February 2020 - Page 4 of 5

What to Know Before Investing In Deeds of Trust

Before you begin Investing In Deeds Of Trust, you should understand how these agreements work. They are not really the same as investing in a mortgage loan.

It is essential to investigate any type of investment before you commit your hard-earned money. And while many investors think that a deed of trust is the same as investing in any private real estate loan, that is not the case. When you are investing in a deed of trust, you never actually hold the title to the property as you would with a mortgage loan. In these deals, there is an impartial trustee who is responsible for the property until the loan is paid off.

The impartial trustee must always be prepared to sell the property if the borrower defaults on the loan. And because the trustee is unbiased, he or she never favors the interest of the borrower or the lender, ensuring that the transaction is fair to both parties. In addition, the foreclosure process involving a deed of trust is not conducted in the same manner as a traditional mortgage default. Conventional Loans require judicial supervision for a foreclosure while the trustee on a deed of trust does not. This makes the sale process much less complicated, which is a benefit for anyone who is Investing In Deeds Of Trust.

When there is a foreclosure, the trustee must sell the property and then distribute the funds to the lender and the borrower. The lender is repaid the full amount that he or she is owed according to the loan agreement, but the remaining funds are then given to the borrower. This is because the borrower retains the title to the property. In the case of most personal real estate Loans, when the borrower defaults, the collateral or in most cases, the property is passed to the lender in place of repayment of the loan. At that point, the lender owns the entire property and can sell it and keep the full sale amount. The lender who was in default has no right to any of the sale money.

Other Differences Between Mortgages And Deeds Of Trust

Mortgages have specific legal requirements that are not met by a deed of trust. And while this has some benefits for anyone who is Investing In Deeds Of Trust, it has some crucial factors that could be seen as a drawback for a borrower. Because this loan is not classified as a mortgage, there can be significant tax implications for the borrower. Many times, mortgage interest is tax-deductible, but the interest and fees on a deed of trust are not. Also, the trustee can liquidate the property much more quickly, which could work against a borrower who is trying to get caught up on payments.

Know Your Risks When Investing In Deeds Of Trust

As with any investment tool, every investor needs to complete his or her research before committing any money to an investment opportunity. The only way to decide which investment is best for you is to evaluate the risk involved and balance that with the potential financial return.

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.

Arizona Land Loans: What’s the Difference Between Lot Land and Raw Land?

Ready to buy some land for construction? Find out the difference between buying raw land and lot land and learn about Arizona Land Loans that can help you finance both types of land.

If you’re looking into buying land for a construction project, you might think that all land is the same. You’d be wrong. There are actually big differences between raw land and lot land, both in terms of the legal definition and the process by which you can buy them.

To put it simply, all lots are land but not all land is a lot. Let’s break that statement down a bit by taking a look at the differences, starting with lot land:

Lot land is land that’s been prepped to support a building. For the most part, that means that there are utility hookups for the major utilities — electric, water, sewer, gas and/or telephone lines. If the lot doesn’t directly have these hookups, they are nearby and accessible.

Raw land, on the other hand, is land that has not been developed. There are no utilities and the land may be difficult to access or ungraded. It’s land that’s essentially only been sculpted by nature.

Choosing Between Raw Land and Lot Land

Deciding between buying raw land or lot land will depend largely on your intent, experience and access to funding. For most builders, lot land is more attractive. Everything is ready or close to ready for construction. Builders can buy it and start pouring the foundation quickly. This makes banks and lenders more likely to give out Arizona Land Loans.

Raw land involves more time and money to develop, which often makes it less attractive to both builders and lenders. However, because of this upfront cost and work, the competition for raw land is usually lighter and there may be more deals to be had by experienced builders.

Finding Arizona Land Loans

Here at Level 4 Funding, we offer Arizona Land Loans for both raw land and lot land purchases in Arizona. And you won’t find terms like ours elsewhere — we boast loan to value up to 90%, rates as low as 5.99% and no prepayment penalties. Even better, you can get pre-approved in just 24 hours, get funded in days and take advantage of flexible terms from 3 months to 60 months. Give us a ring today to see how we can get you funded.

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

Things to Consider for Successful Trust Deed Investing

(So, you’re thinking about Trust Deed Investing? Have you thought everything through? Here are a few tips for making your investment as successful and beneficial to you as possible.)

