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

Thursday, April 18, 2019

Why Smart Texas Private Money Lenders Insist on Title Insurance (And You Should Too)

Most Texas Private Money Lenders require title insurance in order to fund a deal. Although there’s some debate on the merit of this practice, it’s essential because it protects both you and the lender.

Although land and property transactions began occurring in the United States for almost all recorded history, the concept of title insurance is relatively new. Initial transactions were simple for obvious reasons. There was virtually no chance anyone else could lay claim to a property because so little of the country had been settled.

Because of this, the conveyancer system was used. Conveyancers worked similarly to title insurance companies in the sense that they carried out diligence, but they offered no guarantee that a property was free and clear. They weren’t lawyers, but rather, were local experts who could carry out research on any given property. They’d craft reports and sign off on them, which would give buyers/ borrowers and those financing purchases more confidence, but the transactions were still risky.

Watson v. Muirhead in 1868 changed this. Muirhead was a conveyancer hired by Watson to check into a Pennsylvania property. After finding a lien on the title, Muirhead consulted an attorney. The attorney told him the lien was invalid and Muirhead decided to certify the property was clear. Watson purchased the property, but it was later put up for a Sherriff’s sale to pay off the lien. The sale was legal. Watson lost his property and his money. He attempted to sue Muirhead (thus the groundbreaking case of Watson v. Muirhead), but he lost. At the time, Muirhead could have only been held liable if he had been negligent, and because he consulted an attorney and acted upon the attorney’s advice, Muirhead was not in the wrong from a legal standpoint.

The following year, the first title insurance company was formed. Today, Texas Private Money Lenders and virtually any entity handling the financing of a property requires that a title insurance company be involved in the transaction.

Title Insurance is a Win-Win Solution

While many people think title insurance is purely in place to protect the Texas Private Money Lenders, this early case highlights how important it is from a buyer or borrower standpoint too. The insurance company not only carries out the research, but pays out if, for some reason, a mistake on their part results in financial losses. Ergo, it will address things like unpaid taxes or liens that could become a problem later, existing loans, active or pending foreclosure, active bankruptcy by the current owner, undisclosed or missing heirs to the property, errors, fraud, and more.

You’ll risk less by having title insurance and can protect your own assets.

As a borrower working with Texas Private Money Lenders, you’ll have some skin in the game too. Although title insurance is not a 100% guarantee there won’t be an issue with the property later, purely because the title insurance company is using public records to certify, their willingness to pay out in the event there’s an issue protects your investment and the money that your financers are putting in as well. Simply put, getting title insurance is one of the smartest things you can do when you purchase a property.

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.

Wednesday, April 17, 2019

Top 4 Tips to Get Your Texas Hard Money Loans to Close Faster

One of the biggest benefits to using Texas Hard Money Loans is that they can get cash in your hands quickly. To keep the process moving smoothly, come to the table prepared.

1. Establish a main point of contact. Most lenders will pair you up with someone, be it an account manager, broker, or assistant. It’s important to develop a relationship with this person and ensure the lines of communication are open, so they can follow up with you as needed and keep you informed of the progress. If you aren’t given a main point of contact, find out who you should be keeping in touch with.

2. Find out what documents you’ll need in advance and have them ready to go. Each lender will have a different set of requirements for approving Texas Hard Money Loans, but you’ll typically need to supply details on the property, an appraisal, an outline of your plans, a budget, a timeline, and documents related to your business and financials. Oftentimes, the team cannot even begin processing an application until after everything is submitted, so delays in getting the paperwork to the finance team will naturally slow the approval process.

3. Don’t overwhelm your finance team with unnecessary paperwork. It can be tempting to send in everything you have related to your project, but your lending team will have its own processing methods and if extra things are sent in, that simply makes it harder for them to find what they need in your stack of papers.

4. Be prepared to supply additional details. If something is missing or is unclear, the team will need a prompt response from you in order to continue moving forward. Ergo, if you had a stack of papers you held back from the initial submittal, keep them close at hand just in case they’re needed.

Demonstrate Eligibility Early and Have Cash in Hand in Days

Traditional bank loans have regulatory red tape that slows the approval process, dragging the funding out for a month or more. This isn’t true with Texas Hard Money Loans. If your initial application is comprehensive and you supply all requested documents promptly, you can literally close on your financing in a matter of days.

When you work with a good team, they’re there when you need them.

The process will be different depending on where you’re sourcing your Texas Hard Money Loans from, but an experienced funding team works like a well-oiled machine. That’s part of the reason they’re able to stay in business. By taking care of you promptly, they’re not only creating a happy customer who will return for later deals, they’re freeing themselves up to complete other deals. They do this day in and day out, so it’s a smooth and straightforward process. Follow their lead, stay connected with them, and you’ll close faster than you ever thought possible.

Can You Really Use Texas Hard Money Loans to Flip Hoarder Houses?

