Dennis Dahlberg - It Can't Get Better Than This!

Tuesday, March 28, 2017

The 3 Ways to Fund Your Next Flip & Flip

The trouble facing most real estate investors who want to enter the fix and flip business is finding the money to purchase property. Short-term financing through fix and flip loans is available in a variety of forms, each with its own advantages.

Private-Money Fix and Flip Loans

Private money lenders usually takes the form of loans from family or friends. If you are able to offer a return on investment that is better than what these potential lenders can expect from low-risk investments such as interest from a money market account interest or certificates of deposit, they may be willing to lend money at a relatively low interest rate. These investors are willing to lend you money based on your established relationship and good reputation, meaning that there is more riding on the success of your flip than money alone. However, if you are able to take the money and flip a home at a profit to your investors and to yourself, you may be able to establish an inexpensive source of capital for future flips.

Hard Money Fix and Flip Loans

Hard Money Loans can be more expensive than private money loans, but they do have some great advantages. For one thing, hard-money lenders may allow the complete cost of renovation added to the loan, and many will write the loan based on the expected value of the house after it is rehabbed. Often this means that the loan amounts to more than the purchase price of the home, allowing the investor to build a budget for repairs in the loan. The primary disadvantage of these loans is their price, which after points and interest make them an expensive financing option. Additionally, many lenders want to see that you have invested some of your own money in the purchase because it reduces the likelihood that you will walk away from your money—and theirs—should something go wrong while fixing the home. Don’t forget, this is Hard Money Loans can be funded quickly and save a deal that has high potential.

Fix and Flip Loans Made Through Portfolio Lenders

Unlike most banks, which quickly sell the loans they make on the secondary market, portfolio lenders retain ownership of the loans they write. This gives them greater discretion when deciding whom they are willing to lend money. For this reason, establishing a good relationship with a portfolio lender can be of value to real estate investors who wish to hold several properties simultaneously. The rates portfolio lenders charge for using their money, while not as low as those from most private-money lenders, are typically much lower than what hard-money lenders demand. The down side will be the time required to underwrite the loan and these lenders generally require substantial documentation from the borrower.

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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Monday, March 27, 2017

Top 6 Reasons to Purchase and Invest in Apartment Buildings

When people hear about the millions and billions of dollars investors make buying and selling properties, most of them think about duplexes and homes. A good number of people do not know much about buying apartment buildings.

The benefits of investing in apartments are out of this world. Investing in apartment buildings can be one of the best ideas even when the economy is going sideways. Even though there are advantages and disadvantages to every kind of investment, investing in apartments in not a bad idea. As part three of our apartment building blog posts, here are some of the top reasons to invest in apartment buildings.

1. Predictable source of income

The reason many investors prefer buying apartment buildings is because they provide a very steady source of income. When you choose properly, and in a good location and area, apartments will always provide cash flow every month. Most businesses come and go especially in office, retail and warehouse properties. But people are always looking for a place to live.

2. Apartments provide a more affordable housing option

When we get into all economics that explain why apartments provide a cheap housing option, there are so many things to talk about. For example, the difference between the amounts of paying rent and mortgage payments most consumers spend every month is called a gap. Now, if the average rent is $800 per month and the average mortgage is $1200. The gap is 400. When the gap increases, very few people can afford to buy a home. This means they will choose apartments to live in. If mortgages increases the gap becomes bigger, and we experience greater demand for apartments. This is another good reason to purchase an apartment building.

3. Property appreciation

The value of the apartment is based on the Net Operating income the building offers to the investor. The good thing about apartment buildings is that you can escalate the value of the building without investing in new windows, carpet, siding or paint.

When you decide to increase income, reduce expenses or even both, you increase the value of your property. For instance, if the average Cap Rate in the area is 10%, and you increase the Net operating income by $1000 annually, you have definitely added $10,000 to the value of the property. The Cap rate (capitalization rate) helps to measure the ratio between the net operating income and property’s buying price. Cap rate involves three variables that include value, interest rate percentage, and the net operating income.

Hence, the lower the Cap rate percentage, the lower the net operating income will be. If interest rates fall, it is uncommon it see the rates fall, but when interest rate increases, the rates will follow. You can do this by raising rents and reducing expenses. This is one of the most protected secrets of investors.

4. Principal Reduction

Another benefit of apartment building purchase is a principal reduction. Your equity automatically increases each month in apartment building. This is because your tenants are paying the mortgage on your property with their rents. When you receive the monthly rents, you pay out expenses, and then pay the mortgage. With such payments, you are gaining equity and also increasing your wealth.