We have been helping people invest in trust deeds for years. Trust Deed Investingis a great way to diversify a portfolio, to obtain a high yield income stream, and to protect your investment. However, it’s still important to think about what you want when you invest in a trust deed. Here are a few tips, tricks, and things to consider from the people who understand the business best.

Tips for Successful Trust Deed Investing

· Read all documentation provided to you. There’s absolutely no reason to skim the paperwork, as it is very important you understand what you are signing. If you have questions, feel free to talk to us.

· Don’t ever feel like you can’t add to the documentation necessary for a certain deal. If, for example, you would like to add any supplementary documentation or requirements, do so. We can discuss your needs in full, as well as those of the borrower.

· Discuss the loan term with your borrower and with us to ensure the loan will be paid back in as short a time as possible. You don’t want your borrower taking more time than is necessary to pay the loan back, as this could potentially lead to problems.

· Always visit the property yourself before issuing a loan. The borrower will also need to have the property inspected, as well other third parties, but it’s important that you understand the condition of the site.

· Talk to the borrower about how they intend to pay back the loan. Do they have other income streams that will help them do so? Make sure they have a plan in place and that you know what it is before investing.

Here Is Our Number One Tip…

Trust Deed Investingcan feel easy, even like there is no risk involved at all. But like with any investment, there is some risk to consider. You will be protected greatly by the deed of trust, much more so than if you were to simply loan a friend or another borrower the money they need.

Still, we recommend this as our number-one tip: trust your gut. If something feels fishy, it probably is. Talk to us and find out if there is a problem with something your borrower has told you, and never hesitate to ask questions.

Start Investing as Soon as Possible

We’re happy to answer any questions you may have about Investing in Deeds of Trust. Just call to talk to one of our highly qualified and experienced lenders today.

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

Real Estate Developer? Why Private Money AZ Land Loans Are the Real Deal

If you need find financing to develop a parcel of land you’ll find all sorts of half-baked articles that will point you in the direction of community bank loans, SBA programs, development grants and worse, home equity loans and seller financing. If you’re a real-estate developer none of these are good option. Learn why private money lenders are the best way to go when it comes to getting Arizona land loansfor development.

Disadvantages with most types of Arizona land loans

The biggest disadvantage with all other types of financing for purchasing land is that these loans are simply not meant for developers. Real estate developers need land financing that lets them borrow based on their projections, sell off the development in short order and doesn’t put their personal property at risk. Let’s see how the typical land financing options simply fall short

• Bank Loans: Banks do give loans for the purchase of raw land, the problem? They’ll only lend based on the value of the land itself, usually no more than 70 percent of a lots purchase price. If you aim to build a 200,000-dollar development on a 50,000 parcel of land-35 K in bank financing won’t get you very far.

• SBA loans and other government programs- Any subsidized loan backed by the government is going to offer you amazing terms, and on paper these are the best deals you can get in the industry. But there’s a catch with all these programs, beyond all the red tape, and that is you can’t resell the property for a profit. The big stipulation with all government loans is that they’re meant for business rather than investment purposes. Which basically means If you’re a real-estate developer, government loan programs are off limits, unless you want to run a clothing boutique for the next 15 years.

• Home Equity loans and Seller financing: Sure, you could borrow against your house to buy land, and sure you could take a seller’s money to buy it from them. But there’s two questions you need to ask, 1. Are investments that could result in homelessness a good idea? 2. If someone is so desperate to get rid of a lot that they’ll actually give me the money to buy it, should I buy it?

The answer to both these questions is usually no.

So, given the drawbacks of the most common land financing options, what can real-estate developers do?

Why private money Arizona land loans are the real deal for developers

Private money lenders are usually groups of investors who can set their own terms and work with you based on your given project. In other words when it comes to private money and land development deals, anything is possible.

Unlike banks private lenders will let you borrow against the projected value of your development. Instead of getting 35 K for that 200 K development you could get 140. Unlike government programs, there’s no stipulations or conditions for what you do with your development, sell it, refinance it, hell even run a business out of it, private lenders don’t care as long as you pay them back. In addition, private land financing is far less questionable than home equity loans or seller financing.

Basically, if you need money for land development, private money is the way to go. If you’re in the Phoenix area, and you want to buy land for a development, why not give Level 4 Funding a call?