Hoarder houses can be such a disaster that it’s difficult to assess what needs to be done before it’s cleared, but that doesn’t mean they’re not good investment properties. You can use Texas Hard Money Loans to fund the deals as long as you’ve prepared a solid plan.

Under ordinary circumstances, you’ll have a good idea of the amount of work necessary to complete any fix-and-flip. While you should budget for unforeseen expenses because just about every house has an oddity, chances are your whole project won’t be derailed by a surprise finding. Hoarder houses are different. They can be packed solid with debris from floor to ceiling, totally obscuring the condition of the property.

The medical community is still trying to establish what happens in the minds or hoarders. Initially, hoarding was believed to be an offshoot of obsessive-compulsive disorder, but scans show these individuals have abnormally high brain activity when they’re faced with a decision to throw something away, even when they know it’s junk. This stimulates them to the point where they’re paralyzed from making a decision, and so their clutter grows. Their isolation and depression tends to as well.

Adding to the challenges, there are often infestations and animals kept in the homes. The hoarder, genuinely unable to make the decision to so much as toss a piece of junk mail, cannot manage these issues either. Ergo, the homes are not only packed with debris, but are also unsanitary and unhealthy. It’s no wonder that when TV shows depict the big clean-out, the crews going in wear hazmat suits.

Risk Less by Planning for a Complete Teardown

Part of getting Texas Hard Money Loans involves demonstrating your plan for the property, but if you can’t even see the walls, it’s impossible to determine the condition they’re in. They could have holes, mold, damage from infestation, and more. In other words, the only way you can be sure you’re going to have success with the project is to plan for a worst-case scenario; tearing everything inside the home down. Other costs worth factoring in are pest control and professional junk removal. The latter is beneficial because these people do removals every day. They have the equipment, materials, and expertise to get it done quickly and cost-effectively, as opposed to your regular contractor who may or may not have ever worked on a hoarder home before. It’s worthwhile to get estimates from more than one company for this.

Set Your Expectations Based on Real Numbers to Be Successful

Anytime you apply for Texas Hard Money Loans, you have to demonstrate that your plans make fiscal sense. That’s a given. When it comes to hoarder houses, you need to work backwards, starting with what the finished property will be worth, then subtract all your expenses (remember, you’re going down to the studs and there will be additional costs too), remove a portion for yourself, and then determine what price the property is worth. This is one situation where it may be incredibly difficult not to make an emotional decision, particularly if you’re negotiating a price with the hoarder, but it’s important to focus on the numbers. Only then can you put Texas Hard Money Loans good work by giving this person the chance to walk away and start over, help the neighborhood, and invest in your future too.

Why Do Texas Hard Money Lenders Prefer to Work with LLCs?

If you’ve worked with Texas Hard Money Lenders before, you know how they operate, but if you’re applying for a loan the first time, it can be difficult to know what to expect. Arm yourself with the information you need to spot a bad deal, so you can have a successful venture.

Outright scams are incredibly rare when it comes to Texas Hard Money Lenders. The only news-worthy case in recent history involves investors who believed they were funding deals and unfortunately lost $1.2 billion, according to a Mortgage Professional America report. On the borrower side of things, similar events are largely unheard of, but the story highlights a major point. When you’re borrowing from Texas Hard Money Lenders, you’re usually being funded by private individuals. The regulations regarding the loans are different compared to what you’d find with a traditional business loan and the approval process is unique too. How can someone with little experience stay protected in uncharted waters?

For starters, it pays to watch for offers that promise way more than others are doing. For example, ultra-low interest rates can signify there are hidden fees or a promise that the group will fund any deal should raise red flags. Realistically, no investor could fund all deals because not every borrower is a safe bet.

Secondly, serious investors are going to investigate you and your proposals. More often than not, people turn to alternative funding because a bank loan isn’t going to cut it, so investors must be incredibly diligent about checking into things before funding. If they don’t personally check out a property or business site or send someone out whom they trust prior to approving, that’s also a red flag. They should be going over your application with a fine-toothed comb too. If you have a broker helping you through this process, you might not notice any hitches because he or she will likely catch anything before an application is submitted, but it’s something to be aware of if you’re going it alone.

If You Can Run a Web Search, You Can Identify the Real Deal

Thankfully, it’s usually easy to tell who’s legit and who’s not. Authentic Texas Hard Money Lenders will have an established web presence going back many years. Anyone who isn’t doing business on the up-and-up can’t keep using the same name because it will get tarnished fast. While every company that’s been in business for an extended period of time will likely have a couple negative remarks purely because they’re coming in contact with the general public, you should be able to identify an overall trend in the business reputation.

A reputable financing team will find a win-win solution.

Whether you’re working with a broker or directly with your investors, the aim is always to cultivate lasting relationships. When you’re successful, they’re successful, so they want to fund your deal and have you come back again. Even if a team cannot help you this time, they will still treat you with respect with the hopes that they can help you the next time.

Tuesday, April 16, 2019

Why Do Texas Hard Money Lenders Prefer to Work with LLCs?