5. Taxes

Fianlly, another benefit from commercial loans on apartment buildings are that they provide the best tax benefits. In taxes, apartment buildings benefit in two ways: through depreciation expense while you purchase the property, and you can sell the property and re-invest the proceeds into a new property, you will not pay the taxes on the gain. You can never try this with mutual funds or stocks.

6. Numbers do not lie

If you decide to purchase a family home, your expenses consist of taxes and insurance. But that does not mean other expenses do not exist. There will be turnover, resident problems and the like. For example, if you have 10 houses, you have 10 roofs, and probably 10 utility bills, tax statements and remember the time you will be spending from one property to the other.

When you purchase apartment buildings, expenses will include taxes, utilities, insurance, management and much more. But you get to spread out the cost of maintaining the property across all units. It is cheaper to own an apartment building than buying a house.

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Glenford’s Spec Home Story—Are Spec Homes Right for You?

Contemplating adding a spec home to your real estate investment portfolio? Weighing the pros and cons and working with professionals can help.

An Experienced Contractor’s Story

Glenford Branham comes from a long line of savvy real estate investors and general contractors. Starting at just 14 years of age, Glenford has been in the construction industry for 57 years. Originally from Kentucky, he moved to Arizona to enjoy the warmer weather. “Construction and real estate is a family tradition,” he says.

Glenford’s built a few houses in his day—around 40. After his wife passed away last year, he decided to “do something a little different” by tackling a spec house project. He called his go-to contact Tony for assistance with the mortgage loan, but spec home financing is simply not an option at most traditional banks and mortgage brokers.

Tony recommended Glenford work with Private Hard Money Lender, Level 4 Funding, touting the group’s impeccable track record, quick service and competitive pricing. Glenford was sold, picked up the phone and called Mark Gowlovech.

As a general contractor, Glenford also handles commercial construction and is always on the go. He’s actively coordinating several construction projects, all while raising his 12 year old granddaughter by himself. With no time left for added headaches or piles of paperwork Glenford was happy to lean on Mark for the heavy lifting and speedy service his hard money loan request needed.

Speedy Service

Mark swiftly took the reins and got Glenford the financing he needed for his latest real estate project. Glenford smiled as he shared he just received the project permit and would be diving into the construction process shortly.

Glenford was satisfied with his Level 4 Funding spec home loan experience, thanks to Mark. Though this was his first transaction with Level 4 Funding, chances are it won’t be the last. Glenford will be back when his next spec home or specialty project calls.

A Contractor’s Advice

Glenford is a man of few words. When asked to summarize his experience with Level 4 Funding and share advice regarding lending and investments, he said:

“Get with someone you trust to help you

with your lending and your business.”

Pointed advice from a seasoned general contractor, with so much incoming work he has no need to advertise. Glenford trusts his projects to Level 4 Funding, and recommends calling Mark for your next spec project loan.

Are Spec Homes for Right for You?

Speculative homes, commonly referred to as spec homes, are of course houses investors build with the intent to sell for a profit. Some builders prefer to deal in spec homes, and avoid the complications and time needed to customize a project for a specific home buyer.

Review the pros and cons below to help decide if building a spec home is the right investment move for you.

Pros

Moderate Risk: Don’t let their risky-sounding name fool you—spec homes can actually be a fairly conservative investment. Of course you must have or be an experienced builder to confidently secure a tidy profit or conservative turns to risky.

Reputation is Everything: Builders know that spec homes are a reflection on their quality of work and highly visible in the marketplace. Shoddy work will quickly show, and negative news spreads like wildfire. To preserve and showcase their reputation, builders typically take great care to perform their best work on spec homes. Great news for investors and homeowners alike.

Generous Profit: Profits on spec homes vary based on house location, type, and size, but many investors strive to net a 25% profit. Others follow a “sell two, build a third for free” rule of thumb, with a target net of 33% per project. No matter where you fall in this range, spec homes can indeed be lucrative. Just ensure you’re properly estimating and tracking expenses and using the most trustworthy partners you can find.

Cons

Builder Biffs: End up with a disreputable builder and your project stability begins to crumble. Costs can creep up, profits sink down and in a worse-case scenario you’re stuck paying expenses for a property you can’t sell. Or can’t sell for a profit. Do your homework and ask around to ensure a reputable builder is on your side to increase safety and peace of mind.

Customized Competition: Once your spec home is ready to sell, you’ll be competing with custom built homes. Spec homes are intentionally built following rather “vanilla” formats as builders have no idea what customized features the buyer would want. Keeping costs down without sacrificing quality is their primary concern. Your home may lose the battle against a buyer’s ability to choose their specific preferences and build a customized home.

