Learn To Be A Fix & Flip Investor

Monday, March 26, 2018

How to Obtain Your Next Commercial Loan in Less Than a Week

Traditional commercial loans often take more than a month to obtain when you consider the time to approval and then funding. Find out how you can obtain your next commercial real estate loan in a matter of days.

According to Bob Hope, “A bank is a place that will lend you money if you can prove that you don’t need it.” Investors with less than stellar credit or in need of immediate capital have found this perspective to be right on target. In addition, the type of loan will play a part in a traditional bank’s inclination to put the stamp of approval on your loan request. For instance, since 2008, traditional banks have been less prone to making small business loans and loan-to-value ratios have declined. For investors that are prone to higher-risk models, a traditional bank may not be the best choice when it comes to commercial loans.

In today’s current market, where sellers are experiencing multiple offers in a matter of days, obtaining quick capital for investment purposes has become much more important than in the days of the recovery, when properties could sit on the market for months without an offer. Multiple offers on the table will often place contingency offers to the back of the pile. Quick funding can dispel this dilemma.

So, just what types of lenders can get you the capital you need in the time frame that you need it? Hard money lenders offer short-term commercial loans that are quick to fund in order to facilitate the purchase of your next real estate investment. While traditional banks usually offer longer repayment periods at reduced interest rates, they also require excellent creditworthiness and can take a minimum of 6 months to fund. This does not take into account the length of time that it will take to prepare your business plan, financial projections, and a proposal as well as exit strategy.

Benefits of Obtaining a Hard Money Loan for you Next Investment

Unlike banks, many hard money lenders are private lenders who are not bound by the same rules and regulations that traditional lenders must abide by. They may be a group of lenders pooling their funds together or individuals that make loans on specific types of properties whether multifamily or the fix & flip segment of real estate investing. Their focus is not on your credit history, but rather on the property or collateral involved in the loan. Time to loan varies among the various private lenders.

At Level 4 Funding, we work with hundreds of private investors and can provide loans up to $5 million. We offer approvals within 24 hours and funding within as little as a few days.

Working with a large pool of investors allows us to offer funds for nearly all commercial loans. This includes multifamily, office, warehouse, storage, raw land and even student housing. Call us for a no-obligation quote. We can often say “Yes” when banks and other lenders have said “No.”

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 Qualify for a Commercial Real Estate Loan

With all the varying requirements, it can be confusing understanding what one needs to do and expect when trying to qualify for a commercial real estate loan. Here’s a few of the basic documents and experience you need when applying for a loan.

No matter which type of lender you are working with, most will prefer that the borrower focus on a property when assessing a loan. This information should include the address and location, purchase price, intended use of structure, amount and scope of work, timeline for rehab, contractor bids and projected after-repair-value (ARV). The more information you can bring to the table, the better, such as drawings and environmental analysis.

The financial information regarding the project includes the rent roll or schedule of leases which basically amounts to the amount of income that can be expected from the property. If the property is under construction, a lender will want to see the general health of the particular market including the area’s vacancy rates and your plan for obtaining tenants. Having pre-leasing in place can be a big checkmark on the “yes” side when trying to obtain a commercial real estate loan.

They will also want to know what type of experience you have and any past investment projects in this specific segment of real estate. Some lenders will check the borrower’s qualifications such as credit history and bank statements. They will want to know your financial situation. Do you have other projects currently in the pipeline? If so, just how much debt are you currently faced with? If you have partners, the lender will want information on them as well. This will be their go-to in case of default.

Pro Forma

Other lenders require a pro forma for a commercial real estate loan. This includes the net operating income (NOI). Also known as EBIT or Earnings Before Interest and Taxes, it is, just that, and helps lenders understand what kind of cash flow you’ll be expecting. It equals all revenue from the property minus all operating expenses. The debt-service-coverage ratio (DSCR) is also part of this documentation and is calculated by dividing the Net Operating Income by the Annual Debt Obligation. The internal rate of return and cap rate are the final pieces of the pro forma puzzle. The internal rate of return is the rate of growth a project is expected to generate while the cap rate is the ratio of Net Operating Income to property asset value.

Conventional commercial real estate loans from banks and credit unions must adhere to strict rules and guidelines when it comes to financing an investment. For this reason, they are often more difficult to obtain loans from than one provided by a private hard money lender.

