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Showing posts with label Arizona Hard Money Lenders. Show all posts
Showing posts with label Arizona Hard Money Lenders. Show all posts

Sunday, August 2, 2020

The Seller Financing Real Estate Option You Cannot Ignore

Have you ever found yourself out of financing options and wondering where the capital for your next deal will come from? Do you feel as if you have exhausted all your options? Do not worry, you are not alone. Far too many people simply do not realize the sheer volume of financing options made available to them at any given point in time. If you find yourself out of options, there is a good chance you have not looked everywhere. Do not ignore the one seller financing real estate option that could save your next deal: “subject to.”

Few things are more important to today’s real estate investors than constant, reliable access to capital. Outside of the actual knowledge required to run a competent real estate business and the relationships you make along the way, nothing is more valuable than the ability to finance a deal in a moment’s notice. After all, what is financing if not for a tool to facilitate each deal?

It is worth noting, however, that to retain the ability to finance a deal whenever the situation calls for it, you must have options. If for nothing else, real estate is a numbers game; the more financing options you have at your disposal, the more likely you are to receive the leverage you require. I maintain that those investors with the easiest access to capital are also those who will have a significant advantage over the competition, but I digress. Not all financing options are created equal, nor are they from the most obvious originators. However, those that not only know how to identify a good opportunity, but also take advantage of it, will find that the financial scale tips in their favor.

Whether you realize it or not, there are multiple financing options made available to savvy investors; you just need to know where they are and how to find them. Instead of relegating your search efforts to traditional financing, think outside of the box. There are a lot more options out there than institutional lenders and private money lenders. In fact, there is one financing option I don’t want investors to neglect: seller financing real estate.

As its name suggests, seller financing real estate will witness the seller play the role of the lender. In its simplest form, seller financing is a real estate agreement in which the financing provided to the buyer is offered by the seller. Often, seller financing real estate becomes an option when the buyer does not have the necessary credit to purchase a respective property. Provided the seller can offer terms both sides can agree upon, there is no reason seller financing real estate options cannot benefit everyone involved.

Provided the situation calls for it, seller financing can offer creative financing options for buyers, sellers, or even as a deal facilitator for other parties. There is no doubt about it: seller financing real estate has its place in the housing sector, and those that complement their existing financing options with it will find that buying a home is rarely ever out of reach.

”Subject To”: Your Best Seller Financing Real Estate Option

Before I get ahead of myself, it is worth noting that the following seller financing option falls under different naming conventions in different states. What someone may know in California as a “subject to” could be known as something different just one state over. That said, I highly recommend checking with a trusted legal advisor, accountant, and title company before you set out to acquire seller financing real estate options.

The most well-known, seller financing real estate option made available to buyers is known colloquially as the “subject to,” meaning the terms of the loan are subject to the seller’s existing mortgage. Otherwise known as “getting the deed,” “subject to seller” financing real estate options are probably the most well-known, but far from general knowledge. And since so few people know the ins and outs of a “subject to,” it is in your best interest to familiarize yourself with them. At the very least, it will give you one more option to choose from when the time comes to finance a property.

Typically, the seller will offer the buyer a Grant or Quitclaim Deed in exchange for some type of consideration (i.e. money, a note, or other assets). In exchange, the buyer is expected to put down “earnest money,” which is not usually a large sum of money; it is just a gesture to show your interest. In exchange, the borrower essentially takes over the payments of the existing mortgage. What is more, the seller will maintain the loan liability until all obligations have been met. The original terms of the note will stay the same, including the name on the loan it was originated for.

I want to make it abundantly clear; you are not assuming the loan. The terms you decide on are strictly between you and the seller, so long as they comply with the terms that were set forth in the original loan.

In the event you decide to pursue a “subject to” seller financing real estate option make sure the title is free and clear of any discrepancies. Hire a title officer to be certain that the home in question is void of liens against the property and that could cause problems down the road. Only once you are certain that there is nothing that could stall the sales process, or even call into question the real owner of the property, can I recommend moving forward with a “subject to.”

