Month: September 2019

Arizona Tel: (623) 582-4444

Texas Tel: (512) 516-1177

111 Congress Ave | Austin | Texas | 78701

About: 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.

4 Unspoken Mistakes People Make with Fix and Flip Loans in Arizona and Properties

You’ll hear a lot of advice about choosing Fix and Flip Loans in Arizona and ideal rehab properties. However, knowing the things people don’t like to talk about, such as their errors and missteps, will set you apart from the pack.

1. Assuming a property will sell for the same price per square foot as others in the neighborhood. Running an analysis goes a bit more in depth than that. Sometimes newcomers forget to consider features of properties that have recently sold in an area, such as pools or larger lots. Even the overall size of the property can impact the price per square foot. You really need to drill down the data of the properties you’re comparing to identify what your property is likely to sell for; don’t just look at overall prices per square foot in the neighborhood.

2. Using speculation to determine if a deal is worthwhile now. “It’s an up-and-coming neighborhood,” you’ve likely heard. What exactly does that mean now? Are there jobs nearby now? Is the location safe now? Are people moving to the area now? Don’t bet on a deal purely because a new employer is eying moving in or another developer is working nearby. When you’re doing rehabs, you’re typically looking at a shorter timeline, and the things that may add value to the property may not be in place by the time you need to sell. If you’re working a fix-and-hold strategy, it can be even more dangerous to make a bet based on something you think will happen a couple years down the line.

3. Thinking their reputation doesn’t matter. Doing good business does matter, for lots of reasons. Making repairs properly will earn you a good reputation, which can help you move properties faster. Having a good track record and networking with people can make it easier to find properties and get Fix and Flip Loans in Arizona too.

4. Paying early or late. Your relationship with your contractors is everything, and how you pay them has an undeniable impact on their work. Some try to sweeten the pot and get contractors to shift their priorities by paying for a job before it’s done. That can leave you with an unfinished job. Equally, some are slow to pay, and that kills the relationship with the contractor. Check the work right after it’s finished and pay promptly to ensure quality of work and build long-term relationships.

Project Management and Diligence is Everything

The biggest mistakes people make usually involve going on gut feelings and not following a system that works. You’ll be more successful if you’re working with hard numbers you can see here and now and are mindful of how you spend your Fix and Flip Loans in Arizona to maximize the impact each dollar has.

If you do your homework and follow through, getting funding is easy.

One of the things that’s great about working with dedicated Fix and Flip Loans in Arizona is that they’re not usually based on your credit. They’re based on your ability to find good deals and manage projects. Knowing these mistakes, and avoiding them in your own projects, will help you plan better and be more profitable. It’s also what lenders like to see when you approach them for funding. Keep this in mind as you strategize your next purchase, and you’ll not only have an easier time getting funding, but will grow your wealth quicker.

Dennis Dahlberg

Broker/RI/CEO/MLO

Level 4 Funding LLC

Arizona Tel: (623) 582-4444

Texas Tel: (512) 516-1177

111 Congress Ave | Austin | Texas | 78701

5 Secrets of People Who Use Loans to flip houses in Arizona and Get Rich

Not all people who do rehabs turn it into a profitable enterprise. However, those who do use loans to flip houses and get rich doing it have a few tricks they apply to every project.

1. They work with the same people to get their loans to flip houses in Arizona every time. Once you establish a relationship with a lender, you can eliminate some of the work associated with getting funds down the line. This is particularly true when you’re working with private money and your broker is the one going to bat for you for each round of funding.

2. They know their numbers. The seasoned pros who make a ton of cash doing it always know their numbers, from the value of a property through all anticipated costs, and what the property will sell for after.

3. They don’t get emotionally attached. Especially if you’re new to investment properties, you may have the tendency to get fixated on a particular one. Perhaps it’s in a great location or is going for an amazing price. Maybe you’ve already done the rehab in your mind a thousand times. Unfortunately, something that seems great can go south for lots of reasons; the seller can be fickle about pricing or you might discover it needs more work than you initially thought, resulting in a thin profit margin. Those who become wealthy from flips walk away from these sorts of deals and don’t look back.

