do our best to ensure a smooth and simple process!

Saturday, May 5, 2018

Why it’s Important to Find a Flexible Lender When Commercial Real Estate Loan Rates are High

When you need a loan, finding a flexible lender that is able to negotiate for your best interest, even when commercial real estate loan rates are up, can help you get the best value for your money. Level 4 Funding shares why this is important.

Obtaining a loan can be tricky business. In fact, over half of loans that are submitted are typically denied. While this can seem very daunting for someone who is trying to obtain a loan, it’s crucial to remember that there are many options out there when seeking a loan. Conventional loans are very difficult to receive approval for, but there is hope in knowing that non-traditional lenders are there to say “yes” when banks have already said “no.” Even if you have less-than-desirable credit, you are a first time investment purchaser or current times mean high commercial real estate loan rates, you can still get approved.

Traditional banks are very rigid when it comes to approving loans. There is a lot of bureaucracy and red tape that must be dealt with conventional lenders — and they are rarely very flexible. That’s why hard money lenders are a good option. They can be a lot more flexible because rather than focusing on credit score, your business plan or other criteria, they are more interested in the assets of your business or the property you are purchasing which can serve as collateral. You will need to ensure them you have the collateral to put up and perhaps provide a brief outline for the business or property you plan to purchase.

While these lenders deal in short-term loans which typically have high commercial real estate loan rates, if you find a reputable lender who truly believes in your business plan or is flexible enough to negotiate better rates for your loan. However, because short-term loans typically have a repayment schedule that ranges between three months and three years, naturally the commercial real estate loan rates are going to be higher than a traditional long-term loan that allows for many years for repayment. Sometimes the commercial real estate loan rates associated with a short-term loan are simply higher because the lender is making a high risk by approving a loan that would typically (or already has been) declined by a traditional lender like a bank.

There is one more thing your lender might want you to provide.

Many short-term lenders will want you to provide you “exit strategy” from the loan. For example, would you sell the property? Refinance with a more conventional lender once the business starts earning a profit? It’s important to prove how you will build cash flow so you can ensure the lender you’ll be able to make the repayments on schedule.

It’s also important to find a lender you can trust.

While getting the best rates are crucial, it’s also important to work with a lender that is reputable and you truly believe that they have your best interest in mind when creating the loan agreement. Level 4 Funding can help you get the loan you need (sometimes in as little as 24 hours) with people you can trust.

Thursday, May 3, 2018

How to Understand Hard Money Loans

If you learn about the process of hard money loans, you can figure out how to get the best loan to suit your business needs. Level 4 Funding shows you how.

When it comes to learning about hard money loans, it helps to start at the very beginning, with what they actually are. These are unconventional loans that are not reliant on banks or traditional lending institutions for funding. Private sources fund these types of loans, whether it be an individual or a group that helps assist with the funding. Most often, these loans have a short repayment term cycle and are typically used by the borrower to purchase investment properties.

The qualification process for hard money loans it totally different than applying and approval for a traditional loan. In the latter, a borrower needs to complete and submit an application process to the bank or other conventional lender. The process is often very detailed and lots of documentation is required of the borrower. The borrower must also share credit score and history, and provide details about their financial status in order to be considered for the loan.

For unconventional loans, the process is based upon collateral, and the current market value of whatever collateral the borrower is able to provide. Collateral is the value the borrow puts up as a way to offer the lender security of the loan. This could be a car, the person’s home, another building or event the building/property that is being purchased, for example. The lender requires this as security that if for some reason the borrower can’t make payments, than the lender takes over the collateral and can sell it to recover their funds. In this type of loan, the funding individual or group is less interested in the borrower’s credit score or even their currently financial situation. It’s all about collateral.

This is important for borrowers that have less than ideal credit scores or have a ding in the credit history somewhere along the line that makes it difficult for them to obtain a conventional loan. The value of the collateral or the property in mind to purchase needs to have value equal (or likely higher) than the amount that is being requested to borrow. This gives people breaking into the world of investment property purchases a good place to start.

Now that you know…

This is a huge benefit of hard money loans that people don’t often realize at first. While conventional lenders can often be intimidating and the loan applications very challenging, the process of this type of loan is very straightforward. Investment properties, fix-and-flip homes and other property purchases are all great for this type of loan. It offers the cash upfront (and fast!) to make the purchase happen. Then it’s up to the borrower to take their investment purchase to the next level in order to profit to the maximum.

Working with this type of loan has great potential

For those without stellar credit or even those that are just starting to establish their business credit scores, these loans are the way to go. A private lender such as Level 4 Funding can help beginner investors with a short-term loan to build their investor career.

