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Monday, April 15, 2019

How Arizona Hard Money Loans Work

Arizona Hard Money Loans work similar to conventional loans—with half the hassle and much more flexibility.

Just like a traditional bank, borrowers must apply for an Arizona Hard Money Loan. However, instead of waiting weeks, if not months, to find out if you are approved—you find out typically within a day or two. Unlike banks you are generally financed within two weeks. This is helpful for investors who have found a property and don’t want to lose it to an all cash buyer.

Like traditional loans, Arizona Hard Money Loans have an underwriting process. The good news is Arizona Hard Money Lenders do not dig deep into your financial history and the terms can be negotiated and so this underwriting process is leaps and bounds faster than a bank. Once you are pre-approved and have given the lender the information on the property an appraisal will be ordered. As long as the property meets the lender’s criteria and the borrower has purchased the necessary insurance the next step is closing and receiving the funds to purchase the property. It is a very quick process; unlike banks, where it can easily take up to 90 days to receive financing. Unfortunately, in these cases many times borrowers have lost the property due to hang ups with the bank.

How to Find The Right Arizona Hard Money Lender

If you are an investor, speak with other investors and find out which lender they work with. Word of mouth is the biggest way Arizona Hard Money Lenders receive clients. Because real estate investors are the primary clients of Arizona Hard Money Lenders, lenders work on reputation.

There are also many websites that can direct you to a lender that works in your area. Bigger Pockets and Arizona Hard Money Lender Directory are both websites where Arizona Hard Money Lenders are listed. As always, there is google; simply type your city and Arizona Hard Money Lender to find a list of lenders near you.

It is vital that you choose a lender that not only has a good reputation, but also has a solid track record. Because lenders make their own terms and requirements it is essential that you ask many questions when speaking to lenders. Find out about their origination fees (points). Do they have prepayment penalties? Ask the lender if they loan on LTV (loan-to-value) or ARV (after repair value). Depending on what your loan is for—this will make a considerable difference. Many lenders will finance the repairs of the property; find out if the lender you are speaking with does. Another question to ask is if there is someone in the office that can help you along the way—or are you alone on this venture?

Finding the right lender can turn into a future business partner.

Arizona Hard Money Loans are a win-win situation for investors and lenders. Once a borrower finds a lender they can work with there is opportunity for a long-term relationship. Finding the right lender can take your investments to an entirely new level.

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 and 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Fix and Flip Loans

With house flipping at its highest level since 2007, dues to rising home prices and more availability in financing, it’s a terrific time to get involved in real estate investments.

Buying and selling houses is the new fad. You will see it on television and read about it on the internet. But, why? Well, if you are an investor, it is one of the quickest ways to make a profit. And while buying, fixing and reselling property can be fruitful— it takes time, effort and money. You need money to buy the property and you also need money to rehab the property. Ahhhh… and let us not forget you need the money to cover property taxes and insurance until the property sells. So, the big question is, “where do I get all that money from?”

Back in 2005 anyone with a pulse could qualify for a mortgage through a traditional ban—however, this is 2019 and that just isn’t the case anymore. If you don’t have money saved up then house flipping will take some planning. If you are approved for a conventional mortgage you will still end up paying more than you did on your primary residence. Banks are not comfortable lending on a flip house. The bank’s main concern is they are repaid the loan. Knowing that this is an investment property that could potentially fail, leaving the borrower possibly walking away, makes the banks uneasy. Banks do not work with risky deals. However, there are lenders that want to work with risky deals because it’s how they make their money.

Arizona Hard Money Lenders and Fix and Flip Loans

Arizona Hard Money Lenders are not banks. They are individuals that lend money out to investors at a slightly higher interest rate than a traditional bank. The interest rate is higher for two reasons: they are borrowing the money from investors themselves and have to pay an interest rate and they are lending on riskier deals than banks will. Arizona Hard Money Loans have different terms than banks. Their interest rates are typically between 7.99%-15.99% plus two to five points. A point is equal to 1% of the loan amount. With a conventional mortgage a borrower will pay points at closing; with an Arizona Hard Money Loan a borrower does not have to pay the points until the Arizona fix and flip property sells.

