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

Friday, April 13, 2018

Hard Money Lenders: What Rehabbers Need to Know

You find a house that you would like to rehab and flip, but you have never done this type of project before. This is what you need to know when considering getting a loan through a hard money lender.

Time is of the essence when purchasing a property. Especially in today’s market when many sellers are faced with multiple offers. It’s important to have a lender you can work with in a moment’s notice and one that you can develop a long-term relationship with. Various lenders have different requirements. Hard money lenders will either loan on appraised value after repairs or others will loan on the purchase price. You want to find the lender that will loan on the appraised value. A breakdown of the fees will be given to you by the lender, some of them are loan points; closing fees that can include escrow amount, document fees and notary fees; and the interest amount.

Once the hard money lender decides to proceed on your opportunity, you will have a response such as: “We will lend you 60% of the ARV (appraised repair value), 5 points, 500 document fees, 6-month balloon payment loan at 10%.”

Assuming the property is appraised at $200,000, then your loan will be 60% or $120,000. Upfront costs are $6,000 points plus $500 doc fees. $1,167.60 is the loan payment until the property is sold or 6 months is up.

The Lending Process

1) Talk to the lender to see what they require and what you will need

2) Find a proper deal and put it under contract

3) Contact the lender again and inform them about the property you found, repair costs and what you think the ARV is

4) Have the appraiser value the property, either from the loan company or a list that the lender has supplied you

5) If the lender requires, place the documents they need in Escrow

6) The lender will inform you if they will or will not fund the loan, at what amount, and under what terms

7) You set the date to close the loan, either at the title company or the lawyer’s office. The loan company will issue the checks. If the buyer has cash coming back, the loan company will issue this check as well

In recapping, a hard money loan can be used to acquire distressed properties. The speed of the loan is much faster than conventional financing, usually 2-3 days compared to 30-60 days.

The hard money loans are for terms of 1 to 5 years with interest rates of between 10% to 20% and points between 4% to 7%. The advantage of using a hard money lender is that there is a low threshold for the securing of the loan. It is based mainly on the property value and not your credit or income. A drawback is that, with some lenders, you will need to have the cash to do the repairs and either flip the house or rent it within 6 months. Contact Level 4 Funding to talk with the people who know how to guide you through the process. It’s important to consult with experts as you move forward, especially if this is your first adventure into rehabbing.

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.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Wednesday, April 4, 2018

Real Estate Values Are Continuing to Climb Up to Record Levels Again! You’re Making Moola Again!

Technorati Tags: Private Hard Money lender,fix and flip,hard money lender

With a booming economy and a strong GDP coupled with low
interest rates, home values in the South West are marching to
new record highs. Southern California home values are approaching
the boom prices that last occurred in 2006. Many home owners
are selling their homes within days, and the demand is continuing.
Some home owners are receiving multiple offers and builders are
experiencing very strong demand. Although the demand is not as
it was in 2006, with home builders using a lottery system to pick the
buyers and buyers camping at the sales office for days, there has
been a steady increase in demand.

Las Vegas had the biggest dramatic swing in prices. From the
peak in 2006 to the bottom in 2002 sellers were getting out of their
homes by the 1,000’s. However, over the past 5 years prices have
increased an average of 14%/year with the last 12 month's average around 12%.
San Francisco is the hottest market with prices rising like a rocket and demand
is at a very hot pace.

Over the past 5 years San Francisco price increased a
whopping 15%/year. However the past 12 months have slowed
a little with an appreciation of 10%.

(For a PDF of this Graph Click Here)

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC

Monday, April 2, 2018

How to evaluate Commercial Real Estate Loans

There are many commercial real estate loan companies. How do you tell the good from the bad and the ugly?

Commercial real estate loan rates were ridiculously low until recently when rates started moving up. The ten-year government note has moved from 1.44% on January 1, 2018 to over 2.85% on Friday, January 9, 2018, with projections up to over 3%, 3.5% and 4% in the next 60 days. You most likely will not see current rates this low again in your lifetime. Commercial loans are at these low rates because commercial real estate loan companies are sitting on an ocean of cash, nearly $2 trillion dollars. Commercial investors still feel hesitant, however, to overextend with loans from the shock they experienced by the recession of 2008.

So just which commercial loan is best for you? A life Insurance company, a conduit, a credit union, an SBA lender, a commercial bank, a USDA Business and industries lender or even a hard money commercial lender? A life insurance company offers the most attractive commercial interest rates that are only 0.35% to 0.50% higher than the prime residential mortgage rates. Be aware, few life insurance companies will touch commercial projects smaller than $5 million. The project must be very standard and cannot be older than 20 years.