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

Why Your Rotten Credit is Killing Your Arizona Land Loan Prospects

Getting an Arizona Land Loanis next to impossible if you’ve got rotten credit. However, you can still grab your slice of heaven with the right products and prep.

Whether you’ve just come across a piece of land that looks like it’ll be a great investment or you’re weighing the benefits of purchasing raw land to build your dream home, one of the most pressing matters will be how to pay for it. Those with great credit have challenges as it is, especially if the plot isn’t tapped into the grid. For those with rotten credit, making that purchase is often nothing more than a pipe dream. What gives?

Banks think Arizona Land Loanpackages are too risky. The reality is, if push comes to shove, you’re going to protect the home you live in as your priority. That’s human nature and the banks know it. The exception is when it’s an investment that’s actively generating cash, but that’s rarely the case for unimproved earth. That in mind, lenders try to make sure you’re never going to have to be in a position to choose whether to keep up with your payments or not, and they do that by looking into your history.

They will dig deep. They’ll check your credit score to make sure you’ve got a good history of paying. They’ll examine your existing debts to ensure you’re not stretched too thin. They’ll look into your cash flow to ensure it’s steady and strong enough to cover the balance for the foreseeable future. And, they’ll find out if you have reserves you can tap into in order to keep paying if things go south. It’s a frustrating process, but they have to minimize their risk, or they’d go bust.

Take Steps to Increase Your Future Eligibility

If rotten credit is impacting your ability to get an Arizona Land Loan, you can take steps to minimize their risk, thereby making yourself a more appealing borrower. Make sure you’re paying all your bills on time every time without fail to improve your credit score. Come up with a personal budget that gets your debts paid off quicker.

There are two issues that can hurt your credit here; debt-to-income ratio (DTI) and credit utilization. Experts say up to a 43% DTI will still allow you to qualify for a mortgage, but lenders look for a 36% or less. The catch: this isn’t a traditional mortgage. You’ll need to do better. The same is true of credit utilization. While 30% may be standard for other types of loans, you’re going to have to do better to get specialized financing. With debts paid down, you’ll need to work on establishing reserves. All things considered; it can take years to put yourself in a position to qualify.

Get help through alternative lending now.

The good news is, banks aren’t the only ones who can provide you with an Arizona Land Loan, and having rotten credit is not a barrier to getting funding with certain options. Hard money is one such option which relies more on having a good business plan and solid loan-to-value (LTV) than credit. If it sounds like this is the best option for you, touch base with a broker who specializes in hard money lending who can walk you through the process and get you the best possible rates.

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 is a Hard Money Construction Loan?

Unless you work in the construction industry, you probably aren’t aware of hard money lender’s frequent collaborations with developers. Banks typically look at construction loans as too risky making hard money lenders developer’s best option for financing.

Details of Hard Money Construction Loans

Hard money construction loans are a specific form of financing that is offered to developers planning to build new residential or commercial projects. However, there are factors involved when a lender is making a decision to finance you. Typically, if your lender feels confident on the returns of your project, your interest rates and required money down will be lower. Investors want to thoroughly understand the purpose of your property, the value of your property upon completion and regulations in your state. As a rule of thumb, it is easier to work with a hard money lender in your state, or a lender that is familiar with your state regulations.

Depending on the factors of your project, some lenders will finance up to 90% of the purchase price and 100% of construction costs. Rates can start as low as 7.99%, with interest only payments that typically run from 6 to 18 months. However, hard money construction loans can be extended out to upwards of 5 years, depending on the lender.

For the most part, conventional banks are uncomfortable lending on construction loans. Hard money lenders, on
the other hand, are investors and if they see a potential profit, they will work with the borrower. Hard money construction loans also work for borrowers with poor credit. Most lenders can work with credit scores of at least 600, and some will even work with borrowers under a 600. If you seem financially risky to a bank, a hard money lender may overlook some risk factors in favor of the assets you can deliver. Depending on what you can bring to the table, a hard money lender may see you as a wise investment versus a financial risk. Hard money loans are short-term, high-interest loans and so it is worth noting these loans work best when you plan on finishing a project quickly.

Getting a hard money construction loan means you will need to get your finances in order. You will also need to have thorough information about the costs and plans of your project in order to give your potential lender evidence that you are a solid investment. It may benefit you to hire a broker, while searching for a hard money construction loan. This will increase the number of investors that will potentially finance your project. A broker understands how hard money loans work and what the lenders will require for repayment plans. They will work to find you a lender that matches your needs.

