construction loan Archives - Page 3 of 7

How to Secure Fix and Flip Loans

Flipping homes is a great way to enter the real estate investment business. But before you can begin to make money, you need to learn how to land Fix and Flip Loans.

Flipping houses has grown in popularity over the last decade due to the many television shows that depict this real estate investment process as a fast and straightforward way to make a massive profit. But what the shows never explain is how these new real estate investors get the Fix and Flip Loans they need to buy properties. And this is by far the most critical step in the buying process. Learning about your borrowing options and how to secure funding is your first big step in becoming a successful real estate investor.

Flippers are looking for homes that are in disrepair or have been through the foreclosure process. This is how they can invest a little time and money to turn a nice profit. But the downside to these run-down properties is that banks and traditional lenders see them as a high risk. Banks know that the flipper will need money and experience to make the deal profitable. So, these conventional lenders tend to avoid funding flippers. So, when you want a Fix and Flip loan, you better know about alternative lenders.

Hard money lenders are legitimate private lenders who are almost always willing to fund Fix and Flip Loans.
There are a few reasons that hard money lenders don’t mind the added risk of a flip. First, they are basing the loan on the value of the property and then requiring that the property be the collateral for the loan. This system gives them security if you default on the loan. Second, the lender requires a relatively high down payment so that there is instant equity in the property. Again, this provides security for the lender in case you default on the loan. He or she sells the property and gets back the invested funds and sometimes even more than you owed on the loan.

The Price of Doing Business

What you need to know as a borrower is that you will pay for the opportunity to borrow from a hard money lender. And the rates are going to be higher than those offered by a traditional lender. The interest rate could be in the 12% to 20% range or even higher if the down payment is low, or the profitability of the deal is questionable. You are also going to pay points on the loan. Each point is 1% of the loan amount. And in some cases, there are processing fees that you will need to pay before the loan is funded.

What You Get For Your Money

The great thing about hard money is that this is a loan from a private lender. That means that the terms of the loan are at the discretion of the lender, so he or she can be flexible. You might be able to negotiate terms that are tailored to meet your needs or that save you some time and money. But the most significant advantage of hard money is that the loan is fast and simple to secure as compared to a traditional mortgage or loan from a bank.

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.

When to Use Commercial Hard Money Lenders

Not all Loans are the same, and neither are all lenders. There are some very specific times and reasons when you should decide to use Commercial Hard Money Lenders.

Commercial Hard Money Lenders are an excellent alternative to traditional bank Loans for many borrowers. And while the cost for a hard money loan might be more than the price of a bank loan, there are many benefits to the borrower. But in order to know that hard money is the best choice for you, you need to understand when these Loans are most appropriate and beneficial.

When you find a great deal and know that there are going to be many other buyers interested in a property, you should always consider using hard money. You can secure this loan much more quickly than a traditional bank loan. Rather than the 3 to 6 months that it could take a bank to fund your loan request, hard money lenders could complete the process in just about a week. Added benefits include less paperwork for you and far less stringent guidelines to qualify for hard money.

That brings us to the next reason to work with Commercial Hard Money Lenders. If you have poor credit or no credit, a traditional bank or lending institution is not going to consider loaning you money. But hard money is based on the value of the property rather than the borrower’s credit score and creditworthiness. So hard money lenders could be your only option, but one that lets you make the purchase, even with personal credit challenges.

Hard Money Is a Good Option for Unique Needs

Most banks are only looking to capitalize on the masses who need a very cookie-cutter loan. This means that you need to have excellent credit, be buying a property with secure value, and you have a stable income. But where do you go to get a loan when you don’t meet all of these average guy criteria? The answer is hard money lenders. These lenders have the ability to offer terms to meet your needs, they don’t care as much about your personal credit, and they are willing to look at a property’s potential to determine the value of the loan. All of these benefits are worth paying a little bit more for, especially when you have no other legitimate options.

When You Need Some Cash

Hard money can also be a viable option when you need to access some of the equity that you have in a property that you already own or are purchasing. It could be a commercial property that houses your business, or it could be a personal property. Either way, you can access some of the equity in your property with this short-term loan so that you can pay off bills, invest in your business, or even start a new business. Other complex purchases, such as one with multiple pieces of collateral, are not acceptable to a bank or mortgage company. But Commercial Hard Money Lenders are willing to look at any opportunity to determine if there is the potential to make a good deal. All of these unique situations are good reasons to pay a little more for hard money.

