January 2020 - Home 2 New

Explaining Hard Money

Hard money is a way to borrow money, for real estate purposes, without using a bank. Instead loans come from individuals or investors who lend the money using the property as collateral. Hard money is a great option when traditional lenders will not approve funding or when you need money quickly.

Waiting for approval, from a traditional lender, is a gut-wrenching, painfully slow process, even if you have plenty of income and a great FICO score. However, if you have any negative mark or an income that makes the lenders hesitate, the process can take even longer and there is a huge chance, you won’t even get approved.

Hard money lenders are different than traditional banks; they lend based on the collateral that is securing the loan. This allows them to not worry so much about the ability of a borrower to pay back the loan. Hard money lenders know that if you default, they can take the property and sell it. Therefore, the value of the collateral is more important than your financial situation or credit score.

Typically, hard money loans are short-term loans that last between 6 months and 3 years but can stretch longer if necessary. They also have higher interest rates than traditional loans.

Why Would You Use Hard Money?

Why would you use hard money, when it’s more expensive than other options? There are numerous reasons to use hard money. Since the lender is heavily focused on the value of the collateral versus your finances, hard money loans are closed much faster than traditional loans. Typically, these loans are closed within two weeks of application. Lenders prefer not to take possession of your property, but they won’t spend a tremendous amount of time picking through your financial records. The relationship is very important in a hard money loan. Once you have a relationship with your lender, the loan process moves even quicker; this gives you the power to close deals much faster than other investors. The ability to close quickly is a huge bonus when dealing with a property that has many offers.

Hard money loans are considerably more flexible than traditional loans. Hard money lenders evaluate each deal individually, instead of using a standardized underwriting process. This allows flexibility with repayment schedules. Because this is an individual you are working with instead of a corporation, it is easier to hash things out.

Hard money makes the most sense for a situation where a short-term loan is needed.

A good use of hard money use is for fix and flip properties; Investors buy a property, rehab it and sell it for a profit; allowing them to sell the property quickly and make a profit. Individuals with poor credit can use hard money to buy their home, but it would be smart to refinance as soon as possible.

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
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.

How to Get an Arizona Land Loan

Getting an Arizona Land Loan is not as simple as securing a mortgage. There are many details you should know before you seek financing for a land purchase.

A Land Loan is used when you are interested in purchasing a lot that does not have a structure on it yet. As with typical home Loans, you can secure these Loans from a bank, savings and loan, or a private lender. Regardless of the type of lender, you will need to have good credit, and the land value must be in line with the purchase price. But unlike the rather simple evaluation to determine the value of a home or building, accessing the value of land can be more challenging.

Most bare land has little value, as compared to what the value would be if it included a structure. This makes an Arizona Land Loan riskier for the lender. Because of the increased risk, or maybe decreased potential for resale is a better term, lenders tend to increase the down payment required for the loan and to charge higher interest rates. The higher down payment is a way for the lender to be sure that there is always equity in the land, and that it can be sold for a high enough price to cover the remaining balance of the loan, should you default.

There are three different types of Arizona Land Loans, which include raw Arizona Land Loans, lot Land Loans, and construction Loans. Each of these Loans has a different purpose and different qualification requirements. You will also find that different lenders can have slightly customized requirements for their Land Loans. As with most Loans, you will need to demonstrate excellent credit, an acceptable debt to income ratio, and a consistent income that will allow you to cover the payment on the loan.

Land Loan Terms To Know

Because of the increased risk of Loans on land only, interest rates can vary from about 4% up to around 6%, depending on the specific type of loan. In addition, the length of the loan will have some impact on the interest rate. The lowest interest rate is traditionally offered on a 10-year fixed-rate loan. The interest rate increases slightly as the term extends to include a 15-year, 20-year, and 30-year fixed rate. You will also notice that rates on a construction loan are higher than a raw loan and that lot rates are the most affordable interest rate.

Selecting A Lot That Lenders Find Attractive

There are certain lot features that lenders will look at when evaluating your loan request. The boundaries of the lot are essential information to the lender. Having the lot surveyed accurately is a bonus to most lenders. In addition, a lot that already has utilities will be more attractive to a lender as the lot holds more potential than just bare land. All lenders will also want to know about any zoning restrictions on the property. Having this information included in your loan request will be helpful to the lender during his or her evaluation process. And that is sure to increase your chances of getting your loan request approved.

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
Dennis Dahlberg Broker/RI/CEO

Should You Get a Land Loan?

