Learn To Be A Fix & Flip Investor

Thursday, November 9, 2017

What is Hard Money and its Pros and Cons

Answering the question what is hard money can open up many opportunities for an investor. But it is important to understand the pros and cons of this method of funding.

There are several methods of funding a real estate purchase or investment, and each has its own benefits and drawbacks. But understanding all of the options allows you to select the method that will best meet your needs. As you begin to explore you are certain to ask what is hard money. The answer is fairly simple. Hard money is a method of financing a purchase which does not depend on the borrower’s credit to secure the loan. Instead, the lender is focused on the value of the property itself to determine if the loan is a good risk. Normally these are short loans and are used often for investment purchases such as house flips or for real estate developments.

One of the largest drawbacks of a hard money loan is the cost of the loan. Hard money loans are normally considered unconventional loans and are not offered by banks or other conventional lenders. Most of the lenders are private individuals or small investment groups. For this reason, they are not governed by the same rules as banks and other financial institutions. The lender is free to determine the terms as they choose and can charge a much higher than traditional loan interest rates. In many cases a hard money loan will have an interest rate 10 percent or more above current conventional loan rates.

Another issue that some borrowers have with a hard money loan is the time that is offered for repayment. These loans are designed to be short term to allow for purchase, renovation and then a quick resale. And that also means that the borrower will only have a very short time before the repayment is due. This can place added stress on completing a high dollar project very quickly.

The Pros of Hard Money

As a borrower, if you are still asking what is hard money, and why should I consider it then read just a bit further. The biggest benefit of hard money is the lack of restrictions which are found in conventional lending. The terms can be negotiated with the lender which is something that will never happen with a major lending institution. Also, there is a great convenience in the speed at which a hard money loan can be requested and fulfilled. Conventional loans can take months to process and mountains of paperwork. But a hard money loan is riding mostly on the value of the property and not the borrower’s creditworthiness. These two factors make hard money appealing to a huge number of investors.

What is Hard Money Used For?

Hard money is a great means of financing a project based on the value of the property and not the borrower’s personal credit history. This makes the process great for new real estate investors who want to learn to flip houses begin to build a real estate portfolio. These loans are also popular with real estate developers who are interested in developing and reselling a property. The key to maximizing this tools benefit is being able to carry the loan for just a short time and then selling the property at a profit to repay the loan possibly even fund the next project.

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

All You Need to Know About Hard Money Lenders

It is important to understand hard money loans and hard money lenders. Once you have that information you can use this financial tool to your advantage when investing in real estate.

Chances are that you came across the term hard money lenders when you were researching different resources for funding a real estate purchase. And the fact is that the term hard money lenders simply means that the lender is not a financial institution or bank but instead a private lender. And this private lender could be an individual or a group of investors or even a mortgage broker who is supplying funding via personal money. But the most important information to remember is that this is a legitimate lender and not some shady backdoor deal that includes questionable legal aspects or methods.

The criteria that a hard money lender uses to determine if a loan request is granted is a bit different than what a conventional lender would use. A hard money loan is not dependent on the borrower’s credit history or creditworthiness as much as it is on the actual value of the property being purchases. The collateral for the loan is the property and as long as the loan is less than the current property value then the borrower should be able to get a hard money loan. And while that ease of financing is nice, there is a cost associated with it as well. Lenders are willing to take a greater risk than banks would take so they charge the borrowers a larger fee or higher interest rate than a bank would. In some cases borrowers will pay over 10% higher interest rates for a hard money loan.

The borrowers who benefit the most from the use of hard money loans are mostly investors. These short term loans are a great way for an investor to purchase a property, invest in renovations and then quickly sell the property for a profit. Building contractors also use these loans to purchase and flip properties for a profit. And in some cases investors will use hard money loans to purchase a property very quickly. This can be due to the time that is required to process a conventional loan. A great deal on a property can make it sell very quickly so financing quickly with hard money is a viable solution. The investor then refinances with a bank once they purchase the property.

A Solution for Bad Credit

Many times a person who has had credit issues in the past is not able to finance a home through a bank or conventional lender. But hard money loans are a great way for someone with prior credit issue to be able to purchase a home. It also allows the borrower to reestablish good credit.

A Legitimate Resource for Many

Hard money lenders are a legitimate resource for many different people. Not only can it offer a much needed loan to a person with bad credit but it is also a good option for someone who is interested in investing or flipping real estate. The key to getting the maximum benefit from a hard money loan is knowing the terms of the loan and ensuring that you will be able to meet the repayment schedule.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Wednesday, November 8, 2017

How a Bridge Loan can Work for You

Understanding how a bridge loan works can afford you a great opportunity to buy a new home. But you need to understand the risk involved before you chose this option.

