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

Saturday, March 9, 2019

How Much Will I Need in Cannabis Business Loans in Arizona to Start a Grow Operation?

If you’re planning to use Cannabis Business Loans in Arizona to start a wholesale cultivation company, the last thing you want is to run out of money midway through the launch. Break down all the anticipated expenses to get a clear idea of how much you’ll need.

Naturally, the total amount of you’ll need in Cannabis Business Loans in Arizona will vary based on the size of your operation and whether you’ll be growing indoors or out. An outdoor will be less expensive, at somewhere between $10 and $17 per square foot, according to the Marijuana Business Factbook. However, outdoor growing may not be practical in all regions and will generally produce lower-quality plants. To tap into year-round cultivation, produce multiple crops, and possibly charge a bit more for your product, you’ll need to move indoors, which can climb as high as $75 per square foot.

One of your biggest expenses will be the physical location. It may be tempting to base your costs off renting unused warehouse space, but bear in mind many landlords will charge you more than the going rate because you’re in the marijuana industry. As you build out your estimates, call around and verify whether landlords would rent to you and if they would charge you more. In some cases, the cost increases more than $10 per square foot purely because you’re cultivating marijuana. In these cases, it often becomes much more cost-effective to purchase your own property and skip the landlord altogether.

Some sources say you can place as many as eight plants under one light—anything more than that and you’ll diminish the yield so much you might as well have never added the extras. However, some growers will do as little as one plant per light, ensuring each one as ample space. If you’re going with LED grow lights, these alone will run $250-350 each, depending on the wattage and area covered. Fans, humidifiers, and vents will also be necessary, and these usually run around $2,500 per setup. Then, there’s dirt, pots, watering systems, nutrients, electricity, and licensing.

Beware: The Banks Probably Won’t Fund You

While conservative estimates put startup costs around $20,000 if you’re able to find a landlord who will rent to you and aren’t outright buying, banks don’t usually offer Cannabis Business Loans in Arizona. That’s because most are FDIC-insured, and the federal government still hasn’t legalized marijuana even though individual states have.

Alternative lending can give you a helping hand as you launch your marijuana startup.

The good news is, you can get Cannabis Business Loans in Arizona to cover your property/ building/ land and equipment, but you’ll need to look outside banks. Hard money, for example, can get you started and enable you to make interest-only payments for a period of time; perhaps long enough to harvest a crop or two. Generally speaking, wholesalers are making a little over $1,000 per pound right now, but there’s a huge variance in weight per plant—each could be little more than one ounce, or you could grow a single huge plant per grow light, which could potentially give you more than a pound per plant. Do the math. It may be expensive to start, but with margins like that, you could have your full operation paid off in no time and be bringing in serious cash.

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.

Friday, March 8, 2019

3 Things to Consider Before You Explore Cannabis Business Loans in Arizona

Getting matched with the right Cannabis Business Loans in Arizona is an important step, but launching a marijuana startup is unlike starting any other type of company. Before you start applying, it’s important to become familiar with what lenders are looking for in this emerging industry.

1. You’ll probably need to work with an alternative lender. Most banks are FDIC-insured, meaning consumers who deposit money in them have some level of protection from the federal government in case the bank loses it. That being said, marijuana still is not legal at a federal level, so it’s a no-go with federally-insured banks, even if marijuana is perfectly legal in your state.

2. Most alternative lenders have criteria similar to banks. Even if you’re circumventing banks and sourcing your Cannabis Business Loans in Arizona elsewhere, the majority of lenders are still going to be assessing your risk as a borrower or business, meaning they still care about your credit score, your income, and the number of years you’ve been in the industry. Most expect two or three years of experience at a minimum. That can present issues in states which have made a recent move to legalize. If you’re struggling in this area, you may need to bring on a business partner from another state with some experience. That will help you qualify for funding, but you might also want to seriously consider tapping into his or her experience. No doubt, you’ll be able to avoid some of the common pitfalls startups experience if you’ve got a good mentor.

3. You’ll need to have a comprehensive business plan. When you shift into alternative lending, the people providing the funds want additional assurance you’ll be able to pay the money back. So, unlike traditional lending where it’s mostly based on your credit score and a promise, you actually do need to have a full plan, including budget and timeline.

What Form of Lending is Right for My Marijuana Startup?

The right Cannabis Business Loans in Arizona will vary somewhat depending on what you plan to use the funds for, how long you need the funds, your credit score, and other factors. Crowdfunding is one option MJ companies turn to, but bear in mind that options like Kickstarter tend to work best if you have a tangible good. As an alternative, equity crowdfunding can work, but it also requires you to give up shares of the company. As an aside to this, many of the existing platforms tie you down to specific banks and payment portals. Do your diligence with them because if anyone in the chain is using an FDIC-insured bank, there’s a chance your project could get nixed without warning.

Many entrepreneurs are successfully funding marijuana startups with hard money.