If you want to explore hard money construction loans, Level 4 Funding can help.

We have years of experience and can help answer any questions concerning a hard money construction loan. We would love to be a part of your investment journey. Please reach out to 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

Should You Diversify Your Portfolio by Investing in Deeds of Trust?

It’s possible to diversify your portfolio and help someone start their business by Investing in Deeds of Trust. But is this the best way for you to gain these benefits?

We all want to diversify our portfolios. It’s the best way to ensure that a change in any one market will not affect our investments to the extreme in either one way or another. Basically, the best reason for diversifying is to balance your portfolio so that reward and risk are both steady, rather than unpredictable. But is Investing in Deeds of Trust the best way for you to gain this benefit?

Deeds of Trust Are a Great Investment Option

There is a reason why so many people choose Investing in Deeds of Trust as their first foray into diversification. First, this option allows you to stay sheltered against a borrower who might potentially default on their payments. When you choose to invest in someone else’s property through a deed of trust, the deed is actually held by an impartial third party, such as a professional lender or bank, and your investment is highly protected. If the person does default, you will be able to gain control of the property and sell it.

In addition, this option allows for an income stream with a high yield. You will be able to collect interest on your loan, and then, when the project is complete, you will be able to receive your principal investment back in full. This transaction is facilitated by a third party as well, which makes the whole process safer and more effective.

Finally, this option will allow you to greatly branch out in your portfolio without a serious amount of personal risk. Your investment is protected by the deed of trust and by the third-party lender who will also handle the messy bits of the deal. In short, you can protect your investment while expanding your portfolio and making more money. It’s a win-win-win!

Investing in Deeds of Trust Helps You Risk Less, Make More

You deserve to be able to protect your investment while taking a leap that allows you to diversify. We can offer you the advice you need as well as the third-party help necessary to invest in a deed of trust and in a new real estate related business venture. Contact us now to learn more about your options.

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

Building Your Dream Home? What You Need to Know About AZ Construction Loans

If you’re looking to build your dream home, you may have everything down to the doorknobs planned out, so you might think all this careful planning qualifies you for a traditional mortgage. Well, guess again. To build your dream home you’re going to need a construction loan. Learn how these loans differ from ordinary mortgages and what you can do to avoid the pitfalls that come with construction financing.

Banks consider construction financing especially risky. For one thing, if you stop making payments the bank has nothing to fall back on except a patch of concrete and your broken dreams.

Due to this perceived risk on the part of lenders, construction financing has some quirks to say the least, especially when compared with a traditional mortgage.

Two biggest differences between Arizona construction loans and traditional mortgages

• Given in draws- Unlike a traditional mortgage construction financing isn’t given all at once. Instead you’ll get a few thousand dollars every so often to pay for each phase of your construction project in what’s known as the draw process. In order to get more money throughout the course of your project your lender will usually need to verify that you’ve exhausted your previous draw.

• Short term- You won’t be paying back these sorts of loans for 30 years like a regular mortgage. This type of financing is usually paid back in full within 12 months.

So, why not just get a line of credit or simply borrow against your previous home to finance construction, well construction financing does offer some unique benefits:

• The added scrutiny from the draw process can keep you from overspending.

• Because of the draw process, you’ll also only be making interest payments on money you’ve actually spent instead of the full loan amount

• In addition, this type of financing is interest only, which means a lower monthly payment overall

But interest only means your lender will also expect you to pay back the loan amount in full after you’ve finished construction, or once the loan term runs out. So If work stalls or if your previous home’s sale doesn’t’t cover the cost of your loan, you’ll be in trouble.

Two simple ways to avoid risk when it comes to Arizona construction loans

• Have refinancing in place ahead of time- Since you’re building your dream home, for the purposes of living in it, you’ll need to have what’s called, a construction to permanent loan. This type of loan puts refinancing in place ahead of time, so you can pay your lender back once construction is finished. That is unless you want to sell the home of your dreams to someone else, or you plan win the lottery.

• Have a reputable contractor on board- With construction financing, having a good contractor is almost more important than having a good plan. If a good for nothing contractor holds up work for any reason, your next draw might not get approved. You won’t have the funds to keep paying your contractor, work stalls and your lender might demand repayment regardless if your house is finished or not.