Traditional lenders will need to check your credit score as well as your creditworthiness. Hard money lenders, on the other hand, do not require income verification or credit references. These short-term loans usually fall into the one to three-year mark, though some will issue loans up to 5 years and allow extensions. Some lenders assess a prepayment penalty, usually 1 to 3 percent, while others do not—Important considerations when funding your project. It is much easier to qualify and faster to obtain funding for hard money real estate loans making them the loan of choice for many investors.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Leasing vs. Flipping: Two tactics to use your commercial loan

Learn which strategy is right for you when it comes to using commercial loan proceeds.

Leasing and flipping are two of the most common ways to invest in a piece of commercial real estate. Every investor wants to make money, but an investor who leases commercial real estate intends to earn a steady stream of income.

The investor needs to purchase the property, so both approaches have the same upfront costs. Leasing allows investors to maximize the long-term potential of property with minimal risk. If one tenant leaves, another one should be not hard to find in most cases.Renting out commercial real estate is an ideal strategy in areas where the supply of commercial property is low, and demand is high.When it comes to leasing, additional returns can be earned as property values in the area improve, and rents appreciate.

However before committing to leasing as a strategy consider the commitment of time that is involved. Leases can include complex negotiations, require regular property maintenance and resolution of issues among individual tenants. Professional property management companies can alleviate some of these problems, but the added cost can stifle potential returns.

In contrast, flipping commercial property offers a quick profit and a minimal commitment of time

You can use a commercial loan to flip your investment property, but you should throughly understand the market

Flipping is the opposite of leasing commercial property and involves quickly selling a property for maximum profit. With this strategy purchase a commercial property that is substantially undervalued. The lower a properties initial purchase price, the higher the potential for profit.

But commercial real estate valuations are far more nuanced than residential valuations. Savvy investors should know how renovations on commercial property could impact its value. The wrong type of improvements on a property can restrict potential buyers and detract it’s marketability. For example, by converting a storefront into a restaurant space, buyers will be limited only to those who want to open up a restaurant. But the right type of renovations can significantly improve a properties ability to generate income and therefore substantially increase it’s value.

A thorough understanding of the local commercial real estate market, the types of businesses that are opening nearby and other types of due diligence are needed to flip commercial real estate successfully.

There are obvious risks involved in using a commercial loan to flip commercial property, consider these risks before closing an investment strategy

When it comes to commercial real estate leasing is usually a safer investment strategy. Tenants should not be hard to find if the property is in decent shape and in an ideal location. Depending on the terms of the lease tenants can take on the expense of improving the property themselves.

Flipping commercial real estate entails that an investor takes on the cost of the renovations themselves and any improvements can be costly and could restrict potential buyers. Additionally commercial properties are subject to a longer sales cycle. There is a chance that any renovated property could sit on the market for many months, or in the worst case years.

But as with any investment strategy, the higher risks involved with flipping commercial real estate can also offer greater rewards. Consider the market, understand commercial real estate valuations and perform the necessary due diligence when choosing whether to lease or flip a commercial property.

In summary, leasing is a good bet when property values are steadily increasing, while flipping is best in cases where a low-cost renovation can immediately raise a properties value.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

How to Finding Reputable Hard Money Lenders Can Benefit You

Do you wish you could find a trusted hard money lenders to help you obtain the funding you need to take your business to the next level? Level 4 Funding knows that when you need cash fast, not all lenders are created equal — here’s how to find the credible ones.

If you need cash and you need it fast, hard money lenders are your people -- they can help you get the loan you need. This is beneficial for real estate investors to small business owners. Unfortunately, some of these lenders aren’t as professional and ethical as you would hope. It’s important to find a lender you can trust. So here are a few things to remember:

Getting a handle on exactly what hard money loans are is the first step. These loans can be defined as short-term loans in which you can get cash fairly quickly after the approval process — this can sometimes even be the same day as application approval. Next, when you are in search of a lender, it’s a good idea to look for one that specializes in your company’s field of has experience working with a similar type of company as your own. Always make sure the lender is licensed — and that he can prove it. It’s better to be safe than sorry. Take your time when selecting hard money lenders – meet with a few until you get a good feel for one that seems like they really believe in your dream and can help you obtain it via a loan.

When you meet with lenders, be sure to ask a lot of questions — including that what types of fees are associated with the loan, as well as terms and rates. Sometimes hidden fees can creep into the documentation, so be sure to review if carefully and even have a lawyer take a look as well.

