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

Friday, March 22, 2019

Creative Financing Options for Arizona Rental Property Loans

Not every real estate investor uses traditional lenders or even traditional loans to purchase rental properties. There are many ways to creatively finance Arizona Rental Property Loans.

Many investors do follow the traditional path of saving for a down payment and then securing a traditional loan from a bank or a mortgage company, but there are several other ways to creatively fund Arizona Rental Property Loans. Exploring all of your options for financing your first rental property or one later in your career is always a smart move. In some instances, you might need to be creative to land a great deal, even when you are not in a position to seek traditional funding.

Seller financing is always a great option if you can get it. In many cases, you will make a down payment to the seller, and then continue to make payments just as you would to a bank or other lender. In some cases, the lender will only carry a small part of the purchase price, and you will use traditional financing for the remaining balance of the loan. One of the big benefits of owner financing is that you can work with the individual to create loan terms that work well for both of you and are beneficial and fair to both of you.

Investment partners are another common way to fund Arizona Rental Property Loans. Many real estate investors who are new to the business just don’t have the money to cover the 20% down payment required for an investment property. This is because mortgage insurance is not offered on an investment property mortgage. So the solution is to seek a silent partner who contributes the cash for the down payment and then earns a little bit on his money. Sometimes you will even get lucky and find a partner who will contribute money and work to the project.

Fund Your Own Rental Property Purchase

Many real estate investors have a retirement account that is just sitting there waiting to be used. The account is earning interest, but it could also be used to help you start your real estate investing career. Some 401K retirement accounts will allow you to take out a loan from your account to start a business or for other financial needs. If your retirement account offers this feature, then you can fund your own down payment and possibly even the entire purchase. And the best part is that you are paying the interest on the loan to yourself.

Research Your Options

There are many creative ways that you can finance Arizona Rental Property Loans. The only really important factor is that the loan and the terms work for your immediate needs and future needs. Taking a very high-interest rate is sometimes worth the added cost to secure a property that will make you a great deal of rental income for many years to come. Explore your options, and only make your decision based on the cost of the loan and the benefits that it offers you.

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.

Thursday, March 21, 2019

Critical Information for Newbies Seeking Arizona Rental Property Loans

Not all types of loans are the same and that can make seeking Arizona Rental Property Loans a bit scary for new investors. But these few bits of information can be a great help in the learning curve.

Acquiring a first rental property is both exciting and in some ways very trying. The excitement comes from knowing that this first rental property could be the start of a very lucrative real estate investing career. But the trying part begins when the new investor begins to realize that Arizona Rental Property Loans are not the same as a traditional home mortgage.

The first hurdle that most borrowers face is the fact that lenders are much stricter on a loan for an investment property, and they also require a larger down payment. All of this is because Arizona Rental Property Loans and all investment property purchases represent more risk than a mortgage for an owner-occupied property. The biggest reason there is more risk is that a borrower will default on an investment loan long before he or she will default on the loan for the place that he or she is living.

This higher risk means that lenders are going to look a little deeper on loan applications, and they are also going to want to get paid more to lend to the higher risk borrower. The biggest difference that borrowers are going to notice is in the interest rate. If an owner-occupied property loan is charging 4% then expect to pay 7% or even 8% for Arizona Rental Property Loans. In addition, lenders tend to charge a more in points and other fees to process an investment property loan. This can mean an extra point, or it could be additional fees for application processing, appraisal fees or even funding fees.

Your Credit Is a Huge Factor

As with all property loans and mortgages, your credit score is important. In the world of investment property loans, a credit score of 740 or lower is the point when lenders begin to charge higher interest rates. A score of 741 or up will likely get you the best rates that the lender offers. If you are very interested in getting the best interest rate possible, but your score is just a tad under the magic number of 740, then there is often the option to buy down your interest rate. You can request a quote with the best interest rate and the buy-down fees, as well as the rate that you qualify for and do the math to decide which offer works best for you.

More Magic Numbers

Even though you are just beginning the process of your first rental property purchase, it is important to know that most mortgage companies will not even consider a borrower who is already carrying four property mortgages. There are a few options to acquire more mortgages, but you need to have a very large cash reserve, a down payment of 25% and have a credit score of over 720. Knowing these pieces of information will help you to understand the expectations that you will need to meet for your rental property mortgage, as well as what to expect as you grow your real estate investment portfolio.

What are Residential Hard Money Lenders in Arizona?

