Types of Hard Money Lenders for Commercial Lending

In the world of hard money commercial lending, there are various types of lenders. Let’s take a look at what each brings to the table and how you can make the right decision for yourself, as a borrower.

There are several types of lenders available for those that are looking at a hard money, or private lender, for their unique needs. As a real estate investor, it’s important to understand how to raise the needed capital so that when you find “the deal” you have the funds to secure it. One such entity is the direct lender. This person is putting up their own money. It is often difficult to find these individuals and it involves filling out multiple application forms for each independent investor.

Hard money mortgage loan brokers work with numerous investors and pick and choose according to your specific property or project. Those that have been in the business for years will often work with hundreds of individual private investors. They know which of the investors they work with are interested in bridge loans, which ones are drawn to the fix and flip projects, and which prefer large commercial projects such as office or retail. Their search is for the right investor and for the best deal possible for their client. When working with a mortgage broker, it’s best to choose one that has been in the hard money lending business for years because it takes a long time to develop these types of commercial lending connections.

Private single and multi-family offices are wealth management firms for the extremely high-net-worth individuals or families. This is a difficult group to break into and often requires “knowing someone that knows someone.” Mortgage loan brokers with years of experience under their belt have often tapped into this very secretive world of private money lenders.

Funded Hard Money Commercial Projects

Hard money lenders will often provide commercial lending for a variety of projects, depending on their interests and established investors. A few of these include ground-up construction, fix and flip, home purchases, business needs, partner buyouts, improved land loans, multi-family, office buildings, warehouses, shopping centers, retail outlets and mobile home parks. Not every lender is the same. Some have very limited projects and properties that they will make loans on. Others carry a more versatile portfolio of investments. For instance, some will lend on improved land and lots while others will not.

Find a hard money mortgage home broker that you’re comfortable with and that you can trust.

It’s probably evident that the best and easiest way to secure hard money commercial lending is through a hard money loan mortgage broker. You’ll want someone that you’re comfortable with and that you can build a relationship with that will last through your many real estate transactions. Trust your gut and ask the appropriate questions such as time in the business and what their background is in the real estate industry. Check on borrowing requirements and ask if there is any prepayment penalty. While you are delving, or have already dived, into a business that naturally carries risk, it also offers tremendous rewards. Call us at Level 4 Funding. We may just be the mortgage brokers that can help you with the funding you seek for all of your real estate investments now and in the future.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com 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 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

The Difference between Participating Commercial Mortgage and Hard Money Loans

Both participating commercial mortgage and hard money loans are common avenues that real estate investors pursue when looking to fund a new or existing project. Learn the difference between the two and which one may be right for you.

According to CNBC, the Federal Reserve recently reported that loan officers at U.S. banks are tightening lending standards on commercial mortgages. This includes standards for construction and land development loans as well as loans secured by multifamily residential properties. This loan environment causes real estate investors, builders and businesses to take a look at alternative lending operations. Two of these alternative strategies include participating mortgages and hard money loans.

A participating mortgage loan is just that—participating. This means that the lender shares in part of the revenue that the commercial property generates. In addition to the mortgage payment and interest, they will also receive their share of the profits which may come in the form of rental income or proceeds from a sale. These types of loans are common in office and retail projects as well as apartment properties where long-term leases are involved. It is attractive to borrowers because the lender, in these instances, may accept a lower base interest rate and a higher loan-to-value ratio.

These are often high-risk loans that a conventional lender would not be able to make.

A hard money lender is usually a private group or individual investors that offer commercial and sometimes residential loans. Underwriting criteria is less restricted than those of a traditional loan. They do require a plan, including an exit plan, as well as a reasonable loan to value. Creditworthiness does not play a large, if any, part in the decision to fund. In essence, it is really about available collateral. A hard money lender can approve and fund a commercial mortgage much faster—sometimes in as little as a few days. This is valuable to investors needing to get going on a project or a business needing immediate funding for their operations.

What Types of Property is Not Funded by These Alternative Sources?

In most cases, a hard money lender will not make a loan on an owner-occupied residential property. This is due to increasing regulations by the government and stricter guidelines. For others, the location and the market matters just as much as the type of property. Some lenders focus locally while others are available for nationwide lending.

