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Saturday, April 20, 2019

Top 3 Mistakes Newcomers to Texas Fix and Flip Loans Make

Home rehabbers are always on tight schedules, but when you leverage Texas Fix and Flip Loans as opposed to self-financing, it’s that much more important to keep your project on track. Become familiar with the top three mistakes newcomers make in order to ensure a smooth and profitable exit.

1. Not padding the timeline. The work of various professionals assisting you are often dependent on the others staying on track. For example, your drywaller may not be able to take over until your electrician is done or your cabinet installer may not be able to work until the tiler has finished. If one early in the chain is delayed, it will set everyone else back too. Sometimes suppliers are sluggish a slow in the market can delay the sale. Always pad your timeline some, so that unforeseen issues don’t push you past your intended exit date.

2. Not padding your expenses. Having the property inspected by a professional is a must, especially if you don’t have much experience in the area on your own. That said, there are sometimes things you cannot foresee. Perhaps you pull up the carpet and discover mold and water damage or you open a wall and find out the prior homeowner was clearly not an electrician or a plumber, but attempted to be one. You’ll likely have a legal and ethical obligation to set things right. Without extra room in your budget, this will eat away at your profits or could even leave you upside-down.

3. Forgetting about government regulations. After the housing crisis, guidelines for FHA loans changed. This doesn’t impact your ability to get Texas Fix and Flip Loans, but it may impact who can purchase your home and when. There are a couple areas to address here. FHA loans can be good for borrowers who wouldn’t ordinarily qualify for a mortgage. The government insures the loan to protect the lender, but the borrower then has additional fees to pay. For this reason, the location you’re working in will impact whether or not your buyers will want this form of financing. If you’re working in luxury homes, they won’t be, but if you’re working in struggling or up-and-coming neighborhoods, they could be. If you are in an area where buyers may need an FHA loan, they will not be allowed to purchase yours until it’s been in your possession for 90 days if your sales price is two or more times what you paid for it.

With Planning and Foresight, You Will Have a Successful Project

The more you work with Texas Fix and Flip Loans and rehab projects in general, the easier it will become to identify issues in these three core areas and avoid them. However, for your initial ventures, it’s a good idea to give yourself a fair amount of breathing room and simply anticipate there being unforeseen circumstances, so you never fall short on time or money.

Develop a strong network and they’ll be there when you need them.

It can be frustrating when a supplier sends out the wrong thing or delays a shipment, particularly when that makes the schedules of your tradesmen fall like dominoes. However, the more you work with your team and the better you treat them, the more likely they are to prioritize your needs over all the other projects they do. Your Texas Fix and Flip Loans will go further and you’ll be more successful too.

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.

Friday, April 19, 2019

Try These 4 Tactics to Get 90% Texas Hard Money Loans

Most lenders offer 50-60% LTV (loan-to-value) as a standard. However, you can get 90% Texas Hard Money Loans if you know what lenders are looking for and adjust your strategy to suit.

1. Bring on a partner with experience. There’s a fairly large learning curve when it comes to real estate investments. Particularly as things stand now, with the markets leveling out or only climbing slowly, the success of any given project depends largely on the skill of those involved. If you don’t have experience or are weak in one or more areas of fix-and-flips, bringing on a partner who is strong in areas you aren’t will make you a more appealing borrower.

2. Improve your credit. While you can get funded with rotten credit, you won’t likely get 90% Texas Hard Money Loans. On lower amounts, your score matters a whole lot less. It’s based mostly on the value of the property. However, at 90-100% of the value, you’re asking the lender to take on considerably more risk. They’re going to need added assurance you’re fiscally responsible. There are many things that can improve a credit score, such as simply reviewing yours and requesting that inaccurate blemishes be removed or paying off older balances. You may need to spend some time building up in this area though.

3. Do rehab on a draw-basis. Don’t expect to receive all your funding at once. Lenders may feel a bit more at ease if you’re pulling out cash as it’s needed for various projects rather than in one lump sum at the onset.

4. Work a different location. Due to variances in the market, certain locations are safer bets than others. Check with your lender to see if this is the case in your circumstance. If it is, see if they can point you in the right direction when you go to search for a different property.

Find a Different Lender to Help You if Need Be

If you’ve addressed all three key areas—you’ve got the experience, good credit, are willing to work on a draw basis, and have a great location—it could be that the lender you’re working with simply doesn’t offer 90% Texas Hard Money Loans. Not all of them do. Call around to others in your area to see what terms they offer and under which circumstances they offer them. You can also connect with a broker who will know where you can get the best terms too.

Develop relationships to become more successful.

Realistically, 90% Texas Hard Money Loans are hard to come by, and even among those who offer them, the criteria to obtain one is more stringent than other offerings. Find a good team that will work with you and get you the best terms possible. Listen to their advice and follow through on any steps they recommend. As you develop a relationship with them and they gain confidence in your ability to run a successful project, you’ll soon see better terms headed your way.