Sunday, April 29, 2018

How to find the right hard money lender for your next project

Just because you cant secure a traditional bank loan doesn't mean you don't have other options, you may have considered a hard money lender but where do you start? What should you expect from a potential lender, and what will a lender expect from you?

A quick google search for private lenders should turn up an endless array of financing options. Because you might need a specific type of lender to match your particular project an online search can prove to be a little overwhelming. You could always try to be more exact with your search terms, trying things like ‘private rehab loans,' or ‘private construction loans.' Being specific with your online searches may help you find the lender that is right for you, but this isn't always the case.

Consider using one numerous lender databases available online to narrow down your financing options. The ideal database would allow you to aim your search for lenders based on the amount of financing you need or will enable you to search for lenders based on your specific project, (i.e., Renovation, construction, commercial, etc).

If you'd rather avoid the hassle of searching for a lender on your own, you could seek out a referral from a licensed mortgage broker. Local real estate investment groups could also put you in touch with lenders they have worked with in the past.

If you find the right lender, the question then becomes what should expect from them and how do you know you're getting the best possible deal.

What should you expect from a potential hard money lender during the application process?

Search relevant government databases to ensure your lender is licensed. Your lender should also be transparent throughout the process. Ensure that they meet their published guidelines related to fees and closing costs. You should also be wary of teaser rates offered by unscrupulous lenders.

Know that every private lender is different and will have their criteria when it comes what they expect from you as a borrower.Ask your lender to be transparent about any documentation you might need throughout the loan application process.

Know what your hard money lender expects from you to get the best deal possible

This type of loan is often used to finance rehabilitation and construction projects.If your seeking financing for renovation or construction, a lender will want to ensure that you are competent and knowledgeable about your project. In these cases, before approaching any lender, have details about the property you wish to purchase, a budget for your renovations and thorough projections about the future profitability of your project. You build up your lenders confidence and gain room to negotiate by demonstrating your understanding of a project's potential.

You need to have a detailed understanding of what your property is worth to qualify for the best possible loan. A private lender usually bases the amount of financing offered on the market value of the property you are purchasing. You won't qualify the largest possible loan if you don't have a good sense of what your property is worth.

Saturday, April 14, 2018

5 Tips to Successful Hard Money Loans

Hard money loans are a great way to begin a successful career in real estate. Following a few tips will ensure your success.

Any borrowing experience can be stressful if you are not well prepared. But understanding the process and knowing about a few tips to follow can make your first experience with hard money loans simple and successful. Even without personal experience this information will give you a confidence that you are making good choices and will have success with your project.

Picking the right lender is a very important first step in the process. You will want to do some research to make sure that the lender has a good reputation and has experience working with borrowers. You will also want to be sure that you are comfortable working with the lender and within the standard terms that the lender offers. Equally important is selecting the right property. You need to be sure that the numbers work on any property that you are considering. Remember that this is a business deal and there should be no emotional attachment to the property. If the numbers won’t end with you making a profit then it is not the right deal for you.

Being Prepared Is Critical To Your Success

Even with the fast funding of hard money loans, you need to have been planning for your purchase for a considerable amount of time. The loan is likely to be limited to 75% of the cost of the property so you will need to have access to the remaining cash. This down payment is your “skin in the game” and also represents your equity in the property. Having the time to save the 25% down payment also relieves the added stress that will occur if you are using another unsecure resource to borrow additional money. You will also want to be sure that you have carefully prepared all of your paperwork. This can include research on the property and your business plan for buying, improving and selling the property. Some lenders will also want to see documentation showing your cash reserve for any repairs or operating costs and proof of the down payment funds. Having your financials ready can help to reduce the time that it takes you to be ready to seek a loan when you find the perfect property.

Manage Your Expectations

It is critical that you begin each real estate purchase and project with a realistic time line. It can be easy to get over excited on the first few projects and start to believe that the work can be completed more quickly than you first estimated. But in almost every case, you will find that the initial time estimate is shorter than the time required to complete the entire project. Be sure to build in a little extra time as a buffer. This will allow you to complete the project without the added worry of defaulting on the terms of your loan. Hard money loans are a great tool to begin real estate investing but you must be sure to make good decisions and maintain realistic expectations throughout the process.

Commercial Real Estate Loan Rates

Do you have an office building, a rehab, or a multi-unit apartment building? With commercial real estate loan rates at one of their lowest, now may be the right time to consider a loan for your next real estate investment.