By working with private investors who base Cannabis Business Loans in Arizona of the value of an asset, you eliminate most funding barriers. Although they’re still regulated, as virtually anything involving transaction is, the FDIC is not involved, and you can be funded within a matter of days. Moreover, because it’s a form of asset-based lending, your credit score isn’t a huge concern. However, it’s important to remember that hard money is a temporary solution. During the term of the loan, you’ll usually make interest-only payments, and then will be expected to pay the principal back at the end of the term, either by refinancing or paying off the balance with your earnings.

Why Don't Banks Offer Cannabis Business Loans in Arizona?

Most start-ups need a helping hand, but if you’re getting into the marijuana industry, you’ll find banks rarely offer Cannabis Business Loans in Arizona. A lot of this has to do with bureaucratic red tape, but you can cut through it with alternative lending.

The marijuana industry is booming now, thanks to favorable legislation enacted by most states. It’s no longer spoken about in whispers, but in professional circles and in terms of dollars and cents. Many savvy investors have jumped into the emerging sector, and with great success, but if you’re trying to start your own grow operation, dispensary, or are homing in on another aspect of the MJ industry, you’ll find it’s hard to break in due to funding shortfalls.

Small-business owners have always had trouble getting financing. Even today, most who apply don’t get the full amount they need. Banks attribute this to poor credit scores, lack of time in business, and sluggish cashflows. However, starting a marijuana company isn’t like opening an ice cream shop or running a farmer’s market. If you’re trying to get Cannabis Business Loans in Arizona, there are additional challenges thanks to the government.

In short, most banks are insured by the Federal Deposit Insurance Corporation (FDIC), meaning the government protects those who deposit there in the event that the bank loses the consumer’s money. Not all deposits are protected, and not all banks are FDIC-insured, but a great many are. The FDIC won’t touch banks that take on “existential risks,” or those that fund businesses and individuals that could cause major issues for the bank. Although states have moved to legalize marijuana, it’s still illegal at a federal level, and as such, the feds aren’t going to insure banks that lend to the industry either.

Alternative Lending Doesn’t Have the Same Regulations

Alternative lending sources can be thought of as almost anything beyond banks. This includes things like crowd-funding, peer-to-peer lending, angel investing, and private money. These sources aren’t dealing with FDIC-insured deposits, so there’s no risk of losing their status, and they don’t have to follow the FDIC’s rules. However, even within this subset, you’re still dealing with lenders who may or may not support your endeavors, and they’re often looking for things like good credit and an established track record—something someone seeking Cannabis Business Loans in Arizona won’t have because the industry is still so new.

Hard money may be right for you if you’re running an MJ startup.

Hard money, provided by private lenders, is often the best bet for those starting a marijuana-related company. You can get Cannabis Business Loans in Arizona to cover the cost of your building and your equipment, even if you have rotten credit. The only real catch is that you need to be business-minded. These lenders are only looking for people who know how to grow the green stuff—money. If you can nail that aspect down, you can get your startup funded with hard money, even if the banks won’t touch you.

3 Reasons Why Texas Private Money Lenders are Better than Crowdfunding

Crowdfunding has surged in popularity and certainly has its place, but it’s not always the best choice. Learn why working with Lender may be the better solution for your situation.

Recent changes to crowdfunding legislation have made it more popular than ever. Whereas in prior years, only the wealthiest could invest, nowadays almost anyone can, though the maximum amount people who aren’t wealthy can invest is still somewhat modest. It may be tempting to go this route because of its popularity, but it’s important to evaluate each potential funding solution and make sure it’s a good fit for your project before jumping in.

1. Equity crowdfunding means giving away part of your company. If you’re genuinely ok not being the sole owner and don’t mind answering to your shareholders, that’s one thing. However, if you’re starting a business you plan to manage for years to come, or perhaps even a lifetime, giving up your stake in it can be a drastic measure. With Texas Private Money Lenders, your business and your assets are yours, so long as you fulfill your financial obligations.

2. Regular crowdfunding works better for tangible goods and brand-building. If you have a product you want to sell and are hoping to build up a loyal fanbase before launch, traditional (non-equity) crowdfunding can help in both areas. Plus, it doesn’t require that you give anyone stock. However, if you’re doing something that is a one-off project or involves a service, crowdfunding doesn’t work particularly well. Many other forms of lending are better suited for these situations.

3. You may be at the mercy of the platform’s (and its affiliate’s) policies. Let’s say your new business is a special type of gourmet chocolate and people are flocking to support you. That’s great, or maybe not so great if your product has CBD in it. Unfortunately, businesses are still wary of working in specific industries—this is only one example—there are many. If the platform takes issue with you, they’ll cut you off. If their payment processor or bank takes issue with you, they’ll cut you off. If they have advertisers on the site who take issue with you… you get the idea. They can cut you off virtually anytime they wish and for almost any reason. Read their contracts.

