Month: August 2018

As an investor, why would you consider Hard Money Loans instead of a conventional bank loan? Take a look at the reasons why many a real estate investor is using this type of funding.

You finally narrow down the property that you want to invest in. You make an offer and it is accepted. Now, time is of the essence and you need to secure financing quickly. You contact your local bank and find out that the time to close a loan is 30 to 60 days at best. Not to mention the loads of paper work that you must produce in order to support the loan. Hard money loans can move quickly, in some cases it can take as little as 3 days to get funded.

Another advantage to hard money lenders is that they are not concerned with the borrower’s credit history or income, but rather the equity in the project itself. If you have had a challenged background, bankruptcies, or tax liens which would get you turned down by a conventional lender, you may very well get financing through a hard money lender.

If you are a new investor or a seasoned pro, the benefits of hard money loans include the speed to funding, low documentation, and not looking at a borrower’s past credit history. The lender will want to know how the loan will be repaid because they prefer not to get the property back. This finance option provides the borrower with speed of transaction, less paper work, and the ability to do multiple projects.

Hard Money Loans vs Traditional Bank Loans: The Difference Between the Two

· Delivery of funds and fast approval – An experienced hard money lender can approve your loan in hours and fund your project in as little as 3-5 days. The typical time for banks is 30 to 60 days.

· Equity and not credit or income is needed for approval – Regardless of your past credit history, your project funds will be based on 70 to 90% of the equity in your investment property.

· Terms are short – These types of loans run shorter than conventional banks. Residential loans can run from 6 months to 1 year while commercial loans can run up to 5 years.

· Interest rates are higher – Unlike traditional bank loans, hard money lender’s interest rates run from 7.5% to 15%. This depends on the term, loan to value ratio, and the location of the property.

· Paperwork is less than traditional banks– Hard money lenders are funded by private lenders, and the loan is based on the equity of the property. This results in less paperwork than traditional bank loans.

· Distressed or below market property financing – These types of loans are in high use for investors looking to fix and flip distressed properties or below market-value investments.

While many hard money lenders are reputable, as with any industry, not all companies are created equal. As an investor, you will need to do your homework and research each company that you are thinking about doing business with.

You will want to find a lender who has experience, a good reputation, and is licensed. Take careful notes of those lenders who are honest and upfront about the costs and interest rates. At Level 4 Funding, we work with hundreds of private investors whose reputations are solid. We guarantee the lowest possible rates and often approve loans within 24 hours. Call us for a no-obligation quote.

Dennis Dahlberg

Broker/RI/CEO/MLO

Level 4 Funding LLC  Private Hard Money Lender

Arizona Tel:  (623) 582-4444

Texas Tel:      (512) 516-1177

Dennis@level4funding.com

Dennis Dahlberg Broker/RI/CEO

NMLS 1057378 | AZMB 0923961 | MLO 1057378

22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027

111 Congress Ave |Austin | Texas | 78701   

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 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

If you are having hard financial times and want to invest in a real estate project, then hard money lenders might be for you. Here’s what you need to know when you decide to proceed with this type of lender.

Working outside the traditional lending industry is a hard money broker. This broker has a pool of money that he wants to earn a higher than normal interest rate return on the money. The lending decision will be based on the preference for risk and the ability to do the loan. If the people have poor credit or their debt ratios are high, they can still secure a hard money loan.

Compared to conventional banks, loans from hard money lenders often come with higher than normal interest rates. These rates can run anywhere from 7 to 15 percent. Investors often use this type of loans as it is easy to qualify for and provides quick funding. In addition, brokers such as those at Level 4 Funding have put together a large rolodex of private investors that specialize in various types of real estate investments. These include numerous types of properties such as single family and multi-family units, offices, retail space, hospitality sites, storage facilities, assisted living communities, mixed-use buildings and warehouses.

When making payments, hard money lenders may charge you interest only. In these circumstances, the payment on the principal will be deferred until you flip the investment. This will give you a lot of flexibility.

End of Loan Balloon Payment

If your loan is setup as an interest only loan that means that at the maturity of the loan, in most cases 12 months or less, you will be faced with a balloon payment. If you were planning on refinancing, selling the property or paying it off, you will have to do this at the same time with the maturity of the loan. This illustrates the importance of planning before you become an investor in real estate.

With the proper forecasting, you can avoid penalties and proceed with confidence.