Find out as much as you can about these loans — and these lenders — prior to meeting.

Research local hard money lenders in your area to make sure you find a reputable one to work with. Remember, it’s almost as if you are interviewing them for a position so there is no need to feel intimidated and you should take the upper hand by asking questions about their areas of expertise, their current and past project portfolio and anything else you want to ask that you feel would help you make an educated decision as to whether or not this is the right lender to work with.

Once you do find the right lender – it’s important to treat the relationship as a partnership.

So meet them halfway in the process, meaning find out what they need from you, in terms of financial documents, and more to make the application process as smooth as possible. Come prepared with your business plans, current credit report, any collateral you are prepared to put up to secure the loan, and other business or personal finance information. Remember that he is there to help you achieve your business dreams, but you’ll need to do some work too. When you work together and find out as much as possible about how you can obtain approval, you’ll be well on your way to your business’ next phase!

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Sunday, March 25, 2018

Can you make money by investing in hard money loans?

Consider using a deed of trust investment. A deed of trust investment allows you to earn steady returns and interest payments on the loans distributed by hard money lenders.

Deeds of trust may be an unfamiliar concept for many first-time real estate investors. A deed of trust is a promissory note in which a borrower promises to pay back the lender (i.e., you the investor). Your investment goes to the borrower in the form of a loan, and the borrower's property acts as collateral in case of default. You earn both the interest payments and any portion of the principle the borrower manages to pay off throughout the term of the loan. Because a real property secures them, deeds trust are relatively safe and can offer steady returns to novice real estate investors.

Investing in a deed of trust is also a great way to diversify your portfolio. A deed of trust investment allows you to act as a passive owner and earn income from a property without owning it outright. You also save money because you will not need to purchase the entire property upfront and you avoid the hassle of maintaining the property yourself. Deeds of trust can also offer higher returns over an ordinary saving or an investment account.

Use a hard money lender to get the help you need when it comes to investing in deeds of trust

Trust deed investment companies (TDIC's) connect investors with deeds of trust and usually known as "hard money" lenders. The loans issued by these groups are secured by the value of the "hard" asset which the borrower wants to finance. Often TDIC's use deed of trust investments as a way to raise capital for the loans they issue to prospective borrowers.

Some may consider merely acting as private lenders on their own behalf. If you have the money and you want to earn interest, you could always lend the money yourself.

Working with a TDIC allows you to benefit from their knowledge and experience when it comes to the real estate market and the rules and regulations related to lending. The lender can underwrite the loan, take care of legal obstacles, perform the necessary due diligence and in some cases service the mortgage directly.

Level 4 Funding is an Arizona based hard money lender and can guide you through the process of investing in deeds of trust

Level 4 funding will perform the necessary due diligence on any deed of trust investment, ensuring any mortgage you invest in is of the highest quality. Level 4 funding differs from other TDIC's. Because Level 4 has already issued any mortgage you invest in whereas competitors may need your investment to fully finance their loans. With Level 4 Funding you have added the safety of knowing that any loan invest in already has a steady payment history.

To qualify you will need to make a minimum investment of 50,000 dollars, and your investment cannot exceed 10 percent of your total net worth or annual income. For more information about a deed of trust investment at Level 4 funding click here.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Reasons to use a hard money loan for your next fix and flip project

A hard money loan (or an asset-based loan) offers you the benefits of flexible terms and quick approval. Learn why you should consider this type of loan for your next fix and flip project.

Fixing and flipping single-family homes is the subject of many popular television programs and no doubt most readers will be familiar with the process. An investor purchases a single family home, upgrades and repairs it and then sells it for a profit. Every fix and flip project has the same goals, to maximize market value, minimize the cost of renovations and to sell the property in the shortest time possible. But starting any fix and flip project also comes with the added cost of the financing.

Consider using a "hard" money loan to finance your fix and flip project. The value of the investment property secures this type of loan. This type of lender is likely to consider the potential value you can achieve with your project, instead of your credit score. Hard money loans can clear within a matter of days, which makes them ideal when you need to act quickly on a great investment opportunity.

A hard money loan can be the ideal financing solution for your house flipping project

A traditional mortgage will be hard to secure if your investment property is particularly distressed.The majority of regular banks fund their loans by selling them to Fannie Mae or Freddie Mac.More than likely your property will fall short of FHA guidelines, making the sale of the mortgage to Fannie or Freddie impossible.