Not everything goes according to your plans no matter how diligently you might work to ensure that it does. There are just some events that are out of your control. And this can certainly be the case when you are selling your current home and searching for a new home. Nothing is more frustrating than finding your next perfect home before you are able to sell your current home. In some cases you can make an offer with a contingency but other times the seller has multiple offers and you are faced with making an offer or losing the house. Your only solution could be a bridge loan, which is a temporary loan that is secured by your existing home to fund the down payment on your new home.

When you are in a position that requires a bridge loan, the bank will need to see documentation on your current mortgage and your income to determine if you qualify. There are not really any specific standards to qualify for a bridge loan as each case can be drastically different. Most lenders take a more real life approach to evaluating your ability to pay both mortgages at the same time because it is likely that you will not sell your first home before the mortgage payment is due on your new home.

As with any type of loan, there are pros and cons to a these loans. It is certainly a benefit to be able to close on a new home prior to selling your current home. Also, you might be able to negotiate terms with your lender so that the first payment on your short term loan is not due for several months. This can give you time to sell your current home without making multiple mortgage payments each month.

The Drawbacks

Any short term loan is going to have a higher interest rate than a long term loan so expect that as well as additional fees when you are talking to lenders about a loan to bridge your two mortgages. Also, if your income is not substantial, it could be difficult to qualify for a second loan. So before you head down the path of two mortgage payments, even for just a few months, be certain that you have the monthly income or savings to cover both payments. The very real truth is that you do not know when your first home will sell and therefore how long you will need to pay both loans each month.

Understand the Cost and the Risk

Knowing that you could be paying somewhat high fees and interest as well as two mortgage payments each month can add a lot of stress to your finances. Be certain that you understand the repayment time frame of your short term loan before you commit to the lender. Also, be very realistic when you estimate how long it could take your current home to sell. If you have no interest or offers then it could be wise to pass on the new home until your current home sells. Using a bridge loan correctly can be a great benefit but used improperly it can also be a huge disaster.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Bridge Loan Basics

Selling a home to fund the purchase of a new home is stressful. But using a bridge loan can take a difficult situation and make it manageable for a short time.

Timing is everything when you are trying to sell your home and purchase a new one. But unfortunately the timing that you want does not always materialize for you. Having a full price or close to full price offer on your current home can make it much easier to decide to make an offer on the home you want for the future. But what do you do when you find your perfect next home before you get a decent offer on your current home? Some say you should pass on the new home but many will recommend that you use a bridge loan to finance your down payment until your current home sells.

When you are getting a bridge loan to cover the down payment on your next home, your current home is the security or collateral for the bridge loan. So this means that there is some risk involved if your current home does not sell. In short you could be faced with making two mortgage payments each month as well as the payment on the short term loan. For this reason you need to be very careful about the amount of debt that you are taking on and also very realistic about how long it could take to sell your current home. Not only are you risking both your current and new home but your credit score if you are forced to default on any of these loans. And you could even be left with no place to live.

A Solid Option for Many Buyers

But don’t look at a bridge loan as some evil entity that could cost you everything that you have worked your entire life to achieve. There are some advantages to using this short term loan. First, it lets you secure that perfect home before someone else buys it. You are then free to move in and enjoy the new house while you continue to market your first home. It is also beneficial to use a short term loan, such as a bridge, to make your offer more appealing to the seller. Many offers are contingent on another home selling and that is less appealing for other sellers. An offer with no contingencies might even be accepted at a lower offer price than a larger offer but which includes stipulations or contingencies.

Know Your Options and the Potential Downfalls

As with any financial decision, having as much information as possible is critical to making a wise choice. If you are thinking about taking a short term loan to make a down payment on your new home then consider all of the potential outcomes. Speak candidly to your listing agent to learn his or her estimate for selling your current home. Also look at comps in your area to see how quickly homes like yours are selling. Only sign a loan document once you are certain that you home will sell in a reasonable time frame and for a price that will cover your down payment.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Tuesday, November 7, 2017

Tips for Purchasing Overseas Real Estate and the use of National and Texas Commercial Mortgages

Purchasing overseas real estate investments can provide a well-rounded portfolio. Consider these tips before making your first foreign investment including the ability to obtain a national or Texas commercial mortgage.

Live and Invest Overseas prepared their top foreign real estate investments for 2017. These unique locations were recommended due to their bargain value and rental yields. A few of their top choices were the coastal town of Algarve, Portugal; the undervalued and expanding tourist market of Cali, Colombia; and Playa del Carmen in Mexico due to its growing rental demand and strong yields; and Cape Verde, a beautiful archipelago in the Atlantic Ocean off the western coast of Africa, is continuing to make its mark in the tourist industry. 2016 saw visiting tourist numbers rise by over 13 percent.