The next avenue which is available is a CMBS where commercial real estate loan rates are 50 to 65 basis points over the prime residential mortgage rate. For projects between $3 to $5 million and up, a conduit may be an appropriate choice for you. They will also finance older properties. For projects with good credit principals, banks and credit unions may be a good option. The rates run typically 0.75% to 1.50% over prime, 30 residential mortgage rates.

SBA and USDA Loans

SBA, if you qualify, should be considered first. The standard 7a SBA loan is 2.75% over prime floating. With the SBA you can quality for a 90% loan-to-value and the loan is fully amortized over 25 years. You must have a credit score of 700-plus and financials for the last several years. The USDA loan is less attractive. The loans are made through banks and guaranteed by the USDA and they are similar to SBA loans--2.75% over floating prime and fully amortized over 25 years. These properties must be located in eligible rural areas in order to qualify.

Although an effort has been made to quote current rates, this is a fluid market and, as pointed out, rates have increased since the first of the year and are fluctuating.

Once underwritten, residential mortgage companies can sell the mortgage to Fannie Mae or Freddie Mac. The illiquidity of the commercial market, since they do not have an agency to sell their underwritten mortgages to and these types of loans are seen as higher risk, results in commercial mortgages 0.35% to 1.50% higher. Before applying, you need to get all your ducks in a row including property type, projected cash flow, age of property and projected operating expenses. For many real estate investors who require quick capital for their next project, a hard money loan is the answer. Call us at Level 4 Funding for a no-obligation quote.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

The Top Differences to Watch for with Private Hard Money Lenders

While there are over 600 private hard money lenders in the U.S., no two are created equal. Understand the differences and what to look for when choosing a lender for your next project.

Looking for a short-term loan quickly? Need 7 to 10 days? Looking to purchase residential and commercial property for purchase and renovation? Obtaining quick capital via a private hard money lender may be your best option. In fact, this is one of the primary forms of financing for first-time real estate investors. Let’s take a look at what are the marked differences among the various lenders.

Some private hard money lenders focus on properties in relatively good condition, while others will fund properties in poor condition if you come aboard with a good business plan and the numbers to back it up. This includes an in-depth look at renovation costs, time frame, and market. You will also need to include the monthly costs that you’ll incur during the renovation process such as utilities, insurance, loan interest and property tax. Some companies and private investors loan only on the LTV or loan-to-value, while others will consider the ARV or after-repair-value. For instance, some will issue a loan up to 80 percent of the LTV or 70 percent of the ARV. If your model is to rehab properties in poor condition for a fix & flip, you’ll want to be sure to ask your potential investor which value they consider when funding a project.

Buy-and-hold investors, on the other hand, obtain private hard money lenders in order to ensure quick capital. After renovation is complete, they look to more traditional loans for longer terms and lower interest rates. You’ll find many private investors that specialize in one segment of real estate. For instance, there are hard money lenders that invest only in the office or multifamily segments, while others focus on the fix-and-flip model. You’ll want to be sure to find one that is comfortable and knowledgeable in your area. There are even hard money lenders that fund residential loans. These are, in most cases, considered bridge loans—short term loans that bridge from one property to another such as when home owners buy a new home before their old home sells.

Interest Rates and Average Lender Fees

Going into this arena of commercial lending, it’s important to be aware that the interest rates are going to be higher than conventional mortgages because the hard money loans are shorter terms, interest-only payments, and increased risk for lenders. The interest payments are considered “holding costs” and are monthly fees incurred prior to selling or refinancing. These interest-only payments result in lower monthly payments. When you agree to a loan with a hard money lender, there can also be what are known as “loan origination fees” or “points.” Additional fees that the borrower may be required to pay include closing costs, appraisal costs, application fees, prepayment penalties and loan extension penalties.

At Level 4 Funding, we offer loans from 7.99 percent APR with 90 percent LTV.

In addition, we do not charge prepayment penalties and can often fund within days. Because we work with hundreds of private investors, we can usually find an investor in your niche who can offer you the best terms and rates for your project. Call us today for a no-obligation quote.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Get ready, the Donald is getting ready to SCREW YOU!

iStock_000067965589_XXX small (1) Whoa, are you ready for it? You are going to get screwed! I don’t think the Donald is going to actively go out of his way to cause you harm.

You see his hands are tied, but he has to do something before it is too late.

I don’t know if you have noticed it yet, but there is an ugly monster in the corner of your room, and under your bed who is fast asleep, and quietly taking no action.

Don't believe me? Ask our kids, they will tell you also.

It’s a horrible monster, who when it wakes is going to eat you alive; you, your family, your savings and everything around you.

It’s going to be horrible, like something you and I have never seen.

Luckily the monster is asleep and causing little harm.

