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Thursday, February 14, 2019

Commercial Real Estate Loans Made Simple

Commercial real estate loans are typically used to purchase or renovate an owner-occupied commercial property.

Income-producing property is called commercial real estate and is used for business versus residential. Malls, retail shops, hotels and office buildings are some examples of commercial real estate. The commercial real estate loan includes the financing of not only the property, but the development and construction of said property.

Commercial real estate loans can be financed through banks and private lending institutions. There are no FHA or VA programs when it comes to commercial lending—and there is also no private mortgage insurance. What this means to lenders is they have no insurance to cover default of the borrower.

Interest rates on Commercial Real Estate Loans in Arizona are higher than residential loans. And there are fees involved, such as loan origination, loan application and appraisal fees. Depending on the lender there can also be other fees involved—such as prepayment penalties and exit fees.

HARD MONEY COMMERCIAL REAL ESATE LOANS

A hard money loan is a non-traditional bank loan. Texas Hard Money Lenders are private investors that do not have to follow the strict requirements of conventional mortgages. A hard money loan is an asset-based loan and is secured completely by the property’s equity.

Waiting on approval from a bank can be painful and time consuming—and much of the time can take months to receive funding. Here steps in the hard money lender. A borrower can be approved and funded in less than 10 days on a hard money commercial real estate loan. These are short-term loans and are usually only set up to last between 6 months and one year. However, because of the flexibility of Hard Money Loans in Arizona, they can be extended up to five years.

A borrower’s credit is of great importance to a traditional lender. But, because hard money loans are based on the equity of your property they can look past dents in your credit. While closing time is insanely long with a traditional lender—due to documentation, inspections and waiting on the loan committee, a hard money loan can close quickly because typically there are only a few individuals involved in the loan terms and it is their money they are lending.

The bottom line is that hard money loans are set up to be bridge loans. Bridge loans are “bridging” you from a temporary situation into a permanent situation.

These loans are interest only loans until the end of the loan term, in which the balance is repaid. The goal is to give the borrower time to get their ducks in a row and bridge themselves into a conventional mortgage. Texas Hard Money Lenders are there when the bank says, “no.” They are there when you need money quick. They are there when your credit has some issues. Texas Hard Money Lenders are there when you need them.

Dennis Dahlber Broker Ri CEO Level 4 Funding LLC Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com
Dennis Dahlberg Broker/RI/CEO

About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Wednesday, February 13, 2019

Can You Get an Arizona Bridge Loan?

What exactly is a bridge loan? The definition of a bridge loan is “a sum of money lent to cover an interval between two transactions, typically the buying of one house and the selling of another.”

Basically, what this breaks down to is if you don’t have enough income to cover two mortgages at the same time, you can use a Arizona bridge loan to pay off your initial mortgage while you wait on the property to sell—all the while being able to purchase your new property. Bridge loans are short-term loans that borrowers can qualify for a mortgage on their new house before the Arizona bridge loan is paid off.

Bridge financing is a short-term method of financing that is interest-only. Typically, borrowers can receive their funds in less than one week—and very often within 48 hours of approval. It is a secured form of lending that is backed by property—meaning that if a borrower defaults on the loan their property can be repossessed by the investor. Bridge loans can be used for a variety of purposes that include both residential and commercial properties. A common Arizona bridge loan scenario is when the borrower is selling their primary residency, but has found a new home and the seller doesn’t want to wait on the sale of the initial home— a Arizona bridge loan can secure the sale. Also, many times borrowers need fast access to capital in order to obtain permission for a new development. Sometimes, a property is not inhabitable (typically, a fix-and-flip) and a traditional bank will not approve a mortgage.

Texas Hard Money Lenders will approve borrowers with poor credit for an Arizona bridge loan. Because these loans are asset-based a borrowers credit is not as important. These loans are interest-only until the end of the loan term—meaning a borrower only pays the interest throughout the life of the loan and at the end a balloon payment is required. In case of default the lender can repossess the property and sell it in order to get their money back.

WHY GET AN ARIZONA BRIDGE LOAN?

Unlike a traditional bank, a hard money lender does not require excellent credit. However, they will look at your credit score. Texas Hard Money Lenders use collateral to secure the loan. The collateral, which is your property, reverts to the hard money lender that if the borrower defaults the home will go into foreclosure.

Borrowers usually choose a Arizona bridge loan due to the ease of the application and the speed of financing. A borrower can be approved same day and funding can be released in less than a week. However, this convenience does have a cost—slightly higher interest rates. Most borrowers don’t mind this, as they are only short-term loans. Hard money loan terms are usually around one year, but can be extended up to five years.

Bridge loans are an excellent resort to a temporary situation.

When you are searching for a home and you find that perfect home—but you can’t buy it until you sell the home you already have—that can be heartbreaking. Especially, when the seller refuses to wait on the sale of your initial home. This is where a bridge loan can save the day—even with poor credit a hard money lender can help make your dreams come true!

