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

Wednesday, February 20, 2019

Is an Arizona Bridge Loan a Win-Win for Your Business?

Before taking out Arizona commercial real estate loans, you need to ask yourself a few questions. "Will income from the property pay my mortgage on a monthly basis?" and "how do I intend to generate a return? With quick profits from resale or do I want to earn a steady income over the long haul?"

Let’s consider the first question, "Will income from the property pay my mortgage on a monthly basis?" Hopefully, the answer is yes, but you aren't buying a property to make mortgage payments. In the end, you want to make money.

Before taking out Arizona commercial real estate loans on short term investment properties, ask yourself these questions:

• What condition is the property in? When it comes to making a quick turnaround, you want to boost the property’s value as soon as possible while at the same time spending as little money as possible. Scout locations that require minimal work. Better yet, find properties where you can boost cash flow, and therefore raise the resale value without spending any money at all. If a property does need some work, lower your initial offer to account for these costs. For example, if a location needs $10,000 in repairs, you should reduce your initial offer by $20,000. That way, you earn a dollar in profit for every $.50 you spend bringing the property up to code.

• How occupied is the property? Properties with less than 85% occupancy don't sell. A half-occupied apartment complex could take many months to reach that 85% benchmark. Securing new tenants will hinder resale and prevent you from achieving a rapid return on your investment. Save yourself some time and purchase properties that are as close to full occupancy as possible. Otherwise, have a clear plan in place to bring in new tenants before you invest.

Before taking out Arizona commercial real estate loans on long term investment properties ask yourself these questions

• What are the tenants like? If a prospective property is full of deadbeats who don't pay rent on time, it is probably not worth your time. A wave of evictions coupled with the time it takes to find new tenants means you might not be able to keep pace with your monthly loan payments. Ask to look at the rent rolls before investing in a property, which will tell you whether the current tenants are paying rent on time.

• What is the neighborhood like? Earning an income from a property over the long haul requires two things: gradual rent increases and a steady uptick in property values. An area that is on the decline indicates declining rents, occupancy rates and declining property values. Before investing for the long term, get a sense of the neighborhood, or better yet, get some real data to see if property values in the area are on the up and up.

In short, before taking out a loan to invest in commercial property ask yourself a few basic questions:

1. Will income from the property at least initially pay for my loan?

2. How do you intend to earn a return?

3. And consider any factors that could prevent you from earning a return.

Answering these questions for yourself will give you a sense of whether taking out a loan on an investment property is worth your while.

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.

Is an Arizona Bridge Loan a Win-Win for Your Business?

You know the adage, “time is money.” Well, time spent waiting for money from the bank will cost you money. You might have heard the term "bridge loan" in reference to residential real estate, but these loans can help everyday business owners as well.

Bridge financing allows business owners to move quickly on time-sensitive deals. You might find a fantastic opportunity to expand your business or buy some inventory at a discount. You might need financing as fast as possible, but a bank won't share your sense of urgency.

Months might go by before you can secure a business loan. While waiting on the bank, the opportunity might disappear entirely. With bridge financing, this isn't the case, and the process is pretty simple:

1. Get a loan

2. Capture the opportunity

3. Refinance to a long-term loan or use your profits to pay back the initial loan.

Bridge financing gives you as a business owner the freedom to invest without being held hostage by the tedium of the bank application process.

How to use a Arizona bridge loan to benefit your business

• Bridge to refinancing: Say you own a clothing business. A fashionable storefront has opened up in the posh section of town. Lately, your sales have lagged, your margins are thin, and you have little to nothing in savings. You know if you moved to the new location, sales would increase, and the move might save your business.

But, your lagging sales prevent the bank from giving you a second mortgage on the new property, which is already generating a lot of interest from other buyers. What can you do?

You take on bridge financing, which allows you to make a full offer on the competitive property. You secure the luxuriant storefront, and your assumptions prove correct. Increased foot traffic results in a massive uptick in sales. The loan officer at the bank admires your increased profits, and you can now refinance to a long-term conventional loan.

• Bridge to profits: You might be in the furniture business, and your competitor might be liquidating a warehouse full of sleek Italian furniture. They are selling it off at a steep 75 percent discount. Seeing the margins, you decide you want to buy the whole lot, but you don't exactly have the money to do this.

Using bridge financing, you buy up every item in the warehouse. The designer furniture gets a considerable markup, and it sells quickly to your target customers. You pay off the bridge financing with the increased profits and earn tidy sum yourself.

A commercial Arizona bridge loan doesn't just benefit commercial real estate investors.

Looking at the examples above, you can see how bridge financing might benefit you as a business owner.

If you waited on a conventional bank loan in the above situations, you simply would have missed out. You might have gone out of business waiting to get approved for a second mortgage, or you would have never earned a generous return on inventory purchased at a discount.