Getting a land loan may seem like a solution for borrowers looking to make a quick buck off the real estate market. However, it’s important you know the real deal about investing in land and working with hard money lenders before you jump into any loan agreements.

Whether or not a land loan is right for you really depends on your financial situation and who your loan lender is. Traditionally, borrowers go to public money lenders, like banks or credit unions, for their loans. Qualifying with a traditional loan lender usually means steady income, a great credit score, and a reasonable debt to income ratio.

When borrowers don’t qualify for traditional loans, it is still possible to receive approval from Private Money lenders, usually companies or investors, who offer hard money. Hard money is an alternative option with flexibility. Borrowers prove their potential to the lender first through the means of the project, then through their ability as a borrower. They can still be rejected, however, for many borrowers it can be a backup plan for their projects.

Investing in Land

Choosing to invest in land can be a profitable decision if you put in your research first. The last thing you want to do is get sucked into a land loanand be unable to meet payments or interest rates because your property wasn’t what it was cranked up to be. So, what should you look for in land?

Location is prime. Investing in a property that is near business, school, and entertainment districts make it a good option for potential buyers in the future. Being aware of any developmental plans in the neighborhood will be key to knowing how your land could possibly fare in the future. While buyers may choose to build an upscale, modern home, it is important to consider how it fits in with the neighborhood and existing community.

Location is also important when it comes to other things: power, curbs, sewers, and water lines. No one is going to want to purchase a home that can’t feature the basic amenities of a home. Additionally, you’re going to need to consider if the neighborhood is under HOA or if the city has special requirements when it comes to building.

Loans in Arizona

The hard money lenders in Arizona at Level 4 Funding offer a variety of hard money loans. Hard money loans differ from traditional loans in that there is speed and flexibility. Most hard money lenders can get the loan process within the week, compared to the waiting game of a month or more when working with a traditional money lender.

If you are seeking out hard money loans, consider Level 4 Funding. With no upfront costs and a free phone call to discuss your financial situation, we can determine what land loanis right for you. As we are Private Money lender, we can offer services that are unique to your financial situation. If you are tired of shopping around, give us a call today and finally make your dreams reality!

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
Dennis Dahlberg Broker/RI/CEO

Got the Urge to Turn that Odd-looking Old Building You Saw Into a Restaurant?

An Arizona Rehab Loan may be the best answer for you.

The term ‘Arizona Rehab Loan’ can be described as an umbrella that covers several types of loans, mostly concentrated on three things: the purchase price of the property; the costs of needed renovations; the market-ready value of property following the work. In most instances, re-sale is done within a 12-month period to repay the original loan. Ideally this is done at a profit to the borrower, who now has experience, field contacts and money in his pocket. These loans also are dispensed under various titles that have one of more nuances or conditions that differ from each other.

Even the lenders—both hard money and private –have their varying terms and conditions that set them apart despite the titles being used interchangeably, both in print and conversation. Private lenders center on the borrower’s credit, collateral and their ability to repay the loan. Hard money funding sees the collateral as the first in line for payback in case of a default by the borrower.

Some examples of these types of funding, along with the usual type lender, are described below.

Renovation loans cover several areas of lending, but all boil down to one thing—the lender is applying for funding to renovate a property that will have a higher market value when s/he is finished with repairs than it had at the initial purchase. Common names for this loan include reno, rehabilitation and fix-and-flip.

Hard Money Lenders are commonly used in this type of funding.

Existing Arizona Construction Loan, while similar to regular Arizona Rehab Loans, are not exactly the same thing. Yes, you are changing the face of an existing property, but it normally involves set specifications and detailed floor plans. The lender will probably have the say-so on approval of a builder, while the borrower is allowed to choose their own contractor.

Most lenders for this type loan fall under the definition of private investors.
3. Bridge loans (generally done to cover interim financing needs) are pretty well defined by what the borrower wants to do with the property and cover several areas, besides the usual types, including ones for owner-occupied residential properties when the borrower is in most instances using the funding to repair their personal residence. Non-owner occupied loans are generally funding used to repair rental property that is currently occupied by tenants. Commercial property can fall into this category as well when the funding applicant will be using money to repair their own business or another for re-sale later.

This funding is generally handled by private lenders.

When pursuing an Arizona Rehab Loan, try to find a lender that can and will cover costs of purchase and repair in single package. This saves the time and effort put into applying for a second loan later on and you will already know the individual or company that you originally work with in the beginning. Smaller local lenders can work well with unique situations and have more flexibility, but larger firms have access to more funding.