Seller financing real estate options are not as well-known as traditional financing options, but they are nonetheless an option. In fact, there are times when “subject to” financing options just make more sense for everyone involved. So long as everyone agrees to the terms, you may find that seller financing is the best way to go to acquire your next deal. Of course, mind due diligence and make certain that it is your best option, but do not simply ignore it; you could find it to be extremely beneficial.

 

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@level4funding.com 
Dennis Dahlberg Broker/RI/CEO

NMLS 1057378 | AZMB 0923961 | MLO 1057378 
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027 
111 Congress Ave | Austin | Texas | 78701 
About:  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. 
© 2019 Level 4 Funding LLC. All Rights Reserved.

Copyright | Privacy Policy | *Terms & Conditions

       

Tuesday, July 21, 2020

Private Money Lending Guide: How To Get Started

Investing in real estate is essentially one of the smartest and safest strategies to promote wealth building.

With the proper foundation and knowledge, investing in real estate can be highly lucrative for anyone. But let us be honest, you already knew that. Of interest, however, is what an investor can do with the money they make from a profitable career.

While a portion of profits will undoubtedly be allocated to the lifestyle of their choice, investors are advised to be smart with their money. Of course, you can reinvest into another property, but if you are looking for an alternative there may be one option you have not considered yet: private money lending

Investors who have the funds to do so should consider private money lending in real estate. This process offers the same type of underlying security and profit potential as rehabbing or wholesaling, but without acquiring new properties.

What Is Private Money Lending?

Private money lending is when individuals lend their own capital to other investors or professionally managed real estate funds, while securing said loan with a mortgage against real estate. Essentially, private money lending serves as an alternative to traditional lending institutions, like big banks.

As rookie investors gain experience, they strive to aim higher. Leaving your hard-earned money in a savings account is no way to protect and grow your assets. At the end of the day, private money lending allows you to secure a loan with real estate that is worth much more than the loan. In some ways, this process can be less risky than owning real estate. That is why it’s important to familiarize yourself with the best real estate financing options available to today’s investors.

In the past, real estate financing typically came from banks, government agencies, insurance companies, and pension funds. However, with a list of strict requirements and a timeline not conducive to the average real estate investor, a need for alternative lending sources quickly developed. At the same time, it became obvious to those with appropriate funds that their money could better serve investors than large institutions. Now, private money lending is a critical component to the real estate investment industry. In fact, its presence makes it more possible for the average investor to run and maintain a sustainable career.

In case you were unaware, there are several benefits involved for those who choose to lend private money as well. If done correctly, offering alternative real estate financing options can mitigate risk while simultaneously establishing wealth. Of course, this is not a path for everyone. You need to ask yourself if you can afford to do so. Having a little extra money in the bank does not necessarily mean you should throw it at the first investor who comes your way. If you are equipped to mitigate potential risks and take advantage of the opportunities that present themselves, private money lending may warrant your consideration.

You may want to consider private money lending if one of the following applies to you:

·         You are a real estate investor looking to expand your portfolio.

·         You are a doctor, lawyer, CEO, or professional of another kind who has a great income or a surplus of cash.

·         You have a sizable retirement savings account.

·         You are a retiree looking for a passive income investment.

·         You are owner of an estate or other trust fund.

·         You are a tech entrepreneur who owns a successful startup.

·         You are a lottery winner.

·         You want to and can help a friend or family member.

Still on the fence? Don’t worry; the following will answer any questions or concerns you may have about pursuing a private money lending business:


The Anatomy Of A Private Money Loan

The concept of a private money loan is relatively simple, three elements are required for a loan of this nature to transpire: a borrower, a lender, and a lot of paperwork.

For all intents and purposes, private money lending is perhaps your best chance to invest in real estate with no money of your own. If for nothing else, private money loans can provide for investors in need. While they seem to serve the same purpose as traditional lending institutions, there are several key differences. Private money loans typically charge higher rates than banks, but they are also more available in cases an average bank would pass on. Additionally, banks and other financial institutions typically do not provide the same combination of speed and transparency in the decision-making process.