Arizona Hard Money Lenders typically base the amount you can borrow on the property’s after-renovation-value (ARV). This means that the lender will finance the property based on what it will sell for after the repairs and renovation have been done. To give you an idea of what this looks like imagine finding a property selling for $75,000. Once it has been determined what repairs need done and a value has been assessed on the price you will sell it for, the lender will finance you for 70% of that price. So, this $75,000 home will sell for $120,000 after rehab-the Arizona Hard Money Lender will loan you $84,000. That leaves the borrower with $9,000 to use towards the rehabilitation of the property. That is $9,000 that you, the borrower, do not have to spend out of pocket. Yes, you may have to spend a small amount of money. However, it is highly likely that you may not have to spend your own money at all.

Another benefit of an Arizona Hard Money Loan is the terms are flexible. Because these are individual lenders they are not required to follow any federal requirements—they make their own. Which means all terms can be negotiated—from the interest rate to the life of the loan.

A real estate investor not wanting to spend very much of their own money on a fix and flip should seek the help of an Arizona Hard Money Lender.

Not only will a good Arizona Hard Money Lender work with you on terms, they also are not focused on your credit or income. Arizona Hard Money Loans are based on hard assets which will be the property the borrower wants to finance. Yes, these loans have higher interest rates than a conventional mortgage. However, these are typically interest only loans with a balloon payment due on the last payment.

Sunday, April 14, 2019

All About Arizona Hard Money Loans

What is an Arizona Hard Money Loan and who benefits from these loans?

Arizona Hard Money Loans are unlike conventional loans. They are funded by private investors that are often referred to as Arizona Hard Money Lenders. These loans are based on the value of the property that is being purchased versus the borrower’s credit worthiness. The amount of the loan can be based on either the loan-to-value ratio (LTV) or the after-repair-value (ARV). The LTV is the ratio of loan divided by the value of the property being used as collateral. The ARV is what the property will be worth after the repairs will be done. The loan terms will be different depending on the lender.

Arizona Hard Money Loans are much easier to qualify for than conventional mortgages because the approval is not solely based on the borrower and their ability to pay the loan back, but on the property and what it is worth. This is because in case the borrower defaults on the loan—the lender can repossess the property, sell it and get their money back. These loans typically have 6 months to 3 year terms; in certain situations these loans can be extended out for up to 5 years.

These loans are generally meant for real estate investors for fix and flip and construction projects. However, Arizona Hard Money Lenders can finance residential properties and small business loans as well. Arizona Hard Money Lenders have the freedom to be flexible when working with borrowers. Successful real estate investors have a lender they regularly work with. Not only will the lender often lower interest rates for a repeat customer—they are able to give quick financing when the investor comes upon a property.

Why Use An Arizona Hard Money Loan?

There are many situations in which an Arizona Hard Money Loan will benefit a borrower over traditional bank financing. When an investor comes upon a property they are able to get quick financing because funds are generally available in less than two weeks. This aids investors when competing with all cash buyers. Sellers prefer working with investors that work with Arizona Hard Money Lenders because there is security given to the seller that the deal will not fall through.

If the borrowers credit score is not sufficient to secure traditional lending or they just do not meet bank requirements, Arizona Hard Money Loans are a great alternative. Typically, Arizona Hard Money Lenders do not impose prepayment penalties; meaning, that once the borrower is able to qualify for a conventional mortgage they are able to pay off the Arizona Hard Money Loan without any penalties.

Any time a borrower does not have enough cash or access to any financing, Arizona Hard Money Loans are a great substitute for traditional lending. In this case, as the others, when the borrower finds themselves in a situation to secure traditional financing the Arizona Hard Money Loan can be paid off.