If you are an owner or looking to purchase a commercial property, there’s good news to be had: Commercial loan rates remain at an all-time low. With the Federal Reserve promising four rate hikes this year, this may not be so in the future. For this reason, this may be the perfect time for you to purchase or refinance a commercial property. Level 4 Funding has the team that can help guide you through the process and help you feel like a well-informed purchaser. Let’s take a look at how commercial real estate loan rates work and the interest rates the different types of lenders charge.

If your Credit Score is 680, you’ve been in business in 2-plus years, and plan on occupying 51% of the building, you may qualify for a SBA 7 (a) loan. If your project is between $2 and $3 million dollars you may want to explore the opportunities for financing from insurance companies and conduit lenders.

Commercial Real Estate loans have lower interest rates because they are collateralized by the commercial property. There are four factors that affect the interest rates for the Commercial loan. They are:

1) The Business and Customer creditworthiness: Your rate will be determined by the credit score of the customer and business, the higher credit score the lower rate.

2) Is the commercial real estate loan fixed or variable? A fixed rate loan is a loan that has a fixed rate for the term of the loan. The variable rate loan is reset from 1 to 5 years and will be adjusted based on current rates. Most people will not qualify for fixed rates.

3) What is the term and size of the loan? Hard money lenders offer loans with higher rates and shorter terms while conventional lenders offer longer loans with lower rates.

4) Prevailing Market Rates: Interest rates move up and down based on the government bond market. Keep informed about the movement in the government bond market and how they will affect your rate.

The Lender Has the Biggest Impact on your Rate

1) SBA loans--rates run 4.75% to 9.25%, the 504 loans are best for loans over $1, 000,000 and come in three parts: 50% from the bank, 40% from the SBA and 10% from the borrower. You will need a credit score of 680+.

2) Hard Money Loans--Rate run 10% to 18% and covers about 20% of the market. The rates are high because the loan is not based on the credit worthiness of the borrower but the value of the property. The loan-to-value runs around 55% for many hard money lenders.

3) Other Lenders--Only a small amount of loans come from Insurance companies and Conduits.

Commercial loans can be structured in three ways: fully amortized loans, interest rates resets, and balloon payments.

You may want to purchase commercial Real Estate or refinance a commercial property. There are wide varieties available for high credit scores and lower credit scores. Call and counsel with Level 4 Funding to find what works best for you in your situation. We offer rates as low as 7.99 percent.

Tuesday, April 10, 2018

Important Considerations when Choosing a Hard Money Lender

Hard money lenders are many real estate investors choice for funding, yet many just getting into the field know little to nothing about this lending option. Let’s take a look at what this type of lender can bring to the table.

Hard money lenders are not held by the same regulations that banks and credit unions must operate under. Because of this, they can offer loans to individuals and businesses with less than stellar credit. Many are private individuals who specialize in several types of real estate investment strategies from multifamily to office to the fix-and-flip model. These types of loans are asset based, meaning that the lender will look at your collateral as the prominent element of the loan. These types of loans are good for investors just getting in to the real estate investment model.

Another positive to those that operate under less regulation is that they are much quicker to funding. This becomes important when an investor is looking to get into a property, do some quick renovations, raise the property value, and get it on the market or obtain a loan from a traditional lender that is based on the property’s new value. If you end up developing a long-term relation with a hard money lender, you will find that you can often receive the funds you need for that next investment property in as little as a few days, compared to a month or more from other types of lenders.

Be sure to check the small print. Are you working with a hard money lender that offers a no-penalty clause for early payments? A pre-payment penalty states if you pay your loan back in full before the actual due date, a penalty will be assessed. The fee is percentage-based or the amount in interest that you would have paid for a set number of months. This can lead to tens of thousands of dollars. If you have an existing loan with a pre-payment penalty, be sure to assess fees before paying off the loan in full to determine if this is the right strategy for you.

Know Your Exit Strategy

While your property may be acting as collateral, hard money lenders do not want to be in a position of laying claim and having to foreclose on a property due to unpaid debt. For this reason, they will want to know your exit strategy. An exit strategy is how you plan on paying off the debt. Most of these loans are short-term, anywhere from 3 months to five years, making this component an important consideration for both the lender and the borrower. A few options are to refinance with a commercial mortgage, renovate and sell, or pay the debt off with business capital.

Know your exit strategy before considering a hard money lender. Going in with strong collateral and a good exit strategy are keys when considering going after a hard money loan.

At Level 4 Funding, we work with hundreds of private hard money lenders. Our rates start as low as 7.99 percent with terms that run anywhere from 3 months to 5 years. Call us to see if we are the right brokers for your next real estate investment deal.

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 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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