How To Become a Private Money Lender

As I mentioned above, private money lending can offer several benefits for everyone involved. It is not uncommon for investors to eventually expand into private money lending themselves due to these benefits. If you are interested in private money lending, there are a few steps you can follow:

1.      Establish your business and obtain the required insurance.

2.      Meet with a lawyer to create your company structure and review regulations.

3.      Identify your preferred lending focus.

4.      Join a peer to peer lending platform or network to find possible investments.

5.      Evaluate any potential clients by calculating potential returns and risk levels.

6.      Start your business in private money lending.

Private Money Lending: How To Identify Borrowers

The concept of private money lending is relatively simple: without money, real estate investing does not exist. Money, like in every other industry, is the lifeblood of an investor. Real estate investors need to actively work on securing private money loans to fund their deals. Often, the average investor isn’t capable of funding a deal with their own money. Moreover, even if the funds are readily available, investors will seek the assistance of private money. Regardless of a investor’s situation, there is a particular likelihood of them needing private money assistance. Instead of having to pool money or stretch every dollar, investors are given more options to grow their business with the use of private money.

Perhaps even more importantly, is the speed and efficiency in which private money may be obtained. The speed of implementation is critical to an investor, and it can mean the difference between closing on a deal and losing one. Having the money in a timely manner can make it that much easier to close on a deal.

With private money lending, you will be confronted with several types of borrowers. While each is unique, they are all looking for the same thing. Here are the four types of borrowers you may encounter:

·         Rehab/Sell: This type of investor will typically purchase a residential property and complete renovations with the intention of reselling it once the project is complete. Borrowers in this sector find private money attractive because conventional banks will often not lend to properties in poor condition. Perhaps even more importantly, access to private money is more conducive to a timely and profitable flip.

·         Rehab/Rent: These investors typically purchase a residential property and complete renovations with the intention of renting the property for cash flow purposes. These borrowers find private money attractive for the same reasons as investors in the rehab/sell category.

·         Builders/Developers: Builders and developers will purchase vacant land to permit and develop into residential or commercial use. Borrowers in this sector are interested in private money primarily based on the speed with which the funds can be available. Also, many banks will not lend on speculative development.

·         Commercial Investors: This population of investors may seek to use private money as a “bridge loan” for a commercial property when a conventional bank will not lend on an un-stabilized asset.

Money Lending: How To Get Paid

Private money lending is attractive because of the flexibility it offers, not only to borrowers but to lenders as well. You see, with a traditional loan lender will generate income through interest payments made by the borrower. Private loans, on the other hand, allow lenders to negotiate exactly how (and when) they will be paid back for the loan. This opportunity opens several perks not traditionally offered to investors. Read through the following agreements to learn more about making money as a private lender.

·         Joint Ventures: As a private money lender, a profit split can be one of the most attractive options for financing an investment. Investors can negotiate to a receive a percentage of the final profits in this type of agreement. The amount will vary based on the contract and the investment, though it could be quite profitable. In some cases, private money lenders will even find borrowers who propose this option. Just make sure you believe in the potential success of the deal and you are all set.

·         Exit Fees: This loan structure requires the borrower to pay a predetermined amount at the end of the loan term. The exit fee is often negotiated as a percentage of the overall price of the investment. In some cases, lenders may even negotiate an increasing exit fee that changes depending on when the loan is paid in full. For example, if the borrower needed a few extra months to repay the loan, then they would pay a larger exit fee.

·         Interest Payments: As I mentioned above, interest payments are one of several ways to generate income from a private money loan. In fact, this is the most common set up in private money. Lenders can set an interest rate at the time of the loan approval and sit back and wait for the money to arrive. Typically, private money loans are associated with higher interest rates than other loans, making this a particularly attractive arrangement for lenders.

·         Points: Points are essentially fees paid by borrowers in exchange for lower interest rates. Points are calculated as percentages of the overall loan, with one point referring to one percent of the loan amount. The reason some lenders prefer this system is that points allow them to be paid in larger sums, with additional interest payments to follow. Often, points are paid at the beginning of the loan term and are suggested by the borrower as an incentive for granting the loan.