There are specific questions you will need to consider for either type of commercial mortgage.

There are inherent risks in either type of loan. Be sure to ask the prospective lender for a full disclosure of fees and conditions. Don’t be shy when asking about their background and experience. Working with a mortgage loan broker can give you access to hundreds of investors with one phone call. The mortgage broker will, in turn, determine what investor would be best for your particular project and what the best rate is that they can obtain for you.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com 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 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

The Benefits of Obtaining a Business Loan from a Hard Money Commercial Mortgage Broker

Since the financial crisis of 2008, obtaining a small business loan has become increasingly difficult. Find out about alternative funding from a hard money commercial mortgage broker.

According to the U.S. Small Business Administration, over 50 percent of small businesses fail within the first five years. What does that imply? If you’re a cup half-full type of person, your first thought is, “Hey! That means that 50 percent of small businesses make it!” Good for you. You are a born entrepreneur. Consider the words of Jeff Bezos, founder and CEO of Amazon: “I knew that if I failed I wouldn’t regret that, but I knew the one thing I might regret is not trying.”

One of the main reasons that small business fail is that they do not have the capital to sustain them. How much does your business require? To a large degree that depends on its operating cycle. In other words, your accounts receivable, accounts payable and inventory analyzed by the average number of days it takes to collect, pay and turn over a sale. In most cases, when starting up, you need working capital in order to fund your accounts receivable and inventory because accounts payable will not cover the expense. This same scenario happens to veteran businesses as well when working capital is needed for seasonal inventory build-up or a sudden and unexpected growth spurt has left them with little resources.

In order to determine how much money you will need for your enterprise, consult with suppliers in your area. Do comparison shopping and consider lease options instead of outright purchases. Ask about credit terms and start-up inventory packages. Business start-up guides are good resources to give you a general idea of costs that you may have not considered. A business plans and budget are mandatory. And think ahead with a financial forecast.

Obtaining Funds from a Hard Money Commercial Mortgage Broker

Finding a bank willing to make a small business loan can be difficult in the current market. Since the 2008 financial crisis, banks have demonstrated a 20 percent decline in small-business lending. Raising funds from an angel investor can take time—six months or more, and requires developing a business pitch and making a presentation to several angel groups until finding the right investor. A hard money loan from a commercial mortgage broker, on the other hand, can be obtained in a matter of days and relies on collateral to secure the debt more than credit history. These short-term loans may be extended for up to five years or be repaid in as little as three months for those that are looking for a quick turn-around. Bridge loans are short-term loans that “bridge the gap” between money needed now and capital that is coming in later. It may be an ideal solution for increasing inventory or unexpected equipment expenses. These loans are best used when waiting for permanent financing or accounts payables are expected.

An experienced hard money lender can talk with you about the best options for your business.

Do your homework and work with someone that has been in the business for quite some time. A hard money commercial mortgage broker needs to spend years making contacts and developing his true and trusted rolodex of investors. Call us a Level 4 Funding to discuss your needs and see if we have the solutions. Our loans range from 3 to 60 months and we offer quick no obligation quotes.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com 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 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

How to Obtain Commercial Loans for Construction Projects

Supply and demand are leading to lucrative deals for contractors. Find out more about commercial loans for construction projects and how to get into this profitable investment strategy.

Optimism in the housing market is increasing as the rising demand stimulates the need for additional supply. According to Realtor.com, “Prices in the residential real estate market remain at seasonal and historical peaks while for-sale inventory remains very limited.” In addition, the average price for a home, nationwide, came in at $275,000, a 10 percent jump from last year’s median price. And that is good news for construction companies. If you’re looking to delve into this lucrative business platform, there are several options when it comes to financing your next or first project.

Though the Great Recession is behind us, commercial loans for construction of new-built homes are not as easy to obtain as they once were—before the subprime mortgage crisis. If this is your first home and you do not have a finished home to act as collateral, it can be particularly difficult. Connecting with a knowledgeable and connected mortgage broker who offers several programs to meet your unique needs can help you secure the financing you need for new construction.

Construction loans are typically short-term loans with higher rates. The lender will ask to see your plan, budget, and construction timetable and you will be required to make only interest payments on your draws until the project is completed. These draws act as a line of credit and are taken at varying intervals throughout the construction process.