Alternative Funding is About Creating a Win-Win Solution

These issues don’t exist when you work with Texas Private Money Lenders because they learn what you’re about from the onset of a project. While it’s true that some don’t like to fund specific types of projects, there are others who prefer it. Your broker will make sure you’re matched up with someone who believes in your business plan every bit as much as you do.

When you understand the benefits of various funding solutions, a clear winner will emerge.

Just like crowdfunding isn’t right for every situation, working with Texas Private Money Lenders may not be ideal for every time either. However, if you need a short-term cash injection for your business quickly and don’t want to give up equity, talk to a broker to learn more about alternative lending.

Thursday, March 7, 2019

How to Find Texas Private Money Lenders for Real Estate

If you’re getting into real estate investing, establishing ties with people who can fund your deals is essential. A good broker can put you in touch with Texas Private Money Lenders who understand your goals and will contribute to your success.

Real estate investors often turn to alternative forms of financing because they need to move quick on a property or for the easier approval process, and Texas Private Money Lender fall within this subset. As the term implies, Texas Private Money Lenders are not banks, and so they’re not subject to the same lending regulations. That’s why they’re able to get you money faster and can get you approved even if you have rotten credit.

The term is often thought of as synonymous with Texas Hard Money Loans; financing that’s backed by the value of your asset (the property) and your perceived ability to enhance the value, rather than your credit score. Because of this, a fair amount of legwork has to be done before you go looking for financing. Having a good investment property selected, knowing your numbers, and working out a comprehensive timeline and budget should all be taken care of before you approach anyone for funding.

When you’re ready to start exploring real estate funding options, it can be a bit of a challenge to find the right financing team, simply because you’re not really dealing with Goliaths in banking, but regular people who have the means to finance your deal. While you can run searches on Google and check forums, that only gives you a small slice of information, and they may not help you find the right person for your needs.

An Experienced Broker Will Explore Options with You, So You’re More Successful

This is where brokers come in. They handle the networking for you and are familiar with lots of people who help fund real estate deals. Again, as individuals, each person will likely have his or her preferred areas, be it single-family houses, multi-family properties, distressed homes, specific regions, and so forth. Plus, each one will have his own terms too. An experienced broker will match you with the right person. Moreover, he or she will see what you’re bringing to the table and may even help you refine your strategy, so you’re better prepared to make a good pitch, and will ensure you’re getting the best terms possible for your situation.

With the right lending partners, you’ll build relationships and they’ll be there to lend a helping hand anytime you need them.

Both brokers and Texas Private Money Lenders want the most secure investments possible, so once you’ve become established with lending partners, and you’ve had a successful run, they typically want to be part of your future projects. In other words, do your homework first, then connect with an experienced broker, and you’ll always have funding for your real estate deals.

Top 3 Ways to Maximize ROI When Flipping with Texas Hard Money Loans

Texas Hard Money Loans are a great way to fund fix-and-flips and turn a profit. Optimize your projects with a few key strategies that boost ROI.

1. Check and recheck the value of the property. There are many tools on the market that can help you identify what any given property is worth. Don’t rely on a single method. Run comparative stats and bring out value experts if need be; appraisers, contractors, and other rehabbers can help you detect issues that decrease property value, so you don’t wind up paying more than the property is worth. Don’t be afraid to use information you find out to negotiate a lower price and be prepared to walk away if you aren’t going to get at least 20% return. Obviously, 25% is better and you’re golden if you hit 30%, but don’t accept those numbers at face value. Always recheck with multiple methods.

2. Research the neighborhood well. All too often, rehabbers get caught up in what makes a house look amazing and lose sight of what will bring profit. Things like paint and fresh fixtures are usually good bets, but granite countertops or a luxury bath remodel? Maybe not. Learn as much as you can about the features and upgrades in other homes in the area, so that you’re keeping your upgrades on par with others. If you go too high-end, you won’t get ROI.

3. Don’t pay more than you have to for funding. There are Texas Hard Money Loans for every circumstance, and each lender will have a different pricing scheme. Obviously, the less you pay to borrow, the more money you’ll have in your pocket at the end of the day.

Work with a Broker Who’s as Eager as You Are

A motivated broker is going to bring a unique blend to your project. First and foremost, he’s going to shoot straight with you. If there’s a problem with anything you’re bringing to the table, he’s going to tell you. That may sound counter-intuitive because he makes money on the deal too, but the reality is, those who work in Texas Hard Money Loans want to work with the same clients repeatedly. Not only will he be transparent, but he’s going to work hard to find the best rates possible for you because he knows you’re going to be successful and wants to be involved in your future deals. When you’re working with the right person, it’s never about just this one property. It’s about building a relationship.

When you work with a team that’s the real deal, you’ll all be prosperous.

At the end of the day, your Texas Hard Money Loans will go further if you surround yourself with a solid team. Learn how to evaluate who’s really in it for the long-haul. That includes your finance team and anyone doing work on the property, from your contractor through tradesmen, and be sure to treat them like the integral partners they are, so they’re motivated to continue increasing your returns.