The Great Unknown: Even the most sophisticated and experienced spec home builders can’t predict the future. The real estate market takes twists and turns outside of anyone’s control. One construction company owner built and sold over 20 spec homes in California over a 15 year period. But his spec home profit streak ended when the real estate market headed south and he avoided spec building for 5 years. Now he’s back at it, and his first project sold before it was even finished.

Spec Home Financing Solutions

Decided building a spec home is in your future? Follow Glenford’s lead and call Private Hard Money Lender Level 4 Funding. They can’t guarantee your profits or reduce your project risks, but they can ensure smooth, solid financing solutions available when you need them.

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Violin Soloist and Attorney Share Success via Level 4 Funding

When Sharon Chen and her husband William needed a hard money business purpose loan, they knew just where to go—Level 4 Funding. Busy professionals don’t have time to “play around” to find the right loan, William explained. And Sharon and William are successful, busy professionals indeed.

Success on Stage

Sharon was born and raised in Maryland, to parents originally from Taiwan. Her father is a well-respected physician and both of Sharon’s brothers followed proudly in his footsteps—one works for Johns Hopkins University, the other became a gynecologist.

The only girl in her family, Sharon opted out of medical school but took an equally prestigious path. She started playing the violin at just 2 ½ years of age, and eventually went on to attend Harvard College.

Sharon played the violin in the Harvard symphony and became a concertmaster, which is the highest ranking violinist in an orchestra. As a concertmaster, Sharon led the violin section in maintaining unity, and typically played all of the violin solos during a performance. When it comes to Sharon’s musical talents, her adoring husband William says “she is a genius.”

William is a successful banking attorney handling business investors, legal contracts, and legal consultant work. Originally from Switzerland, he and Sharon met and married in New York. Starting 10 years ago, Sharon unfortunately began suffering from an unusual medical condition, and together she and William have traveled throughout Europe and the US in search of the best medical care and cure. They visited Arizona as one of their destinations, prior to heading back home to New York.

After the New York tragedy on September 11, 2001, William and Sharon decided to head west and make Arizona their home. The couple have been proud Phoenix residents ever since.

Nothing but the Best

When it comes to Sharon’s medical care, William settles for nothing less than the best. Their travels around the world are proof that he puts his money where his mouth is.

William’s high-quality philosophy translates into his family’s financial transactions as well. He originally heard about Level 4 Funding from his trusted colleagues in the real estate industry. Unwilling to waste time or risk his personal finance transactions being handled by a mediocre team, he dealt directly with Mark Gowlovech at Level 4 Funding.

“We can’t afford to take shortcuts. Good work is worth paying for,” says William. “Go where service and quality count, like Level 4 Funding.”

William speaks from experience, and just wrapped up his second transaction with Level 4 Funding. He is impressed with Mark Gowlovech professionalism and expertise, and glad he took his colleagues’ advice to reach out to Mark when he needed a quick response on his first loan.

“He’s very easy to work with,” says William, “and he takes time to understand your story and situation. He’s great at putting everything together, and finding ways to make solutions fit your needs.”

Like many of us, William knows that some traditional lenders can be extremely slow to make decisions, and require hours of time to wade through large stacks of paperwork. William prefers the private client boutique-style experience he’s received with Mark and team.

Success Tips from the Professionals

William and Sharon’s track record as successful professionals speaks for itself. Among the best of the best at what they do, they shared additional tips for life and lending.

“Life is made up of two things,” advises William, “your occupation and your hobbies and leisure pursuits. Work hard to get paid well at your career. Then pay someone to work hard and give quality service and results to you.” The cost of incredible service and better quality is worth paying for, William stated firmly. Getting a high-quality loan has just as much value as buying reliable quality clothes and dining at the best restaurants.

“Hard Money Loans are serious business,” William continued. When you need something done, find a professional who can help you get the job done right, and go with them. It’s the same as a critical home repair. If you have a plumbing issue, you find the best plumber and have them handle the job. If you try to do it yourself, you risk errors and waste time—time you could be spending making more money in your area of expertise, or time you could be spending enjoying leisure pursuits. “Don’t play around to try to find the [least expensive] deal,” he advised. “Go where service and quality count, like Level 4 Funding.”

William and Sharon continue to be highly complementary of Mark and team. As two-time clients and connoisseurs who settle for nothing less than the best, they should know. In summary William stated:

“Excellent work, Level 4 Funding makes things a lot easier. I’m busy, Sharon’s sick, and we can’t afford to take shortcuts. Good work is worth paying for.”