Some Texas Hard Money Lenders will only work with LLCs or Limited Liability Companies as opposed to consumer borrowers. The good news is this doesn’t have to be a barrier to your success; establishing an LLC is easy.

Consumer loans are subject to different regulatory guidelines than commercial loans are, so it’s quite common for Texas Hard Money Lenders to focus on just one area. By homing in on the commercial sector, it’s easier to work deals without getting caught up in governmental red tape and success rates are improved. In fact, there’s actually a huge difference in the outcome between consumer and commercial loans. Data gathered by the Federal Reserve Bank of St. Louis concludes that 3.01% of consumer mortgages default, while 2.49% of personal credit card accounts do as well. When it comes to the commercial side, defaults drop down to just 1%, so it makes fiscal sense for investors to apply their funds to an area that’s more likely to give them the return they expect.

Whether you’re doing home rehabs, working commercial projects, opening an Airbnb, or launching another type of business, operating under an LLC demonstrates that you’re a professional and makes it clear you’ll be using whatever funds you receive for business purposes.

There are also benefits to you for getting established as an LLC. The most obvious is that it limits your personal liability if something goes wrong with the business. You’ll also get to choose whether you’re taxed as a “C” corporation or an “S” corporation. As an “S,” earnings are taxed only once, whereas with a “C,” earnings are taxed before being divvied up amongst owners and upon receipt, so the right structure can minimize your tax burden as well.

Starting an LLC is Easy, But Get Advice from a Pro If You Haven’t Done It Before

You’ll need to file your LLC’s articles of organization. The paperwork is straightforward, though you’ll need to have your name and a registered agent (person who will receive all communication) selected. Fees vary by state for filing, but most range from $50 to a less than $150 for the initial filing and then have a small annual fee to maintain it. You will also likely have to publish a notice in the newspaper and obtain any necessary permits or licenses to operate. From there, it’s typically just a matter of opening up a business bank account, so you can keep your personal and business funds separate. Once you have these steps taken care of, and have your business plan ready, you should be able to approach Texas Hard Money Lenders with confidence. If you get stuck along the way, touch base with an attorney who specializes in business law or talk to an accountant about which designations are right for you.

If you can use a computer, you can start an LLC.

Most states provide the paperwork for starting an LLC online, so getting yours going is really only a matter of ticking off a few boxes once you’ve chosen a name and keeping up with the annual renewal. If you’re serious about starting a business or taking on a new project with the help of Texas Hard Money Lenders, getting an LLC set up is a simple and smart first step.

Getting Started with Real Estate Investing

You watch television, listen to your neighbors chat, and read about it— fixing and flipping properties. And from everything you see and hear it looks and sounds glamorous and like the fastest track to wealth.

Glamorous? Probably not. It takes a lot of sweat and tears to become successful in the real estate investment game. Fast track to wealth? It’s definitely a track to wealth, but how fast you get there is up to the time you have to give and how quickly you learn. The first thing as an investor you have to do is find a distressed property that you can fix up and sell for a profit. The second thing you have to do is find financing.

So, you search hard and find a perfect investment property. You have never done this before and you need a loan—so, where do you go? Duh, the bank of course. Unfortunately, after meeting with the loan officer you learn that banks frown upon lending to investment properties. It is just too large of a risk. Enter Arizona Hard Money Lender.

Arizona Hard Money Lenders are the Knights In Shining Armor for Investors

Arizona Hard Money Lenders are not banks. They are firms or individuals that have borrowed money from other investors. They lend this money to real estate investors on short-term loans. Arizona Hard Money Lenders, unlike banks, will loan on any property—no matter how distressed it is. They are in this business with you. Arizona Hard Money Lenders can look at a shack and see a cozy fairytale cabin. They are able to see what banks can not.

Banks will require a large down payment—Arizona Hard Money Lenders lend on an LTV (loan to value) or an ARV (after repair value). The LTV ratio is calculated by dividing the amount borrowed by the appraised value of the property as a percentage. If you find a property that appraises at $200,000 and make a $20,000 down payment, you will be approved for $180,000 resulting in an LTV of 90%. An ARV estimates the future value of a distressed property after it has been repaired. If you find that same property that appraises at $200,000, but after repairs it is assessed to sell at $300,000. The Arizona Hard Money Lender approves 75% ARV—that means the loan amount would be $225,000. That leaves you with $25,000 to put towards repairs.

Each Arizona Hard Money Lender will have different terms and handle each deal differently. They are not banks that treat their customers as a number, they realize you are human. Investors have a one-on-one relationship with their lenders. Because they are private money lenders they have flexibility. What that means is they can work with you. When things come up, call them— talk with them and find a solution together.

Arizona Hard Money Lenders have gotten a bad reputation as sharks that charge outrageous interest rates and hunt down borrowers after one late payment.

In reality that couldn’t be further from the truth. Investors and Arizona Hard Money Lenders form unique relationships. No one wants the investor to succeed more than the lender because that equates repeat business for the lender and security for the borrower.