Following these two tips, will protect you from risk and help you maximize the benefits of construction financing.

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

3 Things to Know Before Seeking a Land Loan

There is a lot more to know about Arizona Land Loans than just the traditional information such as interest rates and terms. These three pieces of information are essential for borrowers to know before looking for a loan.

When you are looking at buying a house, you know that you need to talk to banks and other lenders to determine the amount that you can borrow. That information is what will determine the price of the house that you can afford. But when you are buying land, there are a few more things that you need to take into consideration. Knowing these three tips will help you to make a better and more well-informed choice about getting your Land Loan and how to use it.

When you are buying land, it is not the same as buying a lot in a subdivision. A lender is going to require a detailed description of the property in addition to having the boundaries marked by a surveyor. You will also need to research any zoning or land use restrictions and provide that information to the lender. Having utilities on the lot is also a significant benefit. Lenders know the cost and time involved in site improvements and is happier to lend their money on lots that already have water, electricity, sewers, and roads.

How you plan to use the land can also have a significant impact on the loan. Lenders like property with structures that are considered tangible assets or collateral. If there is no structure, but you are planning to build immediately, a lender will traditionally offer terms including a 10% to 20% down payment. If the lot will sit vacant for an extended period of time, the down payment could be as large as 50% of the property’s value. And if the improvements are not going to be substantial, say a barn or storage facility, the interest rate, and down payment will both be larger. This is because the lot itself does not hold much value, and the lender does not want to take possession of empty land in the event that you default on the Land Loan.

Options for Financing

Due to all of the red tape and qualifications of a traditional loan for land, you might want to consider other options. In some cases, the current landowner is willing to offer what is called seller financing. Because this is a loan between two private individuals, the terms are all negotiable. Another option is to seek a local credit union or lender who might offer more favorable terms than a larger national lender. Or, if you own additional property, you might be able to finance the land yourself by using a line of credit on the other property.

Going Private

For greater flexibility on the terms of a Land Loan, consider borrowing from a private or hard money lender. This is a person whose business is lending money. And the best part of this type of loan is that the lender is free to set the terms that work best for both himself and his borrower. Check out all of your options before selecting the type of loan that you will be using when buying a piece of land. Investing a little time could save you a great deal of money and frustration.

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

Conventional Arizona Construction Loans Vs. Hard Money Arizona Construction Loans

Getting a traditional loan for a construction project has become increasingly difficult over the last decade so more and more contractors are turning to hard money Arizona Construction Loans. Read on to see a comparison of the two and decide if they’re a good fit for your project.

First, let’s look at conventional loans from banks and big financial institutions. There are a number of pros. Banks are established entities backed by the FDIC (the Federal Deposit Insurance Corp.), so they’re typically reliable and uniform in their services. You could compare them to a nationwide chain restaurant — you know exactly what you’re getting, and you’ll see the same menu and level of service almost anywhere you go. Because of their size and standing, banks also typically offer relatively low interest rates.

However, while the sheer size of banks lets them offer some pros, it’s also what leads to their cons. Banks aren’t very flexible; if you or your project don’t fit into their box, there’s often little hope of getting approved or tweaking the terms. The same goes for a financial hiccup or a credit score that doesn’t match their predetermined threshold. Even if you’re approved, getting a bank loan can take at least a month because of all the complicated underwriting and federal regulations.

Comparing Hard Money Arizona Construction Loans

Conversely, hard money comes from private investors; they sometimes come with higher interest rates but they also offer a range of advantages:

● It’s Quite a Bit Faster. Hard money Arizona Construction Loans can be approved in a day or two and funded within a week. Banks might take a month or more to get your money.

● It’s Way More Flexible. Rather than fit into the bank’s box, you and the lender can fit the loan to work for your unique situation.

● Qualification is Much Easier. Since these are asset-based loans, lenders don’t need to know every detail of your financial history or dive into every aspect of your income. They may look at these things, but you, your project and your collateral are the biggest deciding factors.

Which Loan Fits Your Needs?

Not sure which of these Arizona Construction Loans is right for you? We can help because we’ve funded a wealth of different projects over the course of decades of experience. Come to us with your construction project and we can sit down, talk about your needs and help you decide how to get it funded.

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