4. They get a property sold before it’s done. From the onset of a project, great flippers are networking, talking about their project on social media, sharing photos, and chatting up neighbors as they visit the home. Quite often, the buyer is a friend or family member of someone who already lives in the neighborhood, so word-of-mouth gets it moved fast and the project concludes without a hitch.

5. They expect issues and delays. Problems aren’t problems at all to the seasoned home rehabber; they’re expected and planned for. There’s always extra cash set aside for issues and a bit of wiggle room in the timeline to allow for delays.

People Who are Successful Risk Less by Knowing More

There will always be some variables you cannot account for. For example, you may think everything looks great, but pull up old carpeting to replace it and realize there’s flood damage that was not disclosed by the seller. This is where expecting issues and delays comes in and making sure that when you get loans to flip houses, you’ve got a financial cushion to dope with the unexpected. However, those who do best spend time getting to know the industry and each property, then crunch the numbers before making a decision.

If you think like a winner, you’ll have success too.

Whether you plan to use loans to flip houses in Arizona to get a single property going or you’re in the process of building a strong portfolio, wealth will be built in steps. This isn’t a sprint to the finish, but rather a marathon you’ll train for. Gold medalists don’t become one overnight. They have trainers, they study their craft, and even focus on the little details that can give them a competitive edge, like nutrition. The more you train, the stronger you will become, and that’s what will bring in the cash.

Dennis Dahlberg

Broker/RI/CEO/MLO

Level 4 Funding LLC

Arizona Tel: (623) 582-4444

Texas Tel: (512) 516-1177

111 Congress Ave | Austin | Texas | 78701

3 Approaches 100 LTV Arizona Hard Money Lenders Use to Get You Cash

Finding true 100 LTV Arizona Hard Money Lenders is tough. However, when you work with experienced pros, they’ll get you all the cash you need to fund a successful venture.

If you’re into real estate investing or just getting started, it’s important to maximize the cash you have on hand in order to make the purchase and cover any necessary repairs. Chances are, you’ll have a look around and find that there aren’t a whole lot of 100 LTV hard money lenders, meaning few offer 100% of the value of the property. Because they genuinely want you to be able to wrap up your deal and come back to them for the next one, usually around 60-70% of the property’s value is offered. In some cases, that’s just not enough to get a project off the ground. Relax. You still have options that can bump up your loan amount higher; perhaps even to the 100% mark.

1. Cross-collateralization. Let’s say you want to purchase a property worth $100,000 but only got approved for 60% of the value of the property (60% LTV), which equates to $60,000, and you know you’re going to need to sink $40,000 into it in order to do repairs, but at the end, you know it will sell for $150,000, netting you $50,000 in profit. Ultimately, that $60,000 loan isn’t going to cut it unless you’ve got $40,000 of your own cash to do the repairs with. This is where cross-collateralization comes in. You can use another asset as collateral on the loan, ultimately securing 100% of the necessary funds.

2. 100% of rehab. If you’re able to get your hands on at least some cash to cover part of the purchase price, you may be able to secure a loan that covers the full amount of your rehab expenses and up to 90% of the purchase price.

3. Negotiation. One of the benefits of going with hard money is that you can close much faster than you would with a conventional loan, which can work to your advantage if you’re negotiating with a motivated seller. Instead of trying to take out more loans, whittle that sales price down by pointing out to the seller that he’ll be free of his junky house in no time if he’s willing to work with you on price. Remember, typical loans are based on the value of the property, so if the property is worth $100,000 and you manage to get the seller down to $75,000, that’s money in the bank for you. It’s much easier to get 100% when you’re starting off with a screaming deal like this, and yes, those deals (and better) are still out there!