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
Dennis Dahlberg Broker/RI/CEO

What Are Commercial Hard Money Loans?

Simply put, commercial hard money loans are for real estate investors who are looking to purchase or refinance commercial properties and don’t have the time to deal with conventional bank financing.

Investing in commercial real estate is quickly becoming the best way to make money. Many parts of the US are rapidly becoming great locations where the best types of commercial property are available.

There are opportunities just knocking on the door. However, you must know what you are doing to earn the huge profits that are available. The first thing you have to obtain proper financing. If you have any experience in real estate investment, then you are definitely aware of the incredibly lengthy process that conventional loans must follow. Banks must adhere to the defined rules and strict regulations and mandate the borrowers follow them, accordingly. Hard money offers a simpler opportunity to investors that include modifying the loan amount, terms and conditions.

There are no middlemen with hard money loans between the borrower and the lender, as there are in traditional bank loans. Borrowers bring the required documentation and meet one-on-one with the lender. Borrowers will know within a few days if their loan is approved. This fast financing is priceless in the world of real estate investing. Funds are typically provided within 2 weeks; unlike the 30 to 90 days you may wait for a traditional mortgage.

Working with a hard money lender on a commercial real estate deal can benefit you tremendously. Unlike bank lenders who have no interest in the type of commercial real estate you are choosing to invest in, hard money lenders have a plethora of knowledge concerning the area you are buying property. They will share this information because this is an investment for them, as well.

What Happens Now?

Once you have been approved, you will hand over any necessary documentation and sign a contract. Typically, the lender will go out and visit the property to make sure it is legit. You will also sign a promissory note and a deed of trust. You will sign a deed of trust showing the property is securing the loan.

These loans are short-term, high-interest loans. Most borrowers are either using these as rehab loans or will refinance within a short time. Commercial hard money loans are generally around 18 months to 3 years. Unlike bank loans, these loans rarely have early payment penalties.

Commercial hard money loans are not just for real estate investors with bad credit.

The amount of knowledge, security and flexibility of a hard money lender makes hard money commercial loans your best option. To find out more about commercial hard money loans, please visit us at level4funding.com.

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
Dennis Dahlberg Broker/RI/CEO

How to Risk Less and Earn More with Trust Deed Investing

Trust Deed Investing is a smart way to diversify your portfolio and grow your wealth. Like any form of investing, though, it’s important to ensure your deals are structured in a way that minimizes your risk.

Also referred to as private mortgages, Trust Deed Investing allows you to finance someone else’s real estate loan. It’s secured by a trust deed, which is an agreement that transfers the property’s title to a trustee who holds it as a security for the borrower and lender. This alone gives the lender a great deal of protection, but there are three primary ways these investments can run into trouble.

1. Losses in the housing market. One of the greatest concerns is a large scale downturn like what happened during the recession. If values drop or a property won’t move when it’s time to sell, the borrower may either be unable to pay or might take a hit, making it harder for him or her to make good on the loan.

2. Resale losses. Although it’s not often seen with short-term Trust Deed Investing, the structure typically enables the lender to resell the investment, much like a bond. Given the fact that money is usually only tied up for a matter of months, most investors can either hold off on collecting the principal or they simply don’t invest if the money might be needed elsewhere. However, those who need to sell can sometimes take a loss if there isn’t another investor lined up to take over.

3. General borrower defaults. Things happen. Occasionally borrowers run into financial trouble elsewhere or run into roadblocks. These things can make it harder to pay or, at the very least, diminish a borrower’s motivation to pay.

Pitfalls Can Be Addressed with the Right Contractual Terms

There is a number of things that can be done to make Trust Deed Investing more secure for the lender. For example, starting off with a lower loan-to-value (LTV) ensures there’s enough equity in the project to cover any market changes. Generally speaking, a 70 LTV or lower is best to start, but once you’re established and have worked with specific borrowers before or are working with those who are well-qualified, you can opt to go higher.

Taking first position on the deed of trust gives the investor more power as well. Lastly, requiring hazard insurance on the property and having a title policy can provide additional layers of protection, ensuring the outcome will be profitable; come what may too.

Learn how to evaluate terms or work with a pro who can set you up for success.

Knowing what terms to insist on requires experience, something those new to Trust Deed Investing simply haven’t had time to accrue. The good news is, a seasoned broker who has been through the process repeatedly and under various market conditions can help ensure you’re set up for success, connect you with resources as needed, and show you the best prospects. When you’re connected with the right people, you’ll naturally risk less and earn more on your investments.