Arizona Hard Money Loans are not the answer to financing for all; however, for many borrowers, Arizona Hard Money Loans can solve their problems.

Arizona Hard Money Lenders are essentially concerned with the collateral that backs the loans. These lenders differentiate in their loan terms. Most lenders work in a certain geographic location. It is important, when researching Arizona Hard Money Lenders, that you do so in your area. Make sure once you locate a lender you ask questions. It’s not only finding a lender that will qualify that is important—it is finding one that your personality and goal mesh well together.

How To Flip Houses With No Money Down

It would be a lie to say that anyone can flip houses with no money down in Arizona and make a profit. However, it is possible with hard work.

I have flipped over 130 homes in the last 10 years. It is not easy, but once you are able to find an effective strategy it becomes easier and a whole lot of fun. I average about $25,000 in profit per flip. However, I didn’t start out making that type of money. My first house flip I profited $4,500— my second, I walked away with $8,000 in my pocket. And, on my third flip I lost $3,200. Don’t let that intimidate you—I want to be honest concerning this business. After 10 years of flipping homes, I have only lost money on five projects. That equals less than 7% of my deals resulting in losses—not too shabby.

Many people think about becoming real estate investors, but never take actions on that thought. There is a good reason for that; becoming an investor means taking risks and removing yourself out of your comfort zone. However, if you are able to make these changes it will be well worth the time. There are many ways you can flip houses with no money down in Arizona (or very little): wholesaling, buying houses that already have a loan on them and partnering with another investor. However, the most effective way to flip houses with no money down is through private money investors—commonly called hard money investors.

My first flip was actually a home I lived in. When my wife and I first met we both owned homes. Once we decided to get married we chose to sell our homes and buy a fixer upper. We lived there for two years, rehabbed it and sold the property. However, at that point we wanted purchase a nice, new home. About a year later I started getting the itch again to rehab a property. Although I had flipped a house previously—I didn’t have a whole lot of experience. We had also taken our time rehabbing the property. On average it should take about 3 months to fix and another 3-6 months to flip a home.

Hard Money Fix and Flip Loans

Arizona Hard Money Lenders will typically approve more than traditional banks. A benefit to working with an Arizona Hard Money Lender is they will approve not only the property loan but the repairs, as well. Arizona Hard Money Lenders are establishments—and occasionally individuals— who borrow money from investors at a certain interest rate and then lend that same money to real estate investors at a higher rate. Arizona Hard Money Loans are short-term loans that generally have terms from six months to three years. To fix and flip a home with no money down find a lender that will lend on the after-repair-value (ARV). Most lenders will finance at least 70% of the ARV. That means they will lend the borrower 70% of what the house will be valued at after it has been rehabbed. For example, if you buy a house for $105,000—but the ARV is $200,000—the Arizona Hard Money Lender will finance $140,000.

Have you been thinking of getting started as a real estate investor?

If flipping houses in Arizona is something you’ve daydreamed about take that step. Research local Arizona Hard Money Lenders and talk to one. For more information, contact us at level4funding.com. We would be more than happy to get you started in the right direction.

Financing For Rental Properties: Conventional Mortgage Or Hard Money?

Buying a rental property is a fantastic way to get additional income. However, it doesn’t come risk-free.

Every investment comes with risks, weighing the pros and cons of buying and managing rental properties one will see that if the market is good and the investor is skilled—rental properties are a great way to attain wealth.

Of course, before diving head first into becoming a land lord you should have enough information to decide if the income stream is a good fit for you and you need to understand the choices when it comes to financing.

Financing For Rental Properties

The first thing an investor needs to figure out is how they will obtain financing for rental properties. It is not as simple as getting approved for the mortgage on your primary residence. There is a reason lenders are skeptical of financing rental properties. Lenders know that if a borrower runs into financial difficulties they are much more likely to walk away from an investment property than their home.