Understanding what Residential Hard Money Lenders in Arizona are and what they offer can be a great benefit when you are entering the real estate investment business. They might not be perfect for every deal but they do offer some unique benefits.

Residential hard money in the real estate financing world is basically a loan for a residential investment property that does not come from a traditional lender such as a bank. These loans can also be called private loans, bridge loans or asset-based loans. Residential Hard Money Lenders in Arizona are the private groups or individuals who are providing these loans to borrowers.

There are some very clear differences in the services offered by traditional lenders and Residential Hard Money Lenders in Arizona. The first of which is the criteria used to determine if the loan request will be approved. Banks use a very long process that examines the potential borrower's personal credit history, credit score, tax returns, and current overall financial health. Arizona Hard Money Lenders are really more interested in the value of the property being purchases rather than all of the details of the borrower's personal finances.

This difference in the approval process leads to two more very significant benefits to using Arizona Hard Money Lenders. First, the process is much less complex and difficult for the borrower to manage. Very few documents are requested, and most of it is regarding the property and not personal assets or financials. Second, the loan application process, as well as the approval process, requires just a fraction of the time that a traditional lender needs to process a loan request. In many cases, a hard money lender can have an approval for you in less than a week, and then the money in your hands in just a few more days.

Who You Work With

In most cases, Residential Hard Money Lenders in Arizona are individuals or partners who are in business to make money lending money to real estate investors. This is another great benefit for borrowers as you are working hand in hand with the person who will be lending you the money that you need. This allows you to work with the lender to create loan terms that meet all of your needs, while still providing a realistic return on investment for the lender. Unlike many peoples common misconception, hard money lending is a very legitimate business that works within the letter of the law. You will not be working with shylocks, loan sharks, or other shady lenders, who might not be working in a legal business.

Just a Different Option

There are many different types of lenders other than the standard banks and mortgage companies that most borrowers use for a home mortgage. In some cases, these more creative and non-traditional lenders can better meet the needs of real estate investors or consumers who are unable to qualify for a traditional loan. What is important is that you completely understand the terms of the loan that you are getting and the total cost of the loan so that you can fairly compare and contrast all of your options.

Reasons to Use Residential Hard Money Lenders in Arizona

Not all borrowing needs can be met by traditional lenders. For that reason, some borrowers will greatly benefit from understanding the best reasons to use Residential Hard Money Lenders in Arizona.

If you are facing a challenging financial situation, then you most likely already know that banks and other traditional lenders are often not willing to lend money to the borrowers who need it the most, or at the time that they need it the most. When this occurs, it is important for borrowers to understand the advantages of Residential Hard Money Lenders in Arizona and when it is appropriate to borrow from them.

There are many situations in life that all can result in a borrower having bad credit. In some cases, the borrower made some bad choices and is paying the price for poor choices. This could be getting too far in debt with credit cards and being forced to declare bankruptcy or spending more on a home than the borrower could really afford. But there are other cases where the borrower made no mistakes, he or she just got caught up in an unfortunate situation. This could be the loss of a job or getting laid off, a death in the family or even a serious illness that resulted in lost wages and a mountain of medical bills. But when you have issues with your credit, Residential Hard Money Lenders in Arizona might be your only option to get financing to purchase a home or an investment property.

Time is another huge benefit of hard money lending. If you are an investor and you find a great deal on a property, you don’t have time to wait 60 days for a bank to approve your loan. Or if you are facing a bidding war and the seller is looking for a fast-closing rather than getting top dollar, hard money will get you money in hand very quickly. In all of these cases, it is well worth the slightly higher cost of hard money to secure the purchase that will turn a great profit.

Avoiding Foreclosure

If you have fallen on hard times and are behind on mortgage payments, foreclosure is not far away. But you can avoid losing the property and crushing your credit by securing hard money to pay off your traditional mortgage. It is true that you will pay more interest to Residential Hard Money Lenders in Arizona, but that is a far better choice that the loss of the property, the equity that you have created and your personal credit. And once you have paid off the traditional loan and are back on your feet, you have the option to refinance the property with a traditional loan at a lower interest rate and pay off the hard money lender.

Unique Circumstances Require Unique Solutions

Hard money is a non-traditional resource, but it is one that works for many people who are in difficult situations. If you are faced with financial needs and cannot get the money that you need from a bank or mortgage company, then Arizona Hard Money Loans could be a very viable option for solving your issues.