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
Dennis Dahlberg Broker/RI/CEO

Investing in Deeds of Trust: Should You Use a Broker – and Why?

If you are interested in investing in deeds of trust, you will discover that a great deal of the money involved comes through private lenders or Hard Money Lender. The terms are frequently used interchangeably, but there are differences between the two. Hard money is sought in the actual financing of a real estate project, while private funding is based on the property value, termed asset-based lending.

Simply put, with trust deeds an investor funds a developer currently working on a real estate project, with their name put on the deed as the lender. Interest is collected by the investor during the life of the project. When complete, the principal is set to be repaid in full.

Banks generally do not go out of their way to cover this type of investing, while private money lenders are more open to it. It is a positive practical thing for investors, especially those new or just beginning in this field, to use a private money broker in order to help insure the best return and the least risk they can find.

Trust deeds, in the past termed ‘alternative investing’, are not easy to manage since there are so many factors involved and opinions have to be obtained and considered from each of these. Time is another consideration—payoffs range from six months to ten years—there is no 30-year fixed period as in the mortgage field. These investments have a very wide range of risk factors and are difficult to price as a result.

Working with a well-known experienced broker when investing in trust deeds can be not only advantageous, but a critical factor since the details and structure of a private loan–qualification, terms, fees and rates–can range widely. Three top reasons for using a broker are as follows:

While lending money to only one or two borrowers might seem less stressful, a broker can provide you with more options, is possibly safer and more reliable than do-it-yourself.
An experienced broker will have the needed ability to assess current market conditions and determine if a borrower’s background is the best person for you to lend money to.
Brokers know the investment opportunities available and are able to base them using the type loan, kind of property and location, loan to value percentage, etc.

These type investments can, with a secure loan from a good borrower, however, have a reliable payment coming in on a monthly basis, allowing the lender to have a secure income even as other financial markets are rising one day and dropping the next. Again a good broker can point you in this direction when you might not be able to find the best set up by yourself.

Make certain you understand the different sorts of loans and all conditions available when investing in deeds of trust. Choosing the right broker who has the knowledge and expertise you need can be your best asset.

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
Dennis Dahlberg Broker/RI/CEO

Here’s Why December is the Best Time to Get a Fix and Flip Loan

It might sound crazy but getting a fix and flip loan in December or January is a perfect time. Read on to find out why.

Most people think about taking on a flip in the so-called “hot” months of the spring and summer. While any time of year can be a good time to do a fix and flip, there are many good reasons why December is the best month to find a project, get your funding secured, and start working. Here are just a few of them.

1. Prices are low. Real estate is traditionally a bit cold in the winter months. People don’t relocate as much during the winter and this is especially true during the holiday season (November and December). The people who are selling are often desperate — maybe they have to move because of a job or a reassignment, or they’re underwater on their loan and have to get out. Whatever the reason, homes that do hit the market during this time period tend to be cheaper.

2. The timing is perfect. It’s the oldest adage in the book: buy low and sell high. The average time to complete a rehab in Phoenix, Arizona is 151 days according to Atom Data Solutions. That’s just about five months, which puts your completed project on the market right as things are heating up. By timing it this way you might be able to put another 5-10% in your pocket when the deal is struck.

3. Competition is lower. Many rehabbers use the holidays to relax or go on vacation, waiting until the New Year to jump on a new project. You can use that to your advantage and snag a great property while they’re “sleeping.”

Fix and Flip Hard Money Loans Can Help You Strike at the Right Time

Convinced to grab a hot deal in the cold months? A hard money fix and flip loan can help. Unlike the banks, hard money lenders can approve you and get you your funding within a matter of weeks, which can mean the difference between striking at the right time or waiting until the wrong time.

Get a Loan at Level 4 Funding

Level 4 Funding offers a variety of options for fix and flip loansfor your needs including 100% rehab cost loans. You’ll find rates as low as 5.99% and terms that range for 3 months to sixty months. Fill out a quote form or give us a call to get started.

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
Dennis Dahlberg Broker/RI/CEO

Using the Rule of Threes Before Taking Out Arizona Fix and Flip Loan

Ever tried to evaluate a house before taking out a Arizona Fix and Flip loan? If so you know it’s difficult, because all the considerations can be a bit overwhelming, but lucky for you this article will show you three things to look for when it comes to location, resale value, rehab planning and some other things you’ll need to consider to ensure your success when it comes to flipping houses with Arizona Fix and Flip loan.