All About Texas Hard Money Lenders

You have probably heard about Texas Hard Money Lenders—but what exactly is hard money lending all about?

Texas Hard Money Lenders are private lenders who lend money using assets to back the loan. When a borrower needs funding quickly or when traditional lenders won’t approve a loan, a hard money loan is typically the best alternative.

When you apply for a loan, lenders require proof that you can repay them. Traditional lending institutions, such as credit unions and banks, are interested in your income and your credit score— this shows the capability to repay the loan and a solid history of responsibility. Banks use a debt-to-income ratio to be confident in a borrower’s chances of repayment. However, the approval time with a bank is typically a painfully slow process that can take months to complete—even with a fantastic FICO score and a great income. So, when you add poor credit to the mix the process becomes even longer and more agonizing—usually resulting in denial of the loan.

Texas Hard Money Lenders approach is quite different. They determine the loan approval by basing the borrower’s collateral to secure the loan. The borrower’s collateral puts the lender’s mind at ease because in the case of loan default, the lender can get their money returned by repossessing the collateral and selling it. To Texas Hard Money Lenders the value of the borrower’s assets are more important than their financial situation. Therefore, borrower’s with poor credit can still receive a loan.

ARE ALL TEXAS HARD MONEY LENDERS THE SAME?

Nope. Texas Hard Money Lenders differ just as widely as borrowers differ. Some lenders work nationwide—others stick with one geographic area. There are lenders that strictly lend to borrowers looking for a commercial loan and others that only work with residential properties—and there are some lenders that work with both.

Texas Hard Money Lenders also vary when it comes to their interest rates and fees. Certain lenders charge for preparing documents, while others include that in their services. Lenders work on a loan-to-value ratio, as traditional banks work on a debt-to-income-ratio. Lenders vary on the loan-to-ratio—some work with higher value numbers and others work with lower value numbers.

Along with those differences come even more. Some lenders charge prepayment penalties. That means if the borrower repays early, they will receive a penalty and will be assessed a fee. There is such a wide spectrum of differences when it comes to Texas Hard Money Lenders.

Because of the differences in lenders, it is critical that a borrower finds a lender that works for their unique situation.

Not only can geographic areas, fees, interest rates and penalties vary between lenders—so can the life of the loan. These are short-term loans and are usually between 6 months and one year. However, there are lenders that will authorize up to five year loan terms. If you are looking for a hard money lender, please contact us at level4funding.com.

Understanding Hard Money Lending

Even experienced borrowers often have questions about hard money lending and how it works.

Hard money refers to capital available outside of conventional lending institutions such as credit unions and traditional banks. A hard money loan is secured by the borrower’s real estate. Hard Money Loans in Arizona are typically used by real estate investors to quickly obtain the funds needed to purchase or refurbish a property. These loans can be used as bridge loans until a time when the borrower can secure more traditional financing or until they sell their property.

Hard Money Loans in Arizona are short-term loans-typically with one year terms. Some benefits of hard money loans are the ease of the underwriting, fast approval and the emphasis on the borrower’s assets versus their credit. Texas Hard Money Lenders don’t to have to follow the same rules and regulations as conventional lending institutions, therefore allowing more flexibility in the loan terms.

WHAT ARE TEXAS HARD MONEY LENDERS?

Texas Hard Money Lenders are typically private financial groups with capital that is available for loans in certain geographical locations. These lenders have their own set underwriting policies and approve funds using a loan-to-value ratio.

Texas Hard Money Lenders are investors that are seeking better returns than typical investments allow. They approve riskier loans than conventional banks do. Because these are asset-backed loans, Texas Hard Money Lenders require much less documentation than traditional banks. Approval and funding can usually be completed within a week—unlike banks, who can easily take up to two months for funds to be available to the borrower. Texas Hard Money Lenders do not require tax returns to prove that the property is generating revenue. Many borrowers run into problems when attempting a conventional loan due to their properties not all being listed on their tax returns.

Texas Hard Money Lenders will provide funding for many types of properties, but they will not fund all types. Many Texas Hard Money Lenders will not fund owner-occupied hard money loans for residential properties— these situations are government regulated and will result in more documentation and involve federal regulations involving the borrower to meet a debt-to-income ratio. Texas Hard Money Lenders do not work on a debt-to-income ratio because they are asset-backed and do not typically lean on the lenders credit worthiness or income. However, lenders will typically approve loans for owner-occupied commercial properties. Lender rules and regulations are different in different geographic areas — and each lender can determine their own loan terms. There is a great amount of flexibility in hard money lending.

Hard money loan applications are painless and easy. There is a tremendous amount of benefits to working with a hard money lender.

Once approved, funds are dispersed in less than 10 days. A hard money loan can help when quick capital is required to obtain a deal. Perfect credit is not a necessity when applying for a hard money loan— in fact, a borrower’s credit score is not a top priority. These loans can also be used as bridge loans until a borrower can gain approval for a conventional mortgage. There are many advantages to hard money lending. Find a local hard money lender that will assess your situation and give you options.