BUT the Donald knows it is there lurking in your room.

He’s keeping an eye on it and figuring out a way to KILL IT before it awakes.

Kill it in in its sleep; get it now.

I don’t know if he can, but he’s working on it.

So what’s this monster look like?

It’s the trillions of dollars in debt that is inching up every day.

It’s going to get you!

The Donald said that when it reaches 20 Trillion it’s to longer fixable, past the point of no return. (It’s past 20 Trillion now) It’s beyond the path of control.

It’s going to become a living monster that is going to get us. All of us.

However, the Donald is working on a plan to kill it.

Basically there are three options possible to kill it.

Option 1. The first plan that the Donald is trying to do is what he said in his campaign.

Make America Great again. What does this mean? It means getting our GDP up to historic levels. Not just 3%, but even higher. How about a 10% GDP? When we are booming, our cash flow can kill the monster.

That’s what he is hoping for. Kill it with growth. Make so much money that the trillion of dollars can be paid off with a week’s worth of income.

Possible? I don’t know, but this path is the least painful path, compared to the two other Options that will kill the monster.

Option 2 is to inflate it away.

That’s it. Devalue the dollar to the point that 20 Trillion is nothing. Give everyone a pay check that is 10 times more than they are making today. Prices go up, income goes up, but the debt stays where it is.

This is possible, and the Donald thinks that this could happen. The recent tax plan made sure that your taxes rates were indexed to inflation. Wow, did you see that? If the dollar crashes our effective tax rate stays the same. We will be paying a boat load of money in taxes, but your effective tax rate is not going to go up.

Option 3 is to pay it off.

Good luck with that option.

There is not enough income to pay it off. It would require doubling EVERONES' taxes for the next 10 years and cutting social security and all entitlements out completely. No more handouts anywhere for anything.

Don’t think this is going to happen.

Another option that most politician are taking, is to leave it alone and hope it does not wake up.

But it’s going to wake up.

It's past the point of no return.

The wakeup alarm is ringing and the monster is starting to wake up.

Do you see it in the corner, starting to stretch its ugly muscles?

Its Yawning and scratching its back and with one ugly, mean eye open looking directly at YOU!

It’s going to get you, so get ready!

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

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.

Technorati Tags: credit score,christians credit score

Sunday, April 1, 2018

How to Develop an Exit Strategy When Obtaining a Hard Money Loan

An exit strategy is, in essence, your plan for paying off your hard money loan. It is a plan that you will want to develop before you sit down with a lender.

Exit strategies are crucial for obtaining a hard money loan. Many of these lenders offer interest-only payments as you develop or renovate your project. They obtain the big payoff upon completion when you have succeeded in your “exit strategy” and can repay them in full. For those of you in the fix & flip model, your exit strategy is fairly easy to define. You rehab and then sell the property.

Selling the property, then, is your exit strategy. Because timelines can change in the world of construction and rehab as well as finding qualified buyers, it will be important that you look for a hard money lender that does not charge a prepayment penalty. You’ll also want to come to the table with improvement plans that include costs and potential market value as well as comps and average time on the market.

If your real estate segment falls into the buy-and-hold model, selling will, obviously, not be an appropriate exit strategy. A strategy that does work is refinancing. Many traditional lenders that offer lower interest rates with longer terms will not loan on properties in poor conditions. Once you have the property renovated and a suitable tenant, your chances of obtaining a traditional loan are greatly elevated. It could be that you needed a loan quickly to jump on a property that just hit the market. Many investors obtain funding from their hard money lender in order to accomplish a quick buy and then refinance at a later date.

The Sale of Assets

The sale of other assets such as real estate or accessing additional funds such as money from IRAs, the stock market, or business interests is another exit strategy. You may wonder why, in this case, the borrower wouldn’t just dip into their additional assets and bypass the loan process all together. For many investors, time is a crucial component in their investment strategies and waiting while other assets sell may cause them to miss a prime property or opportunity. In essence, you are obtaining a bridge hard money loan. These types of short-term loans simply “buy some time” and act as a “bridge” from either one loan to the next or one property to the next.

Don’t feel like you have to stick with one exit strategy. Blended strategies can often be the best solution depending on the situation.

And just what is a blended strategy? This type of exit strategy utilizes a combination of all of the above to create a strategy that works the best for your particular situation. For instance, if you cannot obtain the full loan amount upon completion of the project, you can sell an asset and reduce the LTV so that a traditional lender will consider financing. Whatever your exit strategy, be sure to check with Level 4 Funding before obtaining your hard money loan. We have years of experience and can help you develop an exit strategy that works well for your project.

Technorati Tags: commercial loans,commercial lending,commercial mortgage