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Tuesday, March 21, 2017

FIVE TIPS FOR FINANCING INVESTMENT PROPERTIES

According to a study conducted by the online real estate site Trulia.com, becoming a homeowner is still as important as ever among consumers. In 2016, 75% of those surveyed dream of becoming a homeowner one day, although twenty-two percent of respondents expect it to become increasingly harder to acquire a mortgage.

If you are one of the lucky Americans who already own a home, yet is considering buying an investment property, pay attention to these five important ideas for financing your real estate investment transaction.

How to Find Financing

If you are new to the real estate investment world and have a clean credit report and low debt ratios, a traditional bank is your best bet for financing. Many of the large banks can offer low rates on mortgages to investors with good credit. While investment money is typically a little more expensive, you can still expect great rates that can increase your buying power.

According to Bankrate.com, the average interest rate on a conventional 30-year home loan is 3.65%, with 15-year rates hovering around 2.50%. These rates are some of the lowest in the history of mortgage lending. If there was ever a better time to finance real estate, we haven’t seen it.

Alternative Lending Private Hard Money In California

Portfolio loans are mortgages that a bank keeps on their books, rather than selling on the secondary investment market. Many credit unions or smaller banks offer these types of loans to investors with multiple properties. The loans are typically a little higher priced than their big bank counterparts but have easier qualifying terms.

Portfolio loans are useful; having comparatively fewer regulations associated with them and higher credit limits. You can find portfolio lenders by reaching out to local investment communities or asking your real estate agent. Real estate agents have an extensive network of lenders with which they work, and many have nurtured those relationships specifically for the benefit of their clients.

Seller Carrybacks

A “seller carryback” is a loan, or portion of a loan, that the seller provides and holds. For real estate investors, seller financing is one of the best options available. A property that is seller-financed means that the seller has agreed to personally finance the mortgage at a “market” interest rate with a specified down payment. These loans typically have a shorter term but are a great option for investors who look to re-sell the property in the near future.

The seller has the possibility to either finance the entire property or the difference between the real estate value and the loan available to the consumer. These loans are an excellent opportunity to get immediate financing with a minimum amount of documentation and regulatory headaches. A realtor or escrow company can assist with drawing up the mortgage docs.

Low Capital? Pursue a FHA 203K Loan

FHA loans are a great strategy for fledgling investors with little start-up capital. With a down payment of only 3.5%, an investor can finance the purchase balance, and with repair costs allowed to be calculated into the loan balance. The only downside to 203K loans is that the buyer will have to live in the property for one year before they can rent it or place it on the market.

There are important details to consider when enlisting these types of high-LTV loans. With a smaller down payment, your loan balance will be higher, which means it is vital to determine your cash flow before considering it as a rental property.

Private Hard Money Lending Solutions

Successful and savvy real estate investors are always seeking to build up their portfolio of properties. A financing strategy many of these investors utilize is private hard money capital. Private lending can come from family or friends, but there are also private money lenders that can provide quick financing at comparative rates.

House flippers and fixers typically use this type of funding to snap up below-marked priced rehab properties quickly. The rate may be high, but if you plan to quickly turn around and sell the property, you can cut the annual percentage rate in half

Private Hard Money Pools

Private lenders use funds pooled from investors to provide real estate borrowers with quick access to the capital needed to finance their properties. There has also been an explosion in this market with the addition of crowdfunding for real estate. According to current regulations, accredited investors with more than $ 1 million (excluding their home value) are eligible to participate in such crowdfunding endeavors.

Putting Your Retirement Funds to Work

If you own a Solo 401K or SEP IRA, you can legally use those funds to finance an investment opportunity. For years, people have been using their retirement funds to start a retail business or invest in one, but you can also use it to finance your real estate investment.

Why Use Solo 401K for Property Investment?

• Access to tax-free capital from the sale of investment property

• You have tax-deferral benefits associated with the capital

• You can invest freely with the capital

• Financing of real estate projects with tax-free, non-recourse loans

• Ability to choose from a wide variety of investments

Using a Solo 401K plan to invest in real estate comes with a few restrictions. First, you must put the capital gains or net income back into your 401K plan. Second, all costs and expenses involved with the investment property should originate from the retirement account.

While it does require a fair bit of due-diligence, investing into real estate is a great opportunity to take advantage of record-low mortgage rates and use them to make money. There are few better advantages in life than earning profits with “OPM” – Other People’s Money.

With the popularity of real estate crowdfunding sites and an extensive selection of private money lenders to choose from, access to capital should not be an issue, as long as you are a responsible investor who has done his or her homework in advance.