If you encounter a business prospect that is a sure-fire bet but you need capital right away, opt for bridge financing instead. Time is money, and time spent waiting on a bank loan might cost you the opportunity to make money.

Arizona Commercial Real-Estate Loans: Should You Buy Low, Sell High Or Should You Boost Income?

When it comes to apartment flips, you might think buying low and selling high remains the golden rule. Well, not exactly. Before taking out Arizona commercial real estate loans on apartment buildings, you need to learn to look beyond the initial sales price, and above all, look for ways to boost income.

It's important to note that commercial properties are valued as follows:

• Annual income/market cap rate

Unlike residential flips, buying low and selling high, doesn't always apply in the case of commercial properties. Because if you can raise annual income, by even a smidgen you can achieve a drastic return from your investment upon resale.

Before taking out Arizona commercial real estate loans, don't just look at the sales price

To illustrate this point, let's consider two investors who follow two very different strategies.

• Buy Low, Sell High: Our first investor might see a complex going for $100,000 in a middle-class suburb. Dollar signs flash through his mind because the sales price is too good to be true. Well, it is too good to be true. It is going to take 12 months of work to get all ten units up to a livable standard. The work will require $560,000 in hard money financing, taken at a 14% interest rate.

• Boosting Income: In the same neighborhood, another investor sees a different 10-unit building listed for $800K. Hopefully no one calls the SEC, because our investor has a bit of inside information. She knows that leases are up on all ten units, which will allow her to raise rents by $250 a month on each unit. However, she doesn't want a bunch of disgruntled tenants on her hands, so she decides to add a pool to the complex to help justify her rent increase. She takes out a loan for $640K, again at 14% interest. The loan is expensive, but she's confident her work will be finished in four months.

When using Arizona commercial real estate loans to invest in properties you can make a lot more money by boosting income

Remember that commercial valuations are valued based on annual income/market cap rate. In our scenario, both properties are in the same neighborhood. Let’s say the prevailing cap rate, is 7%.

• Buy Low, Sell High: Our first investor brought the property up to a livable standard in 12 months, but because the property is only livable, he can only charge his ten tenants $1,000 a month in rent:

• 100 K/.07= $1,428,871 resale value.

Factoring in the cost of his loan, he earned $515,711 in profit. Not bad, but what about the other investor?

• Boosting Income: Our other investor simply added a pool and raised rent by $250 per unit. This increase added $50,000 to the annual income earned from the property:

• 150 K/.07= $2,142,857 resale value

Accounting for the cost of her loan, she earned almost double the profit of the first investor. She bought high and sold for even higher. By focusing on boosting income instead of making drastic repairs, she made more money in less time.

These examples make it clear: before taking on a loan to invest in commercial property, look beyond the sales price and consider how you can boost cash flow above all else.

Tuesday, February 19, 2019

Can an Arizona Bridge Loan Help You Move?

Ever wondered if it’s possible to buy a new home without selling your old one? Don't let the fact that your home hasn't sold yet stop you from making an offer on the home of your dreams, an Arizona bridge loan might just be the help you need.

What is bridge financing? It is a loan that gets you from one house to another. The process is simple, get bridge financing, buy a new house, sell your old home, and use the proceeds to pay off your initial bridge financing.

But there are a couple of approaches you can take.

With a bridge loan, you need to decide what to borrow against, be it the full value of your home or your current equity.

• Borrow Against your homes full value: Say your home is worth 300, and your mortgage balance stands at 200. With this approach, you would borrow up to 80 percent of your homes outstanding value. In this case, you would get 240 in bridge financing to pay back your current mortgage, and you would use the difference to make a down payment on your next house.

• Pro- you'll only have one mortgage

• Con- The balance of your loan will be higher. The higher your loan balance, the higher your monthly payments will be.

• Borrow against equity: In this case, you'd borrow up to 80 percent of the 100 K in equity you currently have on your house, equating to 80 thousand in bridge financing. You then use this money as a down payment on your new home.

• Pro-You'll have a smaller loan balance

• Con-You'll have two mortgages, the one on your original home and the one on your new home.

Both strategies result in one thing, moving to a new home without first selling your old one. But of course like any loan bridge financing comes with some risks.

With a bridge loan, you need to be sure you can resell your old house in short order

The most significant factor to consider before applying for bridge financing is, "will my house sell in a few months?

Because you might cross the bridge of moving from one house to another, but you need to cross the bridge from one loan to another ASAP, or at least within six months.

Bridge financing entails a balloon payment, which means that during the term of the loan you are just making interest payments. You will be asked to pay back the remaining balance of your loan after a few months. If there are hang-ups with the sale of your first home, you will be on the hook to pay 10's of thousands of dollars, which you likely don't have.