 

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@level4funding.com
Dennis Dahlberg Broker/RI/CEO

NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About:  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.
© 2019 Level 4 Funding LLC. All Rights Reserved.

Copyright | Privacy Policy | *Terms & Conditions

Sunday, December 2, 2018

The Best Place to get loans for Airbnb businesses in Arizona?

p1_img2 Short-term vacation rentals are now a viable source of income thanks to platforms like Airbnb. You may want to take advantage of this opportunity, but what's the best source of loans for AirBnB businesses?

In the past, it was challenging to secure consistent short-term rental income.

Vacation rentals were advertised through newspapers and other forms of advertising with limited reach.  How could Joe and Sally from Minnesota find out about a beachfront property available to rent on the coast of California?  Well, they really couldn't. In the 21st century, things are different. Finding a regular stream Joe's and Sally's to lay do   wn several thousand dollars a week to stay in a beachfront home is now possible thanks to platforms like Airbnb. Depending on your locale, owning a vacation rental property could pay for half or more of your outstanding mortgage.

However, you may not have the funds on hand to purchase a vacation property outright, and unfortunately, traditional bank bureaucracy hasn't quite come into the 21st century.

Getting an Arizona Airbnb loans can be difficult, bank regulations and FHA guidelines hamstring conventional lenders

A beachfront condo has just come onto the market. You know for a fact the best strategy here would be to rent it out on a short-term basis. So you go to your friendly neighborhood bank. It's all smiles until the loan officer asks " how do you intend to pay for the second mortgage?"

You explain that you intend to make money by renting out the property during tourist season.  The loan officer reviews his checklist, " short-term rental hmmm, I’m sorry, we can account for that type of income."

Essentially brick-and-mortar lenders haven't caught up to the opportunity offered by platforms like Airbnb. Traditional lenders are for the most part unwilling to underwrite loans based on short-term rental income, which means the vacation property you intend to finance will be grossly undervalued. In most cases usually only the best borrowers can qualify.

Say you've found a dilapidated beachfront property, in a popular hip location. Prices in the area are prohibitive, and this busted up cabin is your only way to get in on the action. You know once the property is up to a livable standard, you could charge 500 bucks a night to rent it out. But, don’t even bother with a regular bank if a property is anything less than livable. Your deal will not close due to FHA guidelines.

If a distressed, but steeply discounted property, comes onto the market in an extremely lucrative area, conventional lenders, unable to resell your loan to Fannie and Freddie, are going to reject your application out of hand.

Private money can be the help you need to get an Arizona Airbnb loan.

In such situations, a private money provider is your best bet.  This type of lender can consider the short-term income potential of the property you want to finance because private lenders set their own rules when it comes to underwriting. Private lenders are also not beholden to FHA guidelines.

With a private lender on board, that condo is yours, even if you have an outstanding mortgage or less than perfect credit. With a private lender, you can transform that run down cabin into a gem. Airbnb will then be sending you a stream of Joe’s and Sallies who will pay you thousands of dollars a week for the privilege of staying in your refurbished vacation home.

So when it comes to vacation rentals, skip the bank and approach a private money provider first.


Dennis Dahlber Broker Ri CEO Level 4 Funding LLC 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@level4funding.com
Dennis Dahlberg Broker/RI/CEO

NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701 

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

© 2016 Level 4 Funding LLC. All Rights Reserved.
Copyright | Privacy Policy | *Terms & Conditions

Friday, November 30, 2018

No Money Down Arizona Fix and Flip Loans: Advice for New Investors


If you are new to be flipping business, you may have heard the prospect of no money down Arizona Fix and Flip Loans. You may be thinking "hmmm,  I can get into the flipping business without spending any of my own money, well sign me up!" 

You can use three methods to pay nothing out of pocket for your next flipping project, wholesaling, private money and hard money.