By Nema Daghbandan, Esq. | Geraci Law Firm || 21-Mar-2017

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Monday, March 20, 2017

How To Spot A Shark Among Hard Money Lenders In California

In a perfect world, every business would have good intentions and want to do nothing but the right thing. Sadly, that is not the case, and some Hard Money Lenders in California are ready to pounce and unsuspecting borrowers like sharks going in for the kill.

It doesn’t happen often, but from time to time there have been shark attacks in the waters off the coast of California. While dangerous, the larger problem for people is not the sharks in the water but the ones on land. No, not Land Sharks like from the old Saturday Night Live sketches or from “shark-nadoes” from the SyFy channel movies.

The sharks people have to worry more about are the unscrupulous Hard Money Lenders in California. They may appear nice. They may act like they are your friend. But if you are not careful and let them get too close, they can make you wish you were swimming with actual sharks rather than doing business with them.

How To Spot A Shark Among Hard Money Lenders In California

In the ocean, it is pretty easy to tell what’s a shark and what isn’t. So when one does get a little too close for comfort you can move away. However, when it comes to Hard Money Lenders in California, it is not as easy. The sharks can be a lot like the good guys. They can say all the right things and appear to be your new best friend while secretly plotting to kill your dream and take you for everything you own.

So—how do you avoid a shark in a sharp suit pretending to be your friend? There are ways to see a shark coming before he/she gets too close to bite:

• Upfront fees or Success fees: If the broker is legitimate, he or she will be compensated by the lender—not you, the borrower. If they want any sort of fee upfront or try to hit you with a “success” fee because they actually did their job right, take your business elsewhere. Something shady is going on.

• Experience: This does not mean an inexperienced lender is a charlatan. But with the barriers to becoming a loan broker being as low as they are, it helps to know about their experience before getting into bed with them. Do they know what they are doing? Have they been successful more often than not? Dig into their history. If any red flags pop up, take your business elsewhere.

• Exclusivity: If your broker works with just one hard money lender in California or only a few, be worried. The better brokers will have relationships developed with numerous lenders and will cultivate more as often as possible to get you a better deal. If they only work with a few, chances are they were created for the sole purpose of funneling clients to those lenders.

• Careful thinking or flooding: a good broker is going to carefully review your application and needs and send your loan package to a select group of hard money lenders that are more apt to approve your loan. A not-so-good broker is going to flood the market with your application in hopes that someone will bite and give you an offer—but not necessarily a good one.

• The Commission: a good broker will take a modest fee from the lender upon the completion of the deal. A bad one will try to take a larger one or charge ridiculous fees. Do your homework, and you can avoid these guys.

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Hard Money Loans in California Just One Way To Get Your Pot Business Started

Federally insured financial establishments are not allowed to work with pot dispensaries but if you want to get into the business, you have to get your money from somewhere. Hard Money Loans in California are one option, but there are others.

It probably still sounds strange to some, but depending on how you do it and which state you live in, it can be legal to sell marijuana. If the media has taught us anything, there is some serious cash to be made in legalized pot. However, since the federal government does not recognize it as legal, federally insured financial institutions are not allowed to approve loans for marijuana dispensaries or even take deposits from them.

So—does this mean you have to be already independently wealthy to open a pot dispensary? Of course not! There are ways to find the money. Hard Money Loans in California are a common method, but they are far from the only option available.

Options Other Than Hard Money Loans in California For The Pot Industry

Hard money loans can be obtained to get the capital you need to get started, but what if the terms are not that friendly and you have already hit up every other hard money lender in the area? Are you screwed? Is this guy dictating such terrible terms because he knows you are screwed?

You aren’t, of course. But it will get a little more challenging to find your funding. The following are a few options:

• Friends and family: It can be embarrassing and hard to ask your friends and family to invest. Doing so certainly comes with an element of risk (how do you tell your brother to quit sticking his nose in the business when he put up $50,000?), but your family and friends are less likely to charge you an insane amount of interest.

• Attend industry events: If you want to find someone who is pro-marijuana and could be interested in investing in a dispensary, attend a trade show, conference, or some other kind of gathering. They wouldn’t be there if they were not interested, and if they don’t have the money to invest, they may know someone who does.

• Private equity funds: This will probably not work if you are trying to get started, but if you are established, have a brand, and want to expand, private equity firms are becoming interested in the market and may be willing to strike a deal.

• Foreign investors: According to some cannabis industry insiders, there have been some Chinese investors making waves in Oregon of late. The talk is just being classified as “rumor” for now, but if you are running out of options, it is something to keep in mind.

There Are Always Options…

If you want to get into the business bad enough, but don’t want to sell your soul to get approved for any Hard Money Loans in California, there are options out there. You just have to look for them and be open to the possibility.

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