Let an Experienced Broker Help You

If you know the business well and have a good plan, an experienced broker can help you refine your pitch and get your project in front of the right people. 100 LTV Arizona Hard Money Lenders don’t work like banks because they’re not. In many cases, these are individual people betting on you and your project. When you win big, so do they, and each project they fund matters.

You can make your dreams come true and pay no upfront fees.

You don’t have to pay any cash to get started and your broker may be able to come up with solutions beyond what’s outlined here as well. You can get fully funded with 100 LTV hard money lenders, so take the first step and begin the path to success.

Dennis Dahlberg

Broker/RI/CEO/MLO

Level 4 Funding LLC

Arizona Tel: (623) 582-4444

Texas Tel: (512) 516-1177

111 Congress Ave | Austin | Texas | 78701

Why Hard Money Loans are Interest-Only and What that Means to You

One of the biggest questions people have is, “Are Arizona Hard Money Loans interest only?” Generally speaking, they are, but you should know the benefits and pitfalls before jumping in.

One of the most misunderstood forms of financing is Arizona Hard Money Loans. Unlike traditional lending options offered by banks, these deals are most often financed by individual people, so you’ll also hear the concept referred to as private money. It’s leveraged quite a bit in the real estate industry. For example, someone in the fix-and-flip business might source funds this way. A real estate investor who intends to hold his property after fixing it might also use one at the onset of a project and then apply for traditional funding later. In these cases, you may also hear it called a bridge loan.

The terms offered will vary based on a number of factors, including who the lender is and what you’re bringing to the table as well as what you need. However, in a typical situation, you’d be offered funds for a short period of time, such as 1-5 years, and during that period, you would make payments toward only the interest. When the agreed upon period ends, you’d be expected to pay off the full amount.

One other major difference is that the loan is usually secured by the property, and the amount made available to you will vary based on the value of it. The ratio is referred to as loan-to-value, or LTV. For example, if you found a property worth $100,000 and you managed to pick it up at auction for $70,000, and you got all your funding to make the purchase from a lender, your LTV would be 70%.

You Need to Have an Exit Plan to Be Successful

The reality is that Arizona Hard Money Loans aren’t ideal for every situation. Making interest-only payments can be great if you need to have more cash on hand for the duration of a project, perhaps even essential. However, you have to have a way to pay off all the principal at the end. Your loan balance will not decrease, meaning if you took out that $70,000 loan to purchase a fix-and-flip, and you do interest-only payments, you’ll be paying $70,000 when your time is up. That makes sense in an industry like fix-and-flips, where you’ll be selling the home for profit after the work is done and you’ll have a natural exit. You simply pay off the loan you took out when your payment comes in. It also makes sense if you know you’ll qualify for a conventional loan before your principal payment comes due. This might be the case if the state of the property was such that it couldn’t originally qualify or if you couldn’t wait around for funding and needed to close quickly to seal a deal.

Know how to evaluate your options and choose the best financing for the situation.

People like Arizona Hard Money Loans because they get funded fast, don’t rely on solely credit, and allow the borrower to make interest-only payments. Seasoned real estate investors often start out solely using them and then transition to other options as their credit worthiness increases. But, they will often go back to the same lender when time is of the essence or a property is in such ill repair that it won’t get funded by traditional methods. The bottom line is that it pays to be familiar with multiple forms of financing and choose what’s right for you based on the situation at hand.

Dennis Dahlberg

Broker/RI/CEO/MLO

Level 4 Funding LLC

Arizona Tel: (623) 582-4444

Texas Tel: (512) 516-1177

111 Congress Ave | Austin | Texas | 78701

How Credit Scores Impact Loans and Why Hard Money Lenders Don’t Care

Few people with rotten credit will get the funding they need through traditional methods. Arizona Hard Money Lenders are less concerned with your credit, so they may be a viable option if you’re getting bank denials.