3 Exit Strategies Residential Texas Hard Money Lenders Will Approve

When you approach residential Hard Money Lenders in Texas for funding, you’ll need to explain your exit strategy. Develop a plan around one of the three common exit strategies to keep your application moving forward.

There are quite a few contrasts between working with residential Hard Money Lenders in Texas and taking out a conventional loan. One key difference is that the principal is typically due in one lump sum at the end of the term. Although you’ll still make monthly payments, they’ll be smaller and will be interest only. Because of this, you’ll need to map out in advance how you plan out your exit strategy, or how you’ll pay off the balance, before you get funded. There are three main ways to do this, and the right choice will vary based upon your circumstances and investment strategy.

1. Sell the property. If you’re doing a fix-and-flip, selling the property is a natural end. You’ll handle all the repairs, put the home on the market, sell it for a tidy profit, and then pay off the loan.

2. Refinance. More often than not, refinancing is done with the fix-and-hold strategy. The loan is taken out either because the property is in poor condition and won’t qualify for a conventional option or the borrower needs to move faster than a bank loan can get funded. In these cases, the borrower can approach a bank at a later date and get a conventional loan. Sometimes borrowers refi down the line for other reasons too. For example, their credit score may not be good enough for a bank or they might have too much personal debt.

3. Payoff. Occasionally, a borrower has cash tied up in other projects and can’t get it out in time to fund a deal. This happens more often with a seasoned investor who has a larger portfolio and wants to keep growing it. He or she may have another property ready to hit the market a month or two down the line and will pay off the balance using the earnings from the other sale. The funds can come from virtually any source, such as an inheritance or other major payout, but the lending team will want to verify that the payoff plan is a sure bet.

Successful Investors Always Have a Backup Plan

Unexpected delays in a fix-and-flip project or a delay in incoming funds earmarked for a payoff could require you to refinance the loan at some point. Because of this, it’s a good idea to establish refi options at the onset of a project and be prepared to leverage them in the event your final payment to your residential Hard Money Lenders in Texas becomes due before you’re able to cover it.

Continue to evaluate your exit strategy throughout your project.

Even after you get approval from residential Hard Money Lenders in Texas, you’ll need to keep tabs on your exit strategy to ensure it’s still within reach. Monitor your timeline and funding as you move forward and be prepared to pivot when needed, so you can avoid complications and make the most of your venture.

Top 4 Pitfalls of Owner Occupied Texas Hard Money Loans

True owner occupied Hard Money Loans in Texas are relatively unheard of in the industry. If you’re looking for one of your own, it’s important to become familiar with some of the drawbacks before you commit.

1. You, personally, must live on the property. Many people seek out owner occupied Hard Money Loans in Texas in the hopes of getting a better deal on financing, simply because most “owner occupied” lending options do have better terms. The logic behind this is simple: people will fight tooth and nail to keep their home. There’s less risk for a lender, so the lender will usually offer more favorable terms. The problem is, the borrower is the one who has to live in the home; not a family member and not a renter. Furthermore, it has to be the borrower’s primary residence.

2. Your income must be scrutinized. The Truth in Lending Act changed things in this respect. Because the government now sees the property as your primary residence, it sticks its hands into it too. The aim is to protect you to ensure you don’t wind up borrowing what you can’t repay, so the requirement then becomes that a third party has to look into you and your income.

3. Property taxes and hazard insurance have to be impounded if it qualifies as a “high-cost loan.” That means your lender has to collect extra payments from you for at least the first year you borrow. Furthermore, it’s up to you to be mindful and cancel it when it’s no longer required. Your lender isn’t allowed to do it for you.

4. You’ll get funded slower. Whereas a traditional private loan can close in a matter of days, you’ll need to add weeks or a month or more to this timeline if you’re borrowing as a primary residence. This, too, comes down to the added government regulations.

You Can Avoid Excess Regulations with Commercial Lending

While the above impacts you, directly, there are further regulations which cause headaches for the lenders too, which is why most will not provide owner occupied Hard Money Loans in Texas Instead, commercial or non-owner options are offered. With these, you are not expected the home. The requirements to qualify are different too. Instead of you being scrutinized, it’s mostly the property that’s of concern. Naturally, that’s a slam-dunk when it comes to things like fix-and-flips or fix-and-holds, but it can be extended to other circumstances. For example, if you’re adding a home office to your own property, technically the funds are for a business use. The key is that the funds cannot be used for you, your family, or your household.

Seek advice from an experienced broker to find the solution that’s right for you.

Chances are, you will not find owner occupied Hard Money Loans in Texas because of the red tape involved, but you probably wouldn’t want to anyway because it causes headaches for you too. A broker can walk you through funding options that are ideal for your particular situation, so you can get funded quickly and move on with your project.