Before you buy real estate overseas, understand that it can be a complex process. Because of this, it’s essential that you obtain a local attorney as well as an international buyer’s agent. In addition to these professionals, learn the nuances of the particular area you’re considering. For instance, in some locales, the “square footage” is considered both the indoor and outdoor space as compared to America where this measurement usually defines the actual building. Also, foreigners are not allowed to own property in some countries. Don’t let yourself be hoodwinked by a fast talking realtor that forgets to share this important fact with you, only after taking your down payment. Make sure your CPA is knowledgeable in foreign investments and understands the Foreign Account Tax Compliance Act.

Foreign investing can offer several benefits including more property for your money, depending on the exchange rate, lower cost of ownership and tax havens. On the other hand, local real estate laws can be complex and some countries can be mired in political or economic instability. Just as in America, be sure you know the market before you sign on the dotted line. Even if you are highly knowledgeable in investing in real estate in America, understand that there can be a remarkable difference in the laws, requirements and regulations of just about every other country. Work with respected professionals in the area of your choice.

Funding

Finding professionals in the area of lending is another important consideration. You can often obtain the funding by working with an institution that has a presence in the country where the property is located as well as the United States. Even so, many national and Texas commercial mortgages are hard to obtain for oversees’ projects.

Finding the right financing for oversees’ projects can be particularly challenging.

One solution is to obtain a Texas commercial mortgage on your current residence or business in America. A cash-out refinanced Texas commercial mortgage may just give you the money you need to develop your oversees’ portfolio. At Level 4 Funding, we provide private hard money bridge loans that can help you obtain the funding you seek. These collateral-based loans provide a bridge from one asset to another.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Tips for Investing in the Industrial Segment of Real Estate and Obtaining Texas Commercial Mortgages

While investing in industrial properties doesn’t quite stir the soul in quite the same way that renovating a historical Victorian mansion might, it is a strong segment in real estate investment strategies. The sale of industrial properties is on the rise as well as attractive rent growth making this a strong consideration for real estate investors, builders, developers, and Texas commercial mortgage lenders.

According to Real Capital Analytics, sales of these types of properties grew by 3 percent during the first quarter of 2017 compared to the same time frame in 2016. An increase in demand as well as the need for specific property features such as wide loading areas appears to be at the forefront of this increase. Tenants are willing to pay more for the features that allow them to conduct business with ease and efficiency. In addition, as compared to the trial that retail is currently experiencing, distribution centers catering to online shoppers are continuing to grow.

Sales in the industrial sector topped $440 billion in 2016 with Los Angeles, New York, Chicago, Atlanta and Dallas leading the way. Many of the industrial sites that are under construction are already pre-leased and built with a specific company’s needs in mind. A few of these companies with building occurring in the Texas industrial segment include Amazon, FedEx, Ravao and Vinmar International. In Fort Worth, Campbell Soup Company and DHL Supply Chain recently opened a 578,000 sq. ft. distribution facility. This one facility will bring at least 120 jobs to the area and will serve as the hub for southern distribution. Due to demand, these types of projects are appealing to Texas commercial mortgage lenders.

Industrial inventory for distribution and manufacturing make up a little less than 50 percent of this space while warehouses make up the lion’s share. The low vacancy rate of 5.5 percent makes this type of real estate investment strategy very popular. While industrial buildings tend to offer lower rental rates than other commercial buildings such as offices, they also offer lower overhead costs and long-term tenants. The downside is that because varying tenants require unique needs, restructuring the building for a new tenant can be costly. Most commercial properties, including the industrial segment, are high risk and high reward with those that do their homework making incredible sums of money as their portfolio increases.

Considerations for your First Industrial Property

There are several different types of properties to consider for investment purposes. These include manufacturing, warehouse, office-industrial hybrids and distribution centers. Many of these require easy access to major highways. Another consideration is demand and, as previously stated, with e-commerce building momentum, distribution centers fall into the high-demand category. Cities often compete for these larger centers and will offer tax-rebates and even reduced prices for land acquisition as well as reduced Texas commercial mortgage rates.

At Level 4 Funding, we work with hundreds of private hard money lenders, some of which specialize in the industrial segment of real estate investments.

We provide up to $50,000,000 in capital based on collateral. Investors commonly use our funding option when they are in need of quick capital in order to make a bid on a prime property or require access to a Texas commercial mortgage while a traditional loan goes through its usual cycle to funding which can take up to several months. Call us today for a no-obligation quote and to see if this type of loan is right for your next project.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Monday, November 6, 2017

The Increasing Demand for Green and Sustainable Commercial and Residential Buildings and the Draw of Texas Commercial Lenders

Demand is overriding supply in the asset known as “green buildings.” This movement is catching the attention of Texas commercial lenders.