Insufficient credit and low credit scores are involved in 36% and 26% percent of funding shortfalls, according to a recent Small Business Credit Survey put out by the 12 Federal Reserve Banks. Overall, about 77% of businesses do not get the funding they need, which creates a major gap in lending.

What’s more, 87% of small-business owners are using their personal credit scores to obtain financing, simply because their business scores are lacking, so it’s not that these people aren’t pursuing all avenues; they are. They’re even seeking loans from multiple sources at once; 48% try the large banks, 47% go for the small banks, and 24% give online lenders a try. Yet, credit risk holds people back time and time again, which is why Arizona Hard Money Lenders have become so popular.

But, to focus on the bank-dominated side of things again for just a moment, let’s say you’re an average person and the bank determines you have “medium credit risk.” To fit into this category, your business credit score would have to be 50-79 or your personal credit score would have to be 620-719. Your odds of getting fully funded are just 29% and there’s a 26% chance you won’t get any money at all.

What happens if you fall below this threshold? If, for example, your business score is 49 or less and your personal credit score is under 620, you’re considered “high risk.” Your odds of being fully funded drop down to 10% and there’s a 50% chance you will be totally denied any kind of funding.

Rotten Credit Kills Your Chances of Getting Traditional Funding

Even those with personal credit scores above 720 and business scores greater than 80 struggle. This is considered the “low risk” group, yet only 56% receive all the funding they need. Ultimately, there’s a gap in lending to begin with, and as your credit risk increases, that gap begins to look more like the Grand Canyon.

Your eligibility for loans can increase when you look into alternative funding sources.

One of the things that sets Arizona Hard Money Lenders apart is that they care less about your credit than banks do, so you can qualify even if your credit is shot or you don’t have the strongest track record. That’s because their loans are based on the value of an asset you own, such as a home. A lot of people in the fix-and-flip industry work with Arizona Hard Money Lenders and use the home they’re buying and repairing as collateral, then pay off the balance owed when they sell the home later. Sometimes people will also use their own home or other property as collateral too. Although these loans are not ideal for every situation, they can work well for many; particularly if you need a cash infusion for a short period of time and fit into one of the many groups underserved by banks.

Dennis Dahlberg

Broker/RI/CEO/MLO

Level 4 Funding LLC

Arizona Tel: (623) 582-4444

Texas Tel: (512) 516-1177

111 Congress Ave | Austin | Texas | 78701

Top 5 Reasons People are Denied Arizona Business Loans

Roughly 77% can’t get Arizona Business Loans and lines of credit at all or in meaningful amounts. If one or more of them is holding you back too, you still have financing options.

The Small Business Credit Survey is an annual publication produced by the 12 Federal Reserve Banks. The latest version indicates that of those who apply, 23% don’t get any kind of financing and 54% don’t get the amount of cash they need. These shortfalls can effectively shut down a company or stunt its growth. Oftentimes, banks cite one or more of five main reasons for denials.

1) Insufficient Credit History: The greatest cause for financing shortfalls for small businesses is not having established credit. This impacts 36% of those who apply.

2) Insufficient Collateral: When credit isn’t enough to obtain financing, sometimes people can use assets as collateral. However, 35% of shortfalls in financing are impacted by lack of assets.

3) Too Much Debt: The survey found that 30% of businesses don’t get the funding they need because the bank thinks they have too much debt to be able to make good on additional payments toward Arizona Business Loans.

4) Low Credit Score: In all 27% don’t have a good enough credit score to qualify for the loan they need. The numbers skyrocket if the lender considers you to be medium risk or high risk, with just 29% and 10% being fully funded, respectively. To clarify, you would have to have a minimum business credit score of 80-100 or a personal credit score greater than 720 to NOT fit into one of those categories.

5) Weak Business Performance: The last measurable segment includes those who are operating underperforming businesses, which could very well be weak because they lack capital. Even still, this ranks among the reasons for not being offered cash 22% of the time.