If a borrower is determined to obtain financing through a conventional mortgage they must prepare themselves to put down a minimum of 20%-25% of the purchase price. Fannie Mae requires a minimum of 15% down, but the majority of lenders require even more. A borrower will also need a strong credit score and monthly income. Along with all this—borrowers will also be required to hold higher cash reserves. Reserves are liquid assets that are available after paying the down payment. Examples of these reserves could be: the cash value of insurance policies, checking and savings accounts and investments in any CD’s or stocks and bonds. Most banks will not approve borrowers if they have more than four mortgages. Also, expect when working with a traditional lending institution on rental property mortgages, to double the required documentation and paperwork as you did for your mortgage on your primary residence.

If you don’t have a 25% down payment, don’t have perfect credit, own four or more rental properties or just don’t want to deal with the paperwork from the bank there is another option.

Arizona Hard Money Lenders will lend on rental properties. Unlike banks, they are not required to follow the strict federal guidelines. A borrower does not need perfect credit. The underwriting process from an Arizona Hard Money Lender is minimal in comparison with the banks. Because Arizona Hard Money Lenders are individuals that make their own terms they are able to approve you quickly. Arizona Hard Money Lenders do not need liquid assets because they back loans using the borrowers hard assets— property. Not only can a borrower be approved within 48 hours; they are able to receive their money in two weeks or less. Arizona Hard Money Lenders are flexible and able to negotiate deals because there are no set lending requirements. An investor will likely have lower closing costs associated with the loan, as well. If you are a seasoned real estate investor, none of this is news to you. However, if you are just sticking your toe in the rental waters to see what it feels like—make sure you research all your options.

Saturday, April 13, 2019

Saved By an Arizona Bridge Loan

I had just turned 40 when my father died and I inherited his home. It was a difficult time for our family. And to add to the stress, I had just recently decided to purchase my first home.

Along with the sudden death of my father I was also thrown into a whole slew of new financial responsibility. Being an only child, with an extremely small family, I inherited my father’s home. This had been my childhood home and along with many good memories came the wear of those memories. The house hadn’t appraised for much and needed an enormous amount of rehabilitation.

Because I now owned this home that had numerous mortgages taken out on it, and still owned the bank money, I was told by the bank I would not qualify for a second mortgage and would need to sell my inherited home before applying for a mortgage. I was mortified. I had outgrown my small apartment and saved for a small down payment. I couldn’t live in my childhood home because it wasn’t even safe to live in. I had found myself in quite a pickle.

How You Can Buy A New Home Before Selling Your Old Home

After talking to more attorneys and loan officers than any sane person would want to experience—I was given some gold information. The last loan officer I spoke to asked me if I had considered an Arizona Bridge Loan. He explained that it was an interest-only loan that I could take out while making repairs and selling my father’s home. It sounded perfect and I could not believe no one had offered me this until now.

However, because of a recent bankruptcy I did not qualify for the Arizona Bridge Loan. I was so disappointed and was feeling helpless. I began Googling Arizona Bridge Loans to find out if another bank may qualify me. As I began googling I found myself reading about Arizona Hard Money Loans. I had always though Arizona Hard Money Lenders were sharks. They were the guys in all the gangster movies. Well, come to find out—they aren’t. They are actually nice, normal people that have money to loan and will do so, regardless of a borrower’s credit or income, if they believe it will make a good return. They are simply investors—just as the people that invest on Wall Street.

I was approved within 24 hours for an Arizona Bridge Loan.

Because an Arizona Hard Money Lender determines a borrower’s eligibility based on their assets versus their credit and income the approval time is very quick. I was funded within a week after finding my new home. The Arizona Hard Money Lender based his decision on my hard assets—which were my properties. I was able to pay the interest only on my father’s home which left me with enough to pay my new mortgage. I was also able to tack on financing for the rehab of my father’s home—making it possible to sell. Once, I sold my father’s home I was able to pay the Arizona Bridge Loan off without penalty and profited what was left over. If it wasn’t for my Arizona Hard Money Lender helping me, I would very easily have been living in my childhood home for many years.