There are no prepayment penalties, so as soon as the construction is complete, you can pay off the commercial loan. It’s good to be aware that not all lenders will include the lot cost in the loan.

Benefits of a Hard Money Commercial Loan

In today’s market, good deals can go quickly. You may have come across an existing structure in need of a tear-down and gut renovation as compared to your quick fix and flip. It’s in an up-and-coming neighborhood and time is of the essence in which case a delay in funding could mean missing out on a unique and hard-to-come-by investment opportunity. A hard money loan can be your perfect solution because it offers the same commercial loans in record time, with funds that can be secured in as little as two days. In addition to speed, you will not need a stellar credit report in order to get funding, just collateral.

Get your project underway and funded in record time by using the expertise of a mortgage broker that funds private hard money loans.

At Level 4 Funding, we offer construction loans for up to 24 months with a monthly quick payout draw program. We can also finance the land purchase and need minimal documentation to get started. This includes a copy of your budget, plans and permits. Funds up to $50,000,000 are available with an APR starting at 9.5 percent. Call us to discuss the best program to meet your needs.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com 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 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Commercial Loans: Hard Money versus Soft Money

As you delve into the world of commercial loans and real estate investments, you will undoubtedly come across these two terms as they relate to the lending world. Here, then, is your foray into the land of tactile lending and what the difference is between these two types of loans.

The two terms, hard money and soft money, are used for both political contributions and in relation to lending practices. If you’re donating your hard-earned money, or easy-earned money if you’re into multiple streams of income, to a specific candidate, it’s defined as hard money. Divvying it out to a party or committee is what’s known in political circles as soft money.

Soft money loans are usually a combination of loan types—aspects of a traditional commercial loan combined with those of a hard money loan. As with a hard money loan, they are asset-backed and collateral is required. Unlike a hard money loan, your credit score is an important factor and, in most cases, needs to be above 580. Another requirement may be proof of available capital, and enough of said capital to pay three to six months of the loan payment. Soft money loans usually take longer to close than respective hard money loans.

Hard money commercial loans are often your best bet if you are in need of immediate cash or you’re working on building your credit back up and currently have a poor credit history. They can be closed in as little as two days and do not require the documentation that a lender of a soft money loan requests. Many investors use these types of loans for bridge loans (when waiting for traditional lending funds or other capital), fix and flip loans, new construction loans, and when looking to purchase rental property. They are very popular among real estate developers.

The Unique Criteria of a Hard Money Loan

A hard money commercial loan is given with a specific project or property in mind, and the loan is secured by real property. A hard money loan usually has a shorter repayment plan—anywhere from 3 to 60 months depending on the project. Lenders also offer loans to businesses in need of cash for their operations or for expansion. In these cases, they may use property, equipment, and receivables as collateral. You may also use your personal assets such as your home. The loan offer is based on the loan to value ratio (LTV) which, in many cases, is anywhere from 50 to 90 percent. An example of this calculation: Your home is worth $150,000 and a lender has given you a LTV of 80 percent. In this instance, you can borrow up to $120,000.

Many who started their first real estate project or house flipping business could not have done so without the aid of a hard money lender.

A hard money loan simply means that the loan is backed by collateral or a “hard” asset. Businesses and investors often find themselves ill-suited for a traditional loan for various reasons from the look of past years tax returns to needing money sooner than the months required obtaining a traditional loan. At Level 4 Funding, we can provide you with many options. Call us to discuss the numerous programs we have available that we can curtail to your specific needs.

Dennis Dahlberg

Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com 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 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Exit Strategies for Commercial Lending Involving Hard Money Loans

Commercial lending involving hard money loans provides fast and easy financing for real estate developers, investors and contractors. But In order to obtain a loan, you need an exit strategy—how you’re going to get out and pay the lender back.

Hard money loans require an exit strategy as part of the application process. As a real estate investor, it’s always best to have multiple options at your disposal. As you know, the market can be canny and changing investment strategies mid-stream is not uncommon. The most frequent way that borrower’s exit in today’s commercial lending market is by selling the property. This is particularly true in fix and flip loans where money is needed for the next investment and profits are taken quickly. If the property is a rental unit or commercial property, borrowers can refinance the property with a traditional long-term loan assuming steady cash flow from rent and an increased property value is evident.