Before you proceed and begin your project, you will need to forecast your cash needs and cash flow. If you get into a tight cash position, and if you are late on a payment to hard money lenders, you may be hit with a very stiff late fees. It’s also important to be aware that a number of loans carry pre-payment penalties. This means that if you come up with a windfall and are able to prepay your loan, you’ve agreed that the lender can penalize you for early payment and not paying the loan for the entire term. Lenders often try to squeeze all the money they can out of a loan. So, before you sign on the dotted line, make sure you understand every item on the term sheet. Consider bringing it to your attorney and letting them review it before you proceed.

And always work with good-standing firms. At Level 4 Funding we understand that your success is our success. We do not charge pre-payment penalties and offer residential terms as low as 7.99% APR with commercial terms starting at LIBOR+350. Call us today for a no-obligation quote.

Dennis Dahlberg

Broker/RI/CEO/MLO

Level 4 Funding LLC  Private Hard Money Lender

Arizona Tel:  (623) 582-4444

Texas Tel:      (512) 516-1177

Dennis@level4funding.com

Dennis Dahlberg Broker/RI/CEO

NMLS 1057378 | AZMB 0923961 | MLO 1057378

22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027

111 Congress Ave |Austin | Texas | 78701   

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 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Hard money loans are also known as private money loans. Most investors prefer the favorable terms and ultra-low rates of conventional financing, but there are certain situations when owner occupied hard money loans can help you achieve your dreams.

If you cannot qualify for a conventional loan and you have a down payment of 30-40%, you may have a short-term solution, a hard money loan to assist you in acquiring a new home. Keep in mind that owner occupied hard money loans are usually easier to obtain than conventional loans. Most loans were equity based until 2008. At the time, if your loan to value (LTV) was 60% or less, a commitment would be issued without the lender considering if the borrower could repay the loan.

In today’s environment, the lender must confirm the ability of the borrower to repay the loan. This is tied to Dodd Frank law and a host of other regulations. On the other hand, owner occupied hard money loans can usually be obtained with a 30% down payment. The lenders may cut back the LTV to 50-60% for less desirable or rural areas. Keep in mind that a definitive exit strategy is needed by borrowers if they use hard money lenders.

If you have had a foreclosure or a short sale in the last 2-3 years, a hard money loan may be your answer to needed capital. Conventional loans require that you allow 3 years to pass before applying for a new conventional loan. If you are considering using a hard money lender you need to have an exit strategy to exit from the hard money loan. One exit strategy is paying off the hard money loan once your first home sells.

No Need for Sourced or Seasoned Funds for the Down Payment

There are very strict laws when a borrower is applying for a conventional loan. The lender in a conventional loan needs to know where the funds are coming from and how long the funds have been in the accounts. A hard money lender is more concerned with the equity position in the property and the borrower’s ability to repay rather than where the down payment funds come from. With a hard money lender, you can use funds from a business account or a family member.

Some hard money lenders require the following when obtaining owner occupied hard money loans:

· A signed Loan application

· Recent credit report

· A signed borrower authorization

· Credit authorization

· Consumer loan disclosures

· A purchase agreement for the property you wish to purchase

· Title report

· Evidence of escrow

· Proof of funds 30-40%

· Vesting

· W-2

· Pay Stub

· Down Payment proof of funds

If you have two properties, hard money lenders can make loans on both properties.

A “blanket loan” can be issued if the buyer has substantial equity in the selling property which is listed for sale with the new property. The properties will be “cross collateralized” which includes utilizing the vacating property and the new purchase. In real estate circles, this type of loan is considered a cross-collateralized owner-occupied bridge loan.

At Level 4 Funding, we make it a point to help you through the process of obtaining hard money loans without the need for mounds of paperwork. Three simple steps can set you up for success: a purchase contract, loan application and a written approval. We do not require tax returns, pay stubs or credit checks and there are no upfront or junk fees. Call us today for a no-obligation quote.

Dennis Dahlberg

Broker/RI/CEO/MLO

Level 4 Funding LLC  Private Hard Money Lender

Arizona Tel:  (623) 582-4444

Texas Tel:      (512) 516-1177

Dennis@level4funding.com

Dennis Dahlberg Broker/RI/CEO

NMLS 1057378 | AZMB 0923961 | MLO 1057378

22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027

111 Congress Ave |Austin | Texas | 78701   

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 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

There are conventional loans and hard money loans for owner occupied properties. Learn the upside and downside of owner occupied hard money loans.