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

Beware Loaning Money Directly: Use Trust Deed Investing Instead

Jane and June were able to work together on an investment that benefited both parties and allowed them to remain friends… all because they were smart and used Trust Deed Investing.

Jane and June were best friends. They met one another when they both decided to take a creative writing class. Jane was a little older and had lived a lot more life. In fact, she and her husband had a considerable amount of money at their disposal, and Jane was always looking for new projects and new ways to diversify her portfolio.

One day, June told her she’d always wanted to open up a tearoom but had never had the funds to buy property.

That’s when Jane got an idea! She would loan June the money to buy her property and start her business. However, Jane was a savvy investor and knew it would be a bad idea to just give her friend the money. That’s why she suggested Trust Deed Investing.

Why Trust Deed Investing Protected Jane and June’s Friendship

When Jane decided to lend June the money, the two women went to a professional lender who was able to draw up the paperwork need for a deed of trust. This deed protected the property by allowing the lender to legally take responsibility for it and protected Jane’s investment. It also laid out the timeline for June to pay Jane back. Jane and June both felt more secure knowing someone else was involved in the process.

While June proceeded with buying the property, fixing it up, and turning it into the tearoom of her dreams, she and Jane had one or two disagreements. Loaning and borrowing money can commonly cause these kinds of spats, and they can be especially hard to alleviate when they are between friends. Fortunately, Jane and June always had someone they could go to in order to relieve these issues, a third party in the form of their lender who was always available to help smooth out the edges and make sure things were fair on both sides.

In the end, June got her tearoom, and Jane was paid back with interest. Now, both women like to spend afternoons together at the shop, writing, working, talking, and laughing.

Want to Learn More about Trust Deed Investing ?

As you can see from Jane and June’s story, it’s always a better idea to get a third party involved when loaning money, especially if you’re choosing to do so with a friend.

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

Everything You Need To Know About Fix and Flip Loans

When you make the decision to enter into the world of real estate investing it can seem a little overwhelming. Although, there are many factors that go into becoming an investor, the one thing that can be simple and clear is the financing.

The majority of the time a fix and flip project needs financing. You need money to make money, as the saying goes. The point of a fix and flip project is to renovate a property and sell it for a profit. The first thing you need to figure out is how much funding is necessary to complete your project. The most popular financing for these types of projects is private money, or hard money.

Hard money means you are borrowing from either an individual or private company; and although they operate similarly to conventional banks, they have their own requirements and terms. Because they do not have to adhere to strict FDIC rules, there is a much faster approval time. There are two main reasons borrowers opt for a hard money fix and flip loan: quick money or not having the qualifications for a conventional mortgage.

Hard money lenders provide loans that are backed by real estate assets. These loans can be used to purchase residential properties, such as condos and houses or buildings that will be used for business. When you begin your search for financing, make sure you have a concrete plan that will give you confidence. When you walk into a lender’s office with confidence and a plan, they are much more likely to feel confident in lending to you.

A hard money lender will look at the after-renovation value (ARV). What that means is what the property will be worth after all repairs and renovations are complete. Typically, lenders will finance up to 80% of the ARV. Let’s say you find a property and the purchase price is $65,000. Once, it is evaluated, it is determined the ARV will be $115,000. Your hard money lender would finance $92,000. That leaves the borrower with $27,000 for repairs, fees, etc. The property itself is used as collateral in case of loan default.

Unlike traditional lending institutions, with strict, rigid processes and lengthy documentation requirements, hard money lender have more freedom and can work each loan according to the borrower’s situation and needs. This creates much less hassle for the borrower. Another bonus, hard money lenders typically don’t charge penalties for early payment of loans. What that means to you, is if you are able to renovate and sell the property faster than anticipated, you will not be penalized. On average, fix and flip loans can be approved and funded between 7 to 10 days.

Hard money fix and flip loans are much less hassle than a traditional mortgage.

Find a property, make a plan and research hard money lenders. When working on a fix and flip project it is best to work with a lender in your state, or one who is familiar with your state’s regulations.

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 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

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