If the inability to qualify for a loan from a traditional commercial lending institution was the reason you originally obtained a loan from a hard money lender, you may be able to fix some of the credit issues while paying interest on the hard money loan and before payoff is due. This can be accomplished by taking steps to increase your credit, making timely payments on your present loan, and minimizing your debt ratio. Hard money loans can run anywhere from 3 months to several years, so take into account the length of time you need to address these issues.

If you are not eligible for a traditional loan due to credit issues, finances, or employment history which cannot be resolved in a few years, a subprime loan may be your answer. These types of loans do not have the same requirements and offer a good exit strategy that will still offer longer terms and lower rates, though not as beneficial as a conventional loan. If this is not an option, some hard money lenders involved in commercial lending will offer to extend the loan past the originally agreed upon terms. If not feasible, you may be able to refinance with a different private money lender.

Be Honest with Yourself and Your Lender

If this is your first rendezvous into the world of commercial lending, make sure that your game plan is well-thought out and all the moving parts have been analyzed. Having a solid business plan in place with a detailed scope of work and numbers that show why you’re requesting a particular loan amount should be included. Perform due diligence when selecting your prospective property or site, know the neighborhood and research comparable sales in the market. If working with sub-contractors, have detailed and itemized contractor estimates.

It’s not only important, it’s mandatory to have an exit strategy in place in order to secure a hard money loan.

This may seem overwhelming to a first-time fix and flipper or real estate investor, but it is achievable.

Consider finding a mentor that’s been through this journey many times.

Many investors are happy to share their knowledge with you. At Level 4 Funding, we are also here to answer any questions you might have. Don’t hesitate to contact us. “There is no stupid question! Except, possibly, a question not asked.”—Christer Romson.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com 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 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Dreams do Come True – Obtaining your First Commercial Real Estate Loan

Whether you’re interested in construction from the ground up, a quick fix and flip, or a long-term investment, real estate can be a very profitable investment strategy. Finding your first commercial real estate loan is often the first step in achieving this vision.

You may have been sitting on the sidelines for some time now, watching your friends purchase properties, rehab them, and then turn around and sell them for a profit. They’ve since left their 9 to 5 (or 8 to 7) jobs while maintaining a lifestyle that allows for weekends with the family and vacations in far off lands. This means of income has been growing in popularity thanks to reality TV and shows like HGTV’s Flip or Flop and Flip that House.

Keep in mind, reality TV shows are just that—TV shows. They are designed to entertain and that may require increasing the drama to the point of taking some of the reality out of those shows that claim to be “real life.” Investing in real estate requires knowing the state and federal regulations, having a deep understanding of the numbers game and accompanying budgets, and a base knowledge of the market and costs of rehab. It also requires patience.

Real estate investors often use hard money loans to fund their projects. This strategy works for several reasons including needing the funds quickly in order to acquire a property that has competing bids, insufficient income history or credit, or investors in need of a quick turn-around. They may want to take advantage of a short sale or foreclosure and do not have the time to wait around for a conventional loan.

Obtaining Your First Commercial Real Estate Loan

Obtaining your first commercial real estate loan is not as difficult as your may have been led to believe. For a hard money loan, you will need collateral and a plan that shows how you intend to pay off the loan, otherwise known as an exit strategy. In many instances, interest only payments are available for a select amount of time as you rehab your property or come up with the right tenants. Using a professional and time-tested real estate mortgage broker can help you achieve your desired outcome without having to find the many individual private money investors. They generally have a wealth of investors that they work with on a regular basis and know which ones will be suited for your type of business or project. They will have varying loan programs designed to meet specific needs.

Working with a mortgage broker gives you access to numerous private money investors and lending programs.

Your first step will be to complete a loan application. It’s important that you take the tact of full disclosure and do not leave anything to the broker’s imagination or leave out pertinent facts. They have done this countless times and can spot transgressions easily. Be up front about any potential issues you foresee. Knowing your “full story” gives them the ability to find the right investor for your project and the right commercial real estate loan for you. Mortgage brokers are professionals who have passed state and national tests and continue their education with yearly courses, and they will often know how to help you even when you think the obstacles are too immense to navigate.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com 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 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial loans,commercial lending,commercial mortgage