Arizona Hard Money Lenders Can Lend a Helping Hand When Banks Don’t

Given that lack of collateral only impacts 35% of small Arizona Business Loans, the approval rate could theoretically be as high as 65%, yet just 23% are getting all the funding they need. This means it’s not lack of collateral holding business owners back, but issues like credit, debt, and business performance. Yet, everybody knows it takes money to make money. The simple answer to getting around most denials: hard money.

If you’ve got collateral, you can get your company the capital it needs to be successful.

Arizona Hard Money Lenders are different because they care more about the value of the collateral than they do about all the other common factors that result in denials. In other words, it’s easier to get Arizona Business Loans this way and a greater number of people will qualify for them—including those who have already been denied by banks. The terms are a little different too. Instead of taking out funds for an extended period of time and paying on the interest and principal each month, you’ll likely have the funds for a year or two, making interest-only payments for the duration and paying off the principal in the end. If you think a hard money loan is right for you, talk to a broker to find out what kind of terms you qualify for.

Dennis Dahlberg

Broker/RI/CEO/MLO

Level 4 Funding LLC

Arizona Tel: (623) 582-4444

Texas Tel: (512) 516-1177

111 Congress Ave | Austin | Texas | 78701

ALL ABOUT RENOVATION LOANS

You have heard about fix and flips—buy a house, renovate it and sell it for a profit. The first step is find a property—the next step is financing.

You find a property at a great price in a good location and you just know you can get it in tip-top shape and make a killing on a sale. There is only one problem—you need financing. You’ve heard that hard money lenders are typically where investors get their financing. But, you haven’t ever done this before and need a quick rundown of the process. This article will walk you through the steps of getting financed for a fix and flip project.

All hard money lenders are different and have unique requirements for financing renovation loans. Certain lenders loan on a percentage based on appraised value and there are others tend to loan on a percentage based on the purchase price of the property. When you meet with your chosen lender they will give you a complete breakdown of their fees and terms—this will include interest amount, loan points and all closing costs. Closing costs will include all document fees, notary fees and escrow fees. The lender will explain clearly what that means to you and your financial obligation.

There are 7 basic steps of the hard money lending:

1. Get pre-qualified—This consists of finding out the requirements of the lender and applying for the loan. The application process is simple and straightforward. It typically takes about 15 minutes to become pre-qualified.

2. Search for a property that has a price you can afford and is in a good location and get it under contract.

3. Contact you lender and give them: the contract price, estimated cost of repairs and give them an idea what you believe the after repair value will be.

4. Your lender will typically send their appraiser out to the property, but occasionally they will give you a list of approved appraiser and you then are5 responsible to get the assessment done and to the lender.

5. The lender will ask for any documents that need to be verified. It is your responsibility to get the documents to your lender quickly.

6. At this step your terms and rates will be agreed upon with your lender.

7. You close your loan and buy your property

Renovation loans typically include any rehab costs, as well.

When you receive your loan based on ARV you will have more money than the purchase price. This is how it works. If you’re lending 70% ARV and the purchase price is $95,000—and your ARV is $155,000 you will receive $108,500 funding. Hard money lenders will lend more for renovations on a job by job situation.

Dennis Dahlberg

Broker/RI/CEO/MLO

Level 4 Funding LLC

Arizona Tel: (623) 582-4444

Texas Tel: (512) 516-1177

111 Congress Ave | Austin | Texas | 78701

HARD MONEY BUSINESS LOANS

Hard money loans can be used for various purchases. Typically, they are used for real estate investments such as a fix and flip home. However, hard money lenders will also approve business loans.

Hard money is money that is supplied by private lenders versus banks or credit unions. It is called hard money because typically it is secured by an asset, such as property. Many people don’t know that hard money lenders will lend to borrowers seeking out a start up business loan. These loans work a little different that a typical hard money loan.