Using the rule of threes when picking houses to use Arizona Fix and Flip loan on

Body, mind, spirit, father, son, Holy Ghost it seems that all things have three aspects and the same is true for house flips. No, this isn’t just a mystical principal. This so-called rule of threes has some very practical applications as we’ll see below.

3 things to look for in the neighborhood:

Even if you see a promising listing online, you actually need to drive to the neighborhood and note the overall vibe in the area, considering:

• Noise levels

• Vandalism

• And the overall feel of the place.

Houses next to airports, replete with ramshackle gang sings, or in areas where the façade of every house is girded by iron bars don’t sell, or at least they don’t sell for a lot of money. After finding a decent neighborhood you need to find three comps that have sold in three months and consider three things about each of them:

• Time it took to sell

• Initial list price

• Actual price sold for

Knowing these three crucial details about comps in the surrounding area will help you account for three things per your loan, how long it will take to sell the property, a good initial price to list it at, and what the potential returns could be. Once you’re satisfied that a potential flip will sell in short order and for a decent amount, you need to refer back to your three comps and consider three things when planning your rehab:

• Finishes

• Layout

• Landscaping

When planning your project, whatever you include concerning the above, should be in line with your three chosen comps. This will keep your plans grounded in the realities of the market so won’t end up adding an Olympic swimming pool in the middle of a working class neighborhood.

How can applying the rule of threes help you risk less when it comes to Arizona Fix and Flip loan?

Simply knowing the neighborhood and having three comps in mind will give you a good sense of the resale value, and when the house will sell. In addition, by planning your project around your three comps you’ll also have an accurate sense of just how long rehab will take.

In the context of your loan, having these insights will tell you three crucial things:

1. Whether taking out a loan is worth it based on the resale value of your three comps.

2. How much money you’ll actually need to fix the house up to the standards of your three comps.

3. When your loan will actually get paid off based on the market history of your three comps.

When you apply the rule of threes, evaluating a potential flip before taking out financing becomes easy as well 1, 2, 3.

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
Dennis Dahlberg Broker/RI/CEO

Simple Steps to Hard Money Lending

Trying to find funding for a hard money loanan seem a bit unnerving. Potential borrowers typically have many questions about the loan process, such as: where do I find a dependable lender and what does the loan process involve?

Potential borrowers can relax. The hard money loanis pretty simple and straightforward when compared to obtaining funding from a conventional lender. The first thing potential borrowers are to find a few hard money lenders that work in the borrower’s area. There are a few ways to find lenders. Networking at local real estate investor meetings is a great way to find lenders looking for business. If you know anyone in real estate, be sure to let them know you are interested in finding a lender. A referral from someone you trust in real estate is a good way to find a reliable lender. Searching the internet for a local lender in the area of the property is always a simple solution. However, be sure to interview the lender. Ask questions such as: How much experience do you have? Do you have references from previous borrowers? Are you a direct lender or a broker? Do you enforce prepayment penalties? How long does it take, after approval, to be funded? What type of license do you hold? Who is your regulator? These are all questions that will either assure you this is a legit lender or will have you running for the hills.

After a few conversations and quotes of some hard money lenders, you should have an idea of which lender they want to use. You want to have the focus be on the terms and conditions of the loan, but you also want to make sure you feel comfortable with your lender. Unlike banks, this is a personal relationship. Lenders are generally flexible and will work with you when issues arise. It is a person you are dealing with, not a corporation.

The Loan Process

The first step in the loan process will be filling out the loan application. These are very general questions and only take about 20 minutes to complete. They typically require information about the subject property, borrower’s employment, income and assets, and any liabilities. All lenders are different; some require more documentation than others. Requested documents can include tax returns, proof of down payment, bank statements, any prior real estate projects.

After the borrower receives approval, the lender prepares the loan disclosures. The first disclosure form is usually an E-sign consent; this allows the lender permission to electronically send documents. After the E-sign consent is signed, the lender will begin sending documents such as the privacy policy, mortgage loan disclosure statement, fair lending notice, equal credit opportunity act notice, and hazard insurance disclosure. The deed of trust will have to be notarized; therefore, it will not be sent electronically.

Once all required documents are signed and have been received by the lender, the borrower will send their down payment to escrow. After escrow has confirmed they received everything needed, the hard money lender can disperse funds to escrow and fund the loan. Depending on the type of loan and the geographic area, the borrower will typically receive the funds within two weeks.

From start to finish, the hard money loan process is quick and painless.

This simplicity is the main reason real estate investors take advantage of hard money loans for their financing needs.

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
Dennis Dahlberg Broker/RI/CEO