Thursday, April 18, 2019

How to Use a Cash-Out Texas Bridge Loan to Grow Your Portfolio

A strong real estate investment portfolio can pave the way to a comfortable lifestyle, but sometimes plans stall out due to lack of capital for the next purchase. A cash-out Texas Bridge Loan can be the tool that gets your plans back on track.

Developing a real estate portfolio, as opposed to focusing purely on fix-and-flips, can give you a steady stream of reliable income. The difference is, with fix-and-flips, you get a sizable amount of cash at the end of the deal, which you can then turn around and apply to your next property. When your funds are tied up in a property you plan to hold, it’s not always easy to move onto the next project. This is where a cash-out Texas Bridge Loan works wonders.

If your existing property is paid for or you have a considerable amount of equity in it, you can tap into that equity to fund the next project, but chances are you’ve never heard about this because the banks don’t like to do it. They will, at times, offer a similar option, but they expect you to spend the money on the property you’re borrowing against, which isn’t particularly helpful if that one’s already up and running and generating revenue.

So, without the banks helping you, where do you get the cash? From a Texas Hard Money Lender, of course. While a Texas Hard Money Lender will still want to know how you plan to spend the cash and will want to be assured you’ve got a solid exit plan mapped out, you aren’t tied down to using the money on the property that’s being leveraged.

Cash Out Can Help You Buy and Hold or Buy and Flip

Most Texas Hard Money Lenders will do a cash-out Texas Bridge Loan for up to 65% LTV (loan-to-value), meaning you can pull out as much as 65% of the value of one of your existing properties and use that cash toward the next project. However, if you know where to look, you can sometimes get as much as 90% LTV. People use cash-out options for different applications. In some cases, they take the full lump sum and apply it to the purchase and repair of a property. When the repairs are complete, they may sell it and pay off the balance or they may hold it and refinance. There’s also the option of using it to help cover what another loan won’t. If, for example, an investor gets funding for the purchase of a new property, but doesn’t get enough to cover the repair, the cash-out option will work there too.

If you’re eager to build a portfolio, you don’t have to wait any longer.

Naturally, it’s important to be mindful of how much you’re tapping into your portfolio to ensure you’re not overleveraging it. However, if you’ve got at least one revenue-generating property with solid equity, you can continue to grow and increase your earning potential with a cash-out Texas Bridge Loan.

Can You Really Be Mortgage-Free with Texas Private Money Lenders?

The mortgage-free lifestyle is the stuff dreams are made of, but many people believe it’s not within reach. There are actually many ways to accomplish this, and Texas Private Money Lenders can help set you on the path to financial freedom.

Data from Forbes Magazine concludes the average person is now leaving school with close to $40,000 in debt and one-in-ten with student debts is in default. On the other side of things, Value Penguin places the average amount of credit card debt at over $9,000 for balance-carrying households, while CNBC concludes nearly three-quarters are in debt and the majority believe they always will be. Nearly 80% of full-time workers are living paycheck-to-paycheck, and those with six-figure salaries are not immune, with close to 60% saying they were in the red.

It’s statistics like these which cause people to either make dramatic life changes or, at the very least, seek out alternative income streams. The good news is, there are many ways to approach this, depending on one’s personal style, and you don’t even have to have good credit to make it happen. It’s more a matter of identifying which strategy is right for you and pairing up with the right Texas Private Money Lenders to make it happen.

Live the Debt-Free Lifestyle with Savvy Investing Strategies

Generally speaking, property investing falls into two main categories; fix-and-flips and fix-and-hold. With the fix-and-flip variety, investors purchase an inexpensive property, upgrade it, and sell it rapidly for a profit. In most markets, each flip generates $20,000 or more, though some of this depends on the prowess of the flipper. With fix-and-holds, the investor keeps the property after repairs, either holding it until the market increases its value naturally or for the sake of renting it out to gain an income stream. There is a hybrid with this in which the flipper also lives in the home as repairs are being made as well. It’s an option worth exploring for those who don’t mind moving around a bit and can establish loan terms which allow it. Yet, these aren’t the only approaches that are being leveraged. As the housing market has shifted, there have been more people approaching Texas Private Money Lenders to get loans for Airbnb properties and even tiny houses too.

Take the first step and make your dreams come true.

Once you decide which strategy is more in line with your comfort level and goals, you can explore your options with Texas Private Money Lenders. Using this form of lending, also sometimes referred to as hard money, the property you purchase serves as collateral and you’ll usually make interest-only payments until the term is up. That gives a bit of breathing room to work through your project and enables you to qualify even if you wouldn’t normally get approved by a bank. Considering the average mortgage payment in the western United States exceeds $1,200 per Value Penguin data, it’s easy to see how eliminating the expense can totally change your life.