Let's talk about wholesaling first. The Easiest way to explain the process is you sell the option to purchase the house to another investor. You don't spend any money; you secure a purchase contract with a buyer  and before the date on the purchase contract comes around you sell off the option to purchase the home to another investor.

Wholesaling is not a good option for someone who is new to the rehab business.  A good wholesaler knows how to find the most attractive houses to flip, can compete with full cash offers to secure a bid and above all, they are in contact with a network of other real estate investors who are willing and eager to purchase their contracts.

As a new investor, it is doubtful you have any of these qualities. So what are your other no-money-down financing options?

Few new house flippers can qualify for no-money-down Arizona Fix and Flip Loans from private investors.

The situation with private money involves you seeking out a cash buyer to finance the full cost of your flipping project upfront. In this situation, you have to prove your value to an investor, and have an answer for him when he asks "why should I pay for the full cost of your project?” The investor needs believe that you can carry out the work,  and all he has to do is sit back and let the money roll in.

However, if you're new to the flipping business, you don't have the requisite demonstrable proven track record when it comes to rehabbing distressed properties. Given this lack of experience, you probably wont get an investor on board. What are your options when it comes to getting no money down financing, for your first flip?

Hard money can be a route for new investors to get no money down Arizona Fix and Flip Loans but carefully consider the risks.

If you have enough collateral on offer, even if you're new to the flipping business you can still get a zero down hard money deal.

A hard money provider is a lender who offers you a loan based on the value of your collateral.  You need to find a hard money provider who is "creative," when it comes to collateral. If you pledge enough of your assets, some hard money providers might not require you to make a down payment. To truly pay nothing out of pocket, you also need to find a lender who is willing to defer the payment of fees until your project resells. But, are you willing to pledge your primary residence,  401(k) or any other assets to avoid out of pocket expenses?

You need to consider this question carefully. If you are new to the flipping business, it might be better to make a steep down payment than to risk losing your house. The more experience you get with house flips, the more financing options you'll have. You can get into wholesaling, partner with other investors and you'll have a bit more confidence to get a no-money-down hard money loan.

Dennis Dahlber Broker Ri CEO Level 4 Funding LLC 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@level4funding.com
Dennis Dahlberg Broker/RI/CEO

NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701 

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

© 2016 Level 4 Funding LLC. All Rights Reserved.
Copyright | Privacy Policy | *Terms & Conditions

Monday, November 26, 2018

Hard Money Arizona business loans: A Tale of Two Businesses


iStock_000002302749_Large (1)When it comes to Arizona hard money loans you take out for your business, consider carefully, whatever your pledging.

Sally Jones lives in a beautiful picturesque tourist town, where she owns and operates a restaurant.  Then the especially ponderous local city council demands Sally make some extensive cosmetic changes to the exterior of her restaurant, “to preserve the historic character” of the neighborhood they say. If she doesn't make these changes, she will have to shutter her business right in the midst of peak tourist season.

She needs money yesterday. She's heard about hard money does a quick cursory search online,  to find a "hard money provider," and the one she finds offers her a merchant cash advance instead.  She doesn't think much of it, applies, and the money quickly comes in. She makes the necessary cosmetic changes. Business goes well extremely well during tourist season.

However, the loan she took out was paid back with 40% of all her profits.  She breathes a sigh of relief ‘at least the loan is paid off,’ she tells herself. But her margins are razor thin, and she has absolutely nothing in savings.

Should be okay right?  Well, then the city council demands that the siding on her restaurant isn't the right color and she'll have to change it. With absolutely nothing in savings, Sally has to take out another MCA loan to resolve the issue.

When it comes to hard money Arizona business loans, real hard money providers don’t use your income to secure their loans.

Across the street, Ralph was under similar threat from the city council.  He too needs fast money, he goes online and finds a hard money provider. His lender asks him to pledge his restaurant as collateral for the loan, and he's a bit nervous about the interest payments.  Nevertheless, he goes ahead and makes the necessary changes. All the extra income he earns throughout tourist season, allows him to pay back the loan he took out and also enables him to save up the additional revenue.