There are different types of hard money lenders. They are all either people or companies that has enough money to lend. Some lenders only work with a few people at a time where others lend money to thousands of people at a time. And, there are some lenders who will loan money to a start up business. Some secure the loan with the business owner’s property. This type of lender will only loan to a borrower who has an asset that can be repossessed in the event of non-payment. Then, there are merchant cash advance lenders,

Most hard money lenders are merchant cash advance lenders. These lenders will lend to small businesses, whether they be start-ups or an existing business that is expanding, in exchange for part of the businesses future earnings. Typically, these lenders will deduct a percentage of the credit card transactions. Once the loan is paid off the lender will have no more rights to the earnings of the business. However, each lender may handle the loan differently.

There are multiple advantages of a hard money business loan. Hard money lenders will lend to businesses that don’t have much collateral or income. They also don’t typically require the borrower to provide them with a sales history. And, approval happens quickly. These loans are generally approved within 48 hours. This is a fast and easy way to get a business up and running.

Gaining approval for a business loan is not easy; especially if you have any dings on your credit report or have had to go through foreclosure or bankruptcy.

A hard money business loan can help many small business owners. However, it is imperative the applicant thoroughly check out any companies or individuals that they are considering borrowing money from. It is helpful to set up an appointment and meet with them. Borrowers should get detailed information that will provide the interest rate and payment plan. Also, potential borrowers ought to ask the lender about their experience with hard money business loans.

Dennis Dahlberg

Broker/RI/CEO/MLO

Level 4 Funding LLC

Arizona Tel: (623) 582-4444

Texas Tel: (512) 516-1177

111 Congress Ave | Austin | Texas | 78701

RENOVATION LOANS

Renovation loans, also known as rehab loans, help real estate investors both purchase and renovate properties. This is also known as a fix and flip loan.

A renovation loan is used by investors who need financing to purchase a distressed residential property and to completely renovate said property. A renovation loan will combine the purchase price with the rehab costs into a short-term, interest only loan. Depending on the investors credit-worthiness and income, they may qualify for various loans. Typically, investors seek out hard money loans due to their quick funding, interest-only and short terms.

Hard money renovation loans are offered by a variety of lenders; both small and local and large and national. Local lenders are able to work with unique projects and generally offer a wider range of rates and fees. They also are able to be more flexible with their qualifications and terms due to their hands on approach. Bigger national lenders typically have standardized costs and are not flexible with their qualifications and terms.

Terms of renovation loans vary. Generally, lenders will lend between 60% to 80% ARV (after repair value). The ARV is what the property will be valued at once it is rehabbed. For example: house A purchase price is $65,000. The investor, after all their homework, believes the property will sell for $110,000 after it has been renovated. The hard money lender will lend 75% ARV (that is 75% of $110,000). The loan will be in the amount of $82,500. Not all lenders require a down payment. However, borrowers should be prepared to put down anywhere from 15% to 25% ARV,

Borrowers will need to provide three months of personal bank statements, purchase contract, a list of any past projects and a renovation budget. Each lender is different and may require different qualifications. And, although hard money lenders aren’t overly concerned about a borrower’s credit score, they do like to see at least a 550. Borrowers can prequalify in as little as 10 minutes and can be funded within 10 days.

Interest rates, points and loan terms

As stated above, local, smaller lenders tend to be more flexible while national lenders stay more standardized. Typically, interest rates run from 7.5% to 13% with points ranging anywhere from one to ten. While these rates are higher than conventional mortgages, they reflect the higher risk that come with renovation loans. During the life of the loan the borrower will make interest only payments with a balloon payment at the end. This keeps the costs down for the investor while he is rehabbing the property. Loan terms are generally from 12 to 36 months; however, they can be from six months to five years depending on the unique situation of the borrower. Hard money loans are beneficial to any investor requiring a renovation loan.

Dennis Dahlberg

Broker/RI/CEO/MLO

Level 4 Funding LLC

Arizona Tel: (623) 582-4444

Texas Tel: (512) 516-1177