As proverbial balloon payments popped around the nation in 2008, so did the mortgage bubble and we all know how that went. But don't let the term balloon payment scare you away.

First determine which bridge financing strategy is right for you, be confident you can sell your home within six months and then go for it. Don't let the fact that your home is still on the market keep you from pursuing your dreams, or better yet your dream home.

Arizona Fix and Flip Loans: Make the Most of Your Investment

Arizona Fix and Flip Loans provide the cash, but you have to turn that cash into a quick turnaround by making your property a must have. Here’s how to make your property a must-have amongst buyers.

Arizona Private Money Lenders will provide your Arizona Fix and Flip Loan, but what do you do once you’ve secured your investment property? Now you’ve got to actually perform the fix and the flip. Unless you have experience in home and interior design you may be at a loss for how to make your property stand out amongst the others on the market. Here are some tips on how to make sure you’re making the right design choices for your investment property funded by an Arizona Fix and Flip Loan.

Stand out, get offers

You don’t want your property to be so cookie cutter that there’s no differentiation between yours and the one down the street. Think about a red door that will attract buyers passing by. Splurge on the countertops so buyers don’t walk in and think about how much they’ll have to spend on upgrading the kitchen. One or two stand-out features can be a deal maker for your fix and flip home.

Look for trends

Standing out is great when it comes to marketing a home and this tip may sound counterintuitive to what we just told you, but trends are trends for a reason. Gone are the days where buyers want to walk into a stark white home. Paint an accent wall in a noticeable, but still neutral tone. Add some Edison bulbs to exposed light fixtures. If you spend fifteen minutes on Pinterest you will see the top trends in homes today and you can easily pick out a few quick, cheap trends to include in your renovation and decorating to make sure your fix and flip is on trend with what people want today.

Invest in staging

A blank home can allow buyers to envision what they would do to the home to make it theirs. A staged home allows buyers to picture themselves already living in it, sitting on that couch, sitting on that patio, having family game night by that fireplace. You don’t want to overdo the staging to where buyers are off put if the style doesn’t match their own, but it should be enough that it doesn’t feel as if they are walking into a bare bones home that they can’t picture themselves living in.

Fix and flip properties require a sense of style and what’s on trend to sell for top price. Picture a model home in new-build neighborhoods. Does it have the lowest end fixtures? Does it have stark white walls and zero personal touches? No, that’s because it needs to feel like a home, not just a building. If you put a little extra money into your finishing touches you can make more on the sale. If you have any questions about Arizona Fix and Flip Loans, call Setabay LLC and we can walk you through the process.

Monday, February 18, 2019

Mi Casa, Su Casa: Rental Property Loans

You can make money purchasing homes that can be used as rental properties, giving you passive income. Arizona Hard Money Lenders give you the cash on an Arizona Rental Property Loan so you can purchase quickly

Have you ever been a renter? Have you made monthly rental payments that went into the pockets of the home owner or a rental management agency? Being a rental property owner can be a lucrative business, but how do you get your hands on that first rental property if you can’t secure a big bank loan? Big banks aren’t the only way to get investment cash to purchase a rental property. Arizona Rental property loans can also be serviced by Arizona Private Money Lenders , also known as Arizona Hard Money Lenders.

Rental property loans will allow you to scoop up investment properties quickly so you don’t have to front your own money to make the purchase. That being said, there are things that can stand in the way of you getting that funding to make the quick purchase before the perfect rental home flies off the market. You can be the majority of the way through the approval process when a big bank decides that you’re “too risky” to fund.

Big bank decisions are based on hard and fast qualification rules that can keep you from having your loan paid on day one, or the day before escrow. We service rental property loans based on your propensity for success, not for your ability to make a credit card payment on time. Here’s why Arizona Private Money Lenders are the way to go for rental property loans.

We’re investor friendly lenders

We are there to service investor loans so we understand the timeliness needed and why Arizona rental property loans need to be treated differently than traditional home loans. We won’t be shopping around for the perfect lender, we ARE the perfect lender. That cuts out time and road blocks that could keep you from getting the property you want.

We offer an alternative to traditional investments

Rental home loans enable you to diversify your wealth through non-traditional means. For some people, the security of an IRA account or 401(k) is what works best for them. But as an investor, you know that real estate, and rental properties in particular, can have far greater returns. Also, there’s potential for multiple rental properties. The strict qualifications at big banks can keep you from securing multiple loans. Alternative lenders can bypass those and help you diversify quicker and bigger.

The fact is that rental properties are always going to be necessary. Housing is a tried and true investment that you can always count on. Rental property loans will give you the opportunity to get a piece of the rental property investment pie, and we can help you get your spot at the rental property table quickly and efficiently. Your Arizona Rental Property Loan needs will be met through Level 4 Funding. Call us today to get started on your approval.