Tuesday, February 12, 2019

All About Arizona Cannabis Dispensary Loans

With the legalization of medical marijuana in Arizona, the need for financing of cannabis marijuana business operations is booming .

In 2016 legal recreational and medical cannabis states generated between $16 to $18 billion. By 2021 it is projected to reach $68 billion. These figures do not include other cannabis related industries such as doctors and growers. There are numerous jobs that are being created due to the legalization of recreational and medical marijuana. These people then spend their money at other businesses. This money ends up paying local and state taxes—these businesses lead to benefits for real estate and construction, as well. The bottom line— legal marijuana is a booming business and one that could result in a lucrative investment.

HOW TO GET ARIZONA CANNABIS DISPENSARY LOANS

As of today, cannabis dispensaries cannot get small business loans through FDIC insured banks due to their regulations. Even though marijuana and cannabis products are legal in many states they are still considered a Schedule I drug by the DEA and the FDIC doesn’t approve of cannabis related business. Banks that approve loans to dispensaries will be subject to prosecution on the federal level. Private money or Hard Money Loans in Arizona are seemingly the only way to get a dispensary loan, as of now. Private loans can provide dispensaries with the capital needed to grow their business. Many investors will provide funding for growing rooms, marijuana kitchens, dispensaries and even websites.

Private money lenders look at investments in a different light than do traditional banking institutions. It is common for a private money lender to look at a project in a “what is needed in the community” way versus “is this too risky.” Private money lenders are not scared to take a risk, in fact that is what their business is all about—risks paying off.

There are various loans that can provide funding for marijuana cannabis dispensaries through hard money and private money lenders. A Bridge loan is a loan you can get through a hard money lender. You can use these for short term funding in order to expand your services. A hard money lender can offer you a short term, higher interest dispensary loan that will fund your company. Many investors will also be willing to take a stake in your company, as well. This could result in your loan being a larger amount and interest rates possibly being lower. Cannabis dispensaries are also allowed to raise up to $1,000,000 per year through crowdfunding. However, equity crowdfunding is unlike normal crowdfunding. Equity crowdfunding means the investors will be financial partners in your company and will get a piece of your company. The benefit is you won’t pay interest on the funds you raise. However, the backers will continue to benefit from your profits.

Arizona is relatively new to the legal cannabis business. Opening a dispensary can be a profitable business.

Because you will be receiving funds from non-traditional sources it is important you understand that these firms are taking a huge financial risk by approving funding to a cannabis based business. It is important to find an investor that has knowledge of Arizona cannabis dispensary loans and can guide you through the process.

Can You Get a Small Business Loan with Bad Credit?

If your credit has been damaged and you want to start a business—you can still get a small-business loan with bad credit.

The biggest reason lenders turn down small-business applications is the borrower’s credit. Banks consider bad credit anything below a 620 FICO score. Because of their past, applicants with bad credit are considered a high risk for defaulting on loans. Have no fear—there are still options out there for entrepreneurs that need a small-business loan.

HOW TO FIND A PRIVATE HARD MONEY LENDER

There are lenders out there that will work with you to get a small-business loan with bad credit. There are lenders that will provide options for borrowers with shaky credit. Typically, they require a FICO score of at least 500. And, believe it or not, there are lenders that have no minimum score requirement. These lenders will look at your business and determine if it is strong enough to be successful thereby giving them confidence that you will repay the loan.

A borrower with bad credit must realize that the lower their credit score is the bigger chance they have in having a higher APR—interest rate and fees that accrue on the loan. A borrower with a low FICO score, no collateral and a brand new business should look toward the option of business credit cards and secured personal credit cards. If you want to manage your cash flow and working capital, a line of credit will be your best bet.

Hard money lenders can help with small-business loans

If you need a small-business loan—even with poor credit, but you have collateral, a hard money lender can work with you. Hard money loans are collateral-backed loans that can give easy access to small-business owners. They are secured by real estate. Hard money lenders are less concerned with a borrower’s credit and more concerned with their hard assets. If a borrower defaults on a loan the lender can foreclose on their property.

Hard money loans offer an execution that is fast. A borrower can be approved within 24 hours and have funds in as little as 10 days. They also don’t have the regulations that traditional banks do. While a traditional bank must adhere to state and federal regulations, a hard money lender creates their own regulations. These lenders still have an underwriting criteria; they are just more lenient.

Why a hard money small-business loan may be for you

If you are an entrepreneur with a vision and you have collateral, but unfortunately your credit is damaged a hard money small-business loan may be the best option. Along with speedier approval and closing time, hard money lenders work with each borrower individually. They have more leeway with underwriting and the repayment schedule. All in all a hard money lender can be more flexible than a traditional bank loan. These private lenders are entrepreneurs themselves and want to help others with that same entrepreneurial spirit.