Wednesday, March 20, 2019

Benefits of Arizona Hard Money Loans

Understanding the benefits of Arizona Hard Money Loans will also explain why some borrowers opt for this higher cost loan. In many cases, the cost is well worth the benefits.

Arizona Hard Money Loans are short term loans that are offered by private lenders. In most cases, these loans are only for a maximum of five years, but borrowers have the ability to negotiate almost all of the terms of Arizona Hard Money Loans so it can vary. There are many benefits that borrowers enjoy when using hard money, but for the most part, the benefits can be broken down into three categories.

Speed is often times the most appealing benefit to hard money. Lenders are more focused on the value and condition of the property which is going to be the collateral for the loan than they are the borrower's personal credit. For this reason, there is far less time wasted evaluating the borrower's personal finances. The lender can have an appraisal done on the property and know exactly what it is worth. This saves a lot of time and money since there are no deep dives into banking records and past taxes.

Flexibility is another great benefit to hard money. When you work with a traditional lender, you are forced to accept the terms that the lender offers. They have processes and procedures in place, and that is the only way that they will do business. But Arizona Hard Money Lenders are willing to negotiate almost all of the terms of your loan to create an agreement that meets all of your specific needs and is also financially beneficial to the lenders. This might allow you to have a creative repayment schedule or even an option to extend or refinance the loan rather than face a large balloon payment at the end of the term.

Getting Approved

Approval is a critical benefit to many borrowers. Hard money is an asset-based form of lending which means that the approval of the loan is based far more on the value of the property than anything else. This means that a borrower with bad credit or no credit can still qualify for a loan from Arizona Hard Money Lenders. What you need to remember is that the worse your credit is, the more risk you represent to the lender. And in almost every case, the lender will want to make more money on these higher risk deals. So you will qualify for the loan but you will be paying a higher interest rate, and you might also be forced to make a larger than normal down payment.

The Benefits Are Worth The Cost

Even at a higher cost than traditional loans, Arizona Hard Money Loans are a very good option for many borrowers. When the only other choice is to pass on the opportunity to buy a great property, then a slightly higher interest rate is not such a bad option. But it is important to understand the terms of the loan and to know the total cost of the loan to be sure that you will still be able to make a profit on the property when you sell it.

The Drawbacks of Arizona Hard Money Loans

Nothing in the world is perfect and Arizona Hard Money Loans are no exception. But even after knowing the drawbacks, many borrowers are happy to take advantage of hard money.

Arizona Hard Money Loans are short term loans that are offered to borrowers by private lenders. These loans are often called asset-based loans or non-traditional loans. These loans are fulfilled based more on the value of the property that is being used as collateral than they are based on the creditworthiness of the borrower who is requesting the loan. And while there are many benefits to Arizona Hard Money Loans, it is important that all potential borrowers understand what the drawbacks of hard money can be.

Arizona Hard Money Loans are very popular with borrowers who have credit challenges. Knowing this, it is understandable to see why Arizona Hard Money Lenders believe that these borrowers represent a higher risk than other borrowers with good credit. And while Arizona Hard Money Lenders are willing to offer these credit-challenged borrower’s loans, they are going to demand a higher interest rate to offset the risk. Hard money loan interest rates are currently estimated at between 7% and 10%, but for a very credit challenged borrower the rate could be even higher.

Another aspect of hard money that can present a challenge for some borrowers is that the loan is only offered for a rather short term. One to three years is the typical length of a hard money loan, while some can extend to as long as 5 years. For borrowers who need more time to repay their loan, it is common to refinance another hard money loan or to move to a much longer-term traditional loan. The term length of each loan will be clearly defined in the loan documents, and it is important that borrowers be aware of the timeframe that they are agreeing to before signing the loan documents.

Finding a Lender

Another drawback to hard money can be locating a reputable lender. It is not as easy to find a hard money lender as it is to walk down the street and locate a bank. But there are many online resources that can provide references and a list of Arizona Hard Money Lenders in your area. It can also be helpful to speak to other real estate investors to learn about the lenders that they have experience working with and how easy they have been to work with.

Make Your Own Evaluation

Nothing is all good, all bad or perfect for everyone. Hard money has its benefits and drawbacks which need to be understood prior to accepting any loan. Every borrower needs to evaluate his or her options and compare the terms and total cost of all of the loan options available. From that point, you can select the loan that offers that best blend to meet your financial needs and other requirements for repayment terms and benefits. Making a well-informed choice is the best way to know that you are going to have every opportunity to be successful in your real estate investing career.