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Tuesday, April 16, 2019

Why Use An Arizona Hard Money Loan?

One type of loan you need to be familiar with, as a buyer or a real estate investor, is an Arizona Hard Money Loan. These are short-term, higher interest loans that can be used when traditional financing either is unavailable or won’t work for your situation.

A typical Arizona Hard Money Loan will run you anywhere form 7.99% to 15% and anywhere from 3-7 points. Points are an upfront fee of the loan amount. Unlike traditional financing Arizona Hard Money Loans are short-term loans, which make them perfect for a fix and flip. These loans generally run from 6 months to 3 years, but depending on the lender can be stretched out to five years. Because of the higher interest rate and points an Arizona Hard Money Loan, per month, will be more expensive.

So, why would anyone use an Arizona Hard Money Loan? There are many reasons an Arizona Hard Money Loan will actually make you more money. Buying a distressed home that you plan on fixing up and selling is a prime example of a reason to use these loans. Banks do not typically lend on fix and flip properties; there are many reasons for this—first and foremost, if the investment property doesn’t work out, it is much easier to walk away from an investment than it is your primary residence. Bank loan terms are longer and they have lower interest rates—this is great if you are buying the home you will reside in, but why would you take a 30 year loan out on a home you are planning on selling within a year? Also, banks will not finance repairs. That means you will have to come out of pocket for any and all repairs. Banks also will not finance until all inspections have cleared—if something needs to be fixed, you either have to bargain with the seller to fix it or it comes out of your pocket. Banks require large down payments—20-25%. An Arizona Hard Money Lender finances on ARV (after repair value) or LTV (loan to value)—either way you are not looking at anything near what a bank requires.

Reasons for Getting an Arizona Hard Money Loan Over Traditional Loans

The fix and flip example is the most popular reason investors use Arizona Hard Money Loans. There are more:

1) You have bad credit: Unlike banks, who approve based on credit scores and income—an Arizona Hard Money Lender bases approval on hard assets—the property.

2) Fast approval: Arizona Hard Money Loans can be approved within a day and financing available generally around 10 days or less. This is important to people wanting high demand properties. A seller will choose to work with hard money versus a bank—banks typically take a minimum of 30 days to close and can easily take 90 days. This quick close helps the buyer negate a lower purchase price.

3) Arizona Bridge Loan— You are selling your home, but don’t want to wait on it to sell to buy your new home. A hard money Arizona Bridge Loan can cover that—these are interest only loans, meaning you won’t pay a large payment until your house sells—when you have the money. These loans make it possible to own two homes, but pay one mortgage.

4) Obtaining financing when a bank won’t provide additional loans: Most banks cap the amount of loans to a borrower at four. Arizona Hard Money Lenders do not have to adhere to federal regulations and so there are not these types of limitations.

Working with an Arizona Hard Money Lender is A Partnership.

Arizona Hard Money Lenders want their deals to go as smoothly as possible. These lenders have flexibility that banks do not and so it is easier to work through a problem and find a solution with your lender. A reliable and experienced Arizona Hard Money Lender will always be honest in their opinion concerning a project—they want it to succeed as much as the investor.

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.

Monday, April 15, 2019

The Differences Between Arizona Hard Money Loans And Bank Financing

To be successful in real estate, there are two components you have to have: management and financing.

When speaking of financing an investor has to work towards as little money down as possible. Less money down means more profit. To understand how important this is let’s take a look at an example: You, the investor, find a property that is selling for $110,000. You have $40,000 in repairs. The after repair value (ARV), because of the large amount of repairs, will be $200,000. What this means is that this home will have $50,000 in equity minus the closing costs. After finding this property the next thing an investor must do is find financing for this deal.

Usually, the first place people think to go, when they hear financing, is the bank. Because that’s what everyone does; you need a loan, you go to the bank. However, that is a rookie mistake. A bank is going to require a minimum of a 20% down payment; that is based on the appraised value of the home or the purchase price. In this scenario we will use the purchase price of $110,000. The minimum down payment would be $22,000. The bank will not roll the closing costs into the loan—you will be responsible to pay that upfront. Let’s assume the closing costs are $5,000; that includes title, underwriting and all fees associated with your deal. The bank also will not lend you money for repairs. So, you will have to come up with that out of pocket expense, as well. So far, you are looking at $45,000 for the closing costs and repairs—and let’s not forget the down payment of $22,000. That is $67,000 you will have to come up with to flip this house. Banks also require inspections—meaning that if the property doesn’t pass all inspections, those will have to be repaired and handled before the bank will finance. Sometimes the seller will fix this, but often—especially in the cases of foreclosures, that doesn’t happen. Also, a bank can easily take 60 to 90 days to close. It is a minimum of 30 days to close. Sellers, of houses that need rehabbed, do not want to wait for 30 to 90 days. They’ll sell it to someone who has the cash.

Arizona Hard Money Loans

Arizona Hard Money Loans are short-term loans that come from a specific source meant for real estate investors. There are no inspections required. Arizona Hard Money Lenders will loan on a property in any condition—they know you are buying it to rehab and sell. Another nice thing about Arizona Hard Money Lenders—they will include the repairs in your loan. Arizona Hard Money Loans are quick-close loans. Investors typically have their money in less that 2 weeks. Sellers love working with investors using hard money for this reason alone. Hard money financing works differently. Arizona Hard Money Lenders lend on ARV (typically 70% of ARV). In this situation the ARV is $200,000. The loan amount for the property alone would be $140,000. The purchase property is $110,000. That leaves you with $30,000 extra for repairs.

Bank financing works for a primary residence—one you will live in for 30 to 40 years.

However, bank financing makes no sense for a property that will be rehabbed and sold. An investor actually loses money using a bank loan. Numbers don’t lie. Contact us for information on real estate investment loans at level4funding.com.

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.

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.

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.

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.

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.

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.

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.

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.