So when the Birkenstock wearing, tofu munching city council demands that he also needs to change the color of the siding on his building he has some extra money on hand and he doesn't need to take out another loan.

Risk less by seeking out real Arizona Hard Money Lenders.

The moral of this story is don't put your businesses long-term income on the line to fix a short-term problem.  A real hard money deal allows you to leverage the equity you have your business' real property as collateral. Yes, there's some risk  and you'll want to carefully consider whether or not you can pay back the loan. However, if the prospect of quickly paying back the loan is in sight than this type of deal offers little to no danger.

However some there are hard money providers online, that are merchant cash advance lenders.  These loans are especially dangerous as seen in the story above because they hamper your business's ability to save income. Your business's cash flow is eroded,  and slowly but surely another short-term problem comes up. Because of your MCA, you have little to no savings on hand, and you have to take out another loan.

So when it comes to alternative financing,  know precisely what you're pledging. Be sure your hard money provider is the real deal.


Dennis Dahlber Broker Ri CEO Level 4 Funding LLC 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@level4funding.com
Dennis Dahlberg Broker/RI/CEO

NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701 

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

© 2016 Level 4 Funding LLC. All Rights Reserved.
Copyright | Privacy Policy | *Terms & Conditions

Fix and Flip Loans: Exit Strategies.


iStock_000002512608_LargeYou are in the flipping game, and you're just brimming with hopeful expectations about your next project. The house is a diamond in the rough, and in your capable hands, you will polish it into a sparkling gem. You are ready to apply for a loan, but what if things don't quite go according to plan? With Arizona fix and flip loans its best to have an exit strategy in mind before you even apply.

Finding the right opportunity isn't everything the flipping game, in fact, it might be even more critical to plan ahead in case things go wrong. Don’t be overconfident going into your next deal. No matter how beautiful the renovations you intend to make or how splendid profit your projections look on paper, math and reality don't always line up. When it comes to flipping, there are two classes of exit strategy: preemptive and "well that sucks," strategies.

Preemptive Exit Strategies for Arizona Fix and Flip Loans

A preemptive exit strategy involves you getting out of a deal before you begin the project in earnest. When it comes to taking preemptive action there are two basic strategies:

  • Keep it Simple:  in this case, you've lost confidence in the prospect of doing a full-blown renovation, but you still think there's some money to be made. So keep it simple, narrow the scope of work, replace the carpet or give the interior a fresh paint job. Then you sell the house for a little less money to a prospective buyer.

  • Wholesaling: Basically you leave the house untouched, you don't do any work, and you sell the house back to another real estate investor. Whatever preemptive strategy you choose you need to ensure the sale price can pay-off the remaining balance of your loan.

The worst-case scenario is that you've already gone full bore into a project, completed renovations and…

"Well, that sucks," exit strategies for Arizona Fix and Flip Loans

Your once shambolic home is now full of snappy furniture and shiny finishes, but no one is buying.  The open door creaks in the wind and the cookie plates go unconsumed at every open house. All the while the home sits unsold and you are paying real estate commissions and the cost of carrying your loan. There are two basic things you can do in this case:

  • Rent it:  You find someone who is willing to pay for the privilege of living in your home every month.  Of course, if you go for this option, that high-interest short-term loan you took out the flip house in the first place might be too expensive. The rent you charge must at least equal your loan payments. If not you might need to refinance, 

But if you can't refinance you might have to,

  • Eat it:  You keep lowering the list price until someone takes the house off your hands.  Hopefully, in the end, you'll breathe a sigh of relief, you might not have made a profit but at least the final sale price paid for the loan. But this won't always be the case, you might just have to eat the difference between the final sale price and the outstanding loan balance. But this better than going into default.

So how do you avoid eating it? Don't just waltz wistfully into every opportunity, hold off a bit. If you have some uncertainty, ponder if you'll be able to refinance if the property doesn't sell. But if you regularly flip houses, sometimes you will simply have to eat it.

Dennis Dahlber Broker Ri CEO Level 4 Funding LLC 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@level4funding.com
Dennis Dahlberg Broker/RI/CEO

NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701 

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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