You may have heard of “hard money” loans for construction purposes. Private hard money loans are actually used for multiple investment opportunities including consumer purpose/owner occupied hard money loans. If you intend to occupy the property you are seeking to purchase, then you need to look into consumer purpose and owner-occupied loans. The borrower intends to occupy/live in the property that they are seeking the loan for—In other words, your primary residence. These types of loans can be used for paying a tax lien, helping a family member, or bill consolidation, as long as the loan is tied to any form of real estate.

Since the financial crisis of 2008, the tighter lending regulations, closing time frames, documents and disclosures involved, and borrower protections has led to the whole process with private lenders being one that is overly onerous. A great Plan B could be private consumer loans. Properly underwritten and compliant are appropriate for borrowers who cannot qualify for Plan A (conventional loan).

If you are a real estate agent or mortgage professional, your clients may want to utilize this loan source if they do not qualify for a conventional loan and do not want to lose the purchase of a home.

Consumer Bridge Loans

The consumer bridge loan, short term in nature, is a good loan to consider when you’re in a time of near-term challenges or when conventional financing is not an option. Here are the many reasons for securing a bridge loan:

· If you have a home to sell AND looking to buy a home.

· If you are looking to downsize and do not want to “double move”.

· Bankruptcy, foreclosure, short sale or job time.

· Challenges when it comes to down payment.

· Personal situations such as divorce or probate situations.

· If you are seeking to avoid tax, and do not want to liquidate other assets (stocks, 401K, etc.…).

· 1031 exchange’s

· Fallout from a reverse mortgage

Terms are usually as follows: 5 to 7 days to close, requires a purchase component, a maximum term of 11 months, a typical interest rate of 9.9%, and 2-3% points plus doc and admin fees.

Long-term private consumer loans, although less common, can help individuals in certain situations.

One of these scenarios is a person with credit challenges that cannot be resolved in 12 months. Credit seasoning is a term to describe the time it takes a borrower’s credit to reach a level to qualify for a conventional loan. Another reason for this type of loan is that the borrower has not been in their current position for 24 months. The borrower may qualify for the long term 30/30 loan: A 30-year loan with fixed payments on 30-year amortization.

Additional reasons for a 30/30 loan include: self-employed, hard to document income, income history inconsistent, credit issues, bankruptcy, already own home and you need to refinance, and the purpose is consumer in nature. Terms may include the following: could close in as little as 5-7 days, no prepayment penalty, interest rate of 8.99%-9.99%, and 2-3 points plus doc & admin fees.

Word of caution: If the lender tells you that they can do a loan that does not fit into the above guidelines or seems “to good to be true,” check reviews and backgrounds before proceeding. You can be assured that when obtaining a loan with Level 4 Funding, you’re working with ethical, knowledgeable individuals that have been in the business for over 20 years. Call us for a no-obligation quote.

Dennis Dahlberg

Broker/RI/CEO/MLO

Level 4 Funding LLC  Private Hard Money Lender

Arizona Tel:  (623) 582-4444

Texas Tel:      (512) 516-1177

Dennis@level4funding.com

Dennis Dahlberg Broker/RI/CEO

NMLS 1057378 | AZMB 0923961 | MLO 1057378

22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027

111 Congress Ave |Austin | Texas | 78701   

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 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

There are many reasons why a borrower would consider owner occupied hard money loans. Consider these motives when making your next decision on where to obtain financing for an owner-occupied property.

You apply for a conventional residential mortgage from your local bank or credit union only to be turned down. Don’t give up on your dream. Your other option is a residential hard money lender for your primary residence. This can be a viable solution in the following scenarios:

· Your credit is classified as poor

· Your history shows a recent loan modification, short sale, bankruptcy or foreclosure

· You currently joined your employer and have less than 2 years of provable employment

· You have your own business and are classified as self-employed

· You are seeking a bridge loan for short term purposes

You locate the perfect residence and receive a conventional mortgage only to find out your lending bank or credit union is unable to perform while in escrow. Now is a good time to consider owner occupied hard money loans. The approval and funding process of a residential hard money lender is much short that a conventional bank or credit union which will keep you from losing the investment property. After the house closes, you always have the option to refinance with a conventional loan. Since Dodd-Frank, many lenders will not even consider residential owner occupied hard money loans because:

· Additional documentation is required

· The hard money lender requires additional licenses

· Time to fund the loan increase due to mandatory recession period

· Compared to investment loans, the residential hard money loan has additional risks

A very small amount of Hard Money Lenders will provide owner occupied business purpose loans, however the borrower only benefits if:

· They own the primary residence

· The primary residence that the borrower owns has a sufficient amount of equity

· The funds the borrower receives will be used for a business purpose

Hard Money Loans for Consumer Purposes

Lenders are few and far between when a borrow wants to obtain owner occupied hard money loans for a property. If you plan on living in the home, this will be considered a primary residence purchase. If you are seeking to cash-out for your equity, this also classifies you as a primary residence loan. If the funds of the loans are to be used for family, personal, or household use, then regulators will classify the loan as a Primary Residence loan

Subject to Federal regulations are residential hard money loans due to Dodd-Frank which requires a lender to verify both the borrower’s expenses and income. To verify income a borrower can submit W2’s, pay check stubs, or tax returns. A borrower will be required to keep their debt-to-income within the required ratios.

A residential hard money loan is intended for a short period of time, usually 3 to 5 years.

Before closing the loan, a borrower will be required to submit a plan to obtain long-term financing, or a different exit strategy, depending on the situation. At Level 4 Funding, we can help you come up with the best solutions to your present funding needs. Give us a call to discuss your unique requirements. The world of real estate investment is creating millionaires every day—don’t delay on taking those first steps into a very lucrative business.

Dennis Dahlberg

Broker/RI/CEO/MLO

Level 4 Funding LLC  Private Hard Money Lender

Arizona Tel:  (623) 582-4444

Texas Tel:      (512) 516-1177

Dennis@level4funding.com

Dennis Dahlberg Broker/RI/CEO

NMLS 1057378 | AZMB 0923961 | MLO 1057378

22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027

111 Congress Ave |Austin | Texas | 78701   

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 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Are hard money loans too good to be true? Learn the truth about this often-misunderstood investment opportunity.

Are you a typical real estate investor seeking the best opportunity and the next best purchase? While years of experience often affect the pursuit and tactics used to find the next property, finding ways to finance your project is faced by beginner and professional alike.

On a rental property that you are analyzing to invest in, how you will be financing your investment is always on your mind. Covering your costs that come along with purchasing your investment property is another hot topic. When purchasing a rental property, hard money loans can be used to purchase the property. A little more due diligence and investigation is to be done before committing to using this type of loan to purchase your property.

Have you been wondering just what a hard money loan is? These loans are secured by real estate and the value of the investment property rather than the credit worthiness of the borrower. The term of these loans usually has a maximum of 12 months and have higher interest rates than traditional loans. The source of the funds for these loans is from private money lenders. When Should you Consider Obtaining a Hard Money Loan?

Hard money loans are perfect partners in certain situations. Some of these are:

· Turnaround Situations

· Short term financing

· A problem in your life has caused your credit to be “challenged”. If the investment property that you are seeking to invest in has substantial equity, this should overcome any credit challenge.

Brokers offer loans through private hard money lenders to real estate investors secured by one or more properties. Unlike banks, these lenders charge higher rates and fees but move much more quickly. Their main focus is the value of the collateral (property) for the loan. There is less focus on the borrower’s financial status and credit score. A typical hard money lender may be a mortgage broker with high net worth clients who will invest in the loans. Lenders have certain criteria when deciding if they will provide hard money loans.

Hard Money Lenders Differ from Each Other in a Multitude of Ways

Some of the aspects that different lenders look at include:

Deliverability of the loan, risk of loss based on the amount/underlying asset value, borrower strength, and what the borrowers repayment plan is. Then the hard money lender will look at the property itself including: the actual worth of the property, how much improvement is needed for the property and what will the actual value be after the improvements, how easy the property bill be to foreclose on if the borrower defaults, and how quickly will it be to sell the property in the market that it is located in should the borrower default.

Remember, real estate investing is risky. Explore all possibilities and get your ducks in order before proceeding.

Rejections come in all forms, but some of the main reasons lenders turn down a loan are:

· The loan is outside of the lender’s lending parameters

· The lender wishes not to lend to a particular borrower

· The loan requirements for a loan fall outside the lenders capital

Dennis Dahlberg

Broker/RI/CEO/MLO

Level 4 Funding LLC  Private Hard Money Lender

Arizona Tel:  (623) 582-4444

Texas Tel:      (512) 516-1177

Dennis@level4funding.com

Dennis Dahlberg Broker/RI/CEO

NMLS 1057378 | AZMB 0923961 | MLO 1057378

22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027

111 Congress Ave |Austin | Texas | 78701   

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 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.