When people hear the word “sustainable” they often think of restaurants and the farm-to-table craze. This word is also circulating among real estate investors, developers and contractors and many are beginning to think green before beginning construction or renovation. Leadership in Energy and Environmental Design (LEED) is “the most widely used green building rating system in the world.” They have certified over 90,000 projects and presently account for the creation of 2.2 million sq. ft. of certified green buildings every day. That is the power and current craze of this health and environment-conscious movement that is drawing the attention of Texas commercial lenders.

Buildings make a huge difference in people’s lives and many are raising their voices as they request sustainable and healthy buildings in which to live, work and play. This has led to an increasing demand for green buildings. Some of the concerns that have mounted include the quality of air in buildings where the material is not evaluated for outgasing. Sustainability also relates to increasing efficiency in the use of water, energy and waste. This approach may include lighting upgrades and the use of solar rooftop installations

The bottom line: green buildings attract more tenants. If you have a choice between a building that has made the effort to maximize natural daylight, increase indoor air quality and use natural materials in the construction that do not emit high levels of volatile emissions, which would you choose?

Remodeling Green

Austin, Texas is home to one of the oldest green-building programs in America. Even so, finding contractors who are green-savvy can be a challenge. Contractors and developers can step in to fill this lucrative position by educating themselves and taking courses in just what building green entails. Businesses, corporations and individuals are increasing the demand for better indoor air quality as well as sustainable energy practices. In many instances, these same institutions and families are willing to pay a higher price for a building that has been built according to green codes—green office space typically leases for 20 percent higher. A survey conducted in Los Angeles revealed that tenants were willing to pay an estimated fifty cents more per square foot in order to obtain a green certified space. LEED certified buildings also sold for over $20 more per square foot. In addition to increasing rental and sale prices, going green also decreased the operating costs for both new construction and renovations.

Due to increasing demand and rental rates, this type of construction is often valued among Texas commercial lenders. Demand is always a good determination when obtaining a loan on a project.

At Level 4 Funding, we work with hundreds of private hard money lenders, many of which specialize in green buildings and projects. As hard money lenders, their loans are based on the collateral or “hard asset” that is going to be used as collateral. They are not bound by the same stringent FDIC and government mandated lending codes, making time to funding and requirements such as credit scores and credit worthiness much quicker and more lenient. Contact us for a no-obligation quote and to determine if we have the right private hard money Texas commercial lender in our rolodex who will provide the funding you need for your next commercial real estate project.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

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Thursday, November 9, 2017

What is Hard Money and its Pros and Cons

Answering the question what is hard money can open up many opportunities for an investor. But it is important to understand the pros and cons of this method of funding.

The Pros of Hard Money

What is Hard Money Used For?

All You Need to Know About Hard Money Lenders

It is important to understand hard money loans and hard money lenders. Once you have that information you can use this financial tool to your advantage when investing in real estate.

A Solution for Bad Credit

A Legitimate Resource for Many

Wednesday, November 8, 2017

How a Bridge Loan can Work for You

Understanding how a bridge loan works can afford you a great opportunity to buy a new home. But you need to understand the risk involved before you chose this option.

The Drawbacks

Understand the Cost and the Risk

Bridge Loan Basics

Selling a home to fund the purchase of a new home is stressful. But using a bridge loan can take a difficult situation and make it manageable for a short time.

A Solid Option for Many Buyers

Know Your Options and the Potential Downfalls

Tuesday, November 7, 2017

Tips for Purchasing Overseas Real Estate and the use of National and Texas Commercial Mortgages

Purchasing overseas real estate investments can provide a well-rounded portfolio. Consider these tips before making your first foreign investment including the ability to obtain a national or Texas commercial mortgage.

Funding

Finding the right financing for oversees’ projects can be particularly challenging.

Tips for Investing in the Industrial Segment of Real Estate and Obtaining Texas Commercial Mortgages

Considerations for your First Industrial Property

At Level 4 Funding, we work with hundreds of private hard money lenders, some of which specialize in the industrial segment of real estate investments.

Monday, November 6, 2017

The Increasing Demand for Green and Sustainable Commercial and Residential Buildings and the Draw of Texas Commercial Lenders

Demand is overriding supply in the asset known as “green buildings.” This movement is catching the attention of Texas commercial lenders.

Remodeling Green

Due to increasing demand and rental rates, this type of construction is often valued among Texas commercial lenders. Demand is always a good determination when obtaining a loan on a project.

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