Traditional lenders are also wary about the potential for default should your project not go according to plan. Generally it is not worth the effort for a regular lender to underwrite your loan or to thoughtfully consider your proposals.

Most asset-based lenders consider the potential of your project rather than your credit score or your properties current condition. If you are a seasoned house flipper, or you can talk up your specific plans, more than likely you can qualify for a asset based loan. Asset-based loans can also close quickly which allows you to take advantage of immediate investment opportunities.

If you intend to flip a home in Arizona consider using Level Four Funding as your hard money lender

Level 4 Funding offers short-term financing which is ideal for house flipping projects. Levels 4 offers interest-only loans which gives you the benefit of lower monthly payments. Level 4 Funding can also finance to 85 percent of your next house flipping project, whereas most other asset-based lenders usually only offer up to 75 percent. With Level 4 Funding you'll need to spend less of your own money up front to get your project started. Level 4 Funding offers flexible loan terms, with a minimum term of less than a month allowing you to pay off the loan at your convenience.Level 4 Funding can also close loans within a matter of days, which will help you get your project started quickly.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

The Top Seven Questions to Ask Your Hard Money Lender

Hard money lenders are popular lending options when it comes to real estate investments, residential loans, and even capital needs for small businesses. Not all lenders are equal which means it’s important to come to the table with questions that can help you determine if this is the right lender for you.

Hard money lenders are, as the name implies, lenders that base loans on property, collateral or assets. In many instances, they are private lenders who can vary in their lending requirements and processes. Because of this, you will want to take the time to get to know them and what areas of lending they may specialize in. Here, then, are the top seven questions you should ask during your initial interview process. Choosing well is important not only to your current project, but to your future projects that are sure to follow.

What type of lending experience do you possess and what type of businesses or real estate segments do you specialize in? Some hard money lenders specialize in particular types of small businesses while others invest in various real estate properties. Of course, if you have stellar numbers that show increasing profitability and a well-thought out exit strategy, you may have multiple interested lenders. For your sake, obtaining a loan from someone familiar with your project type is highly recommended. Your success is, after all, their success. Leveraging your lender’s experience can help you succeed and give you the additional benefit of professional advice when needed. This leads us to the next question: Are you open to providing information and consultations if I have questions as the project proceeds?

You will also want to find out if they are direct hard money lenders or brokers that will obtain a hard money lender for you. Brokers that work with multiple lenders can often find the best deal for your specific needs which includes the fastest time to funding as well as the best rates. Just what is their interest rate, and do they charge points or processing fees? While these determine the cost of the loan, it should not be the only consideration. Time to funding as well as their experience level can be even more important points to keep in mind when choosing a lender.

Is there a prepayment penalty?

This is one of the most important questions to ask. Why? Because loans that are quick to fund and high risk can carry higher than average interest rates. If you are involved in a quick fix and flip property, you will want to get out as soon as the rehab is complete and a seller is found. And you’ll want to keep those extra profits that accompany a job well done instead of passing it on to your lender.

Make sure your lender does not charge a prepayment penalty.

At Level 4 Funding, we are brokers that specialize in finding the right lender for your particular project.

We do not charge prepayment penalties and offer fast and easy approval processes that can fund within days instead of weeks. Call us for a no-obligation quote.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Tactics for refinancing your commercial loan

When it comes to refinancing commercial loans, you naturally want to qualify for the largest loan with the best terms. Learn some strategies to help you refinance your commercial mortgage

Once your commercial mortgage matures, why should you refinance, rather than selling the property? Refinancing can improve your monthly cash flow and if your property has appreciated in value, refinancing will enable you to pull out additional equity tax-free.

There are some significant differences when comes to refinancing commercial real estate. A Residential mortgage is usually fully amortized and can have terms of up to 30 years. Commercial mortgages have shorter lifespans of 5 to 10 years, and commercial borrowers typically need to refinance their mortgages on a regular basis. But The biggest difference between commercial and residential refinancing is the impact of net operating income on commercial property values.

Improve the income you receive from commercial property to improve the terms of your commercial loan

Net operating income has a considerable impact on commercial real estate values.

The value of commercial property increases if it can generate more income, regardless of property values in the immediate area.

Before refinancing the best strategy is to increase the amount of income your property generates. By maximizing the profit you receive from a property, you increase its value and can refinance to a larger mortgage with better terms. Some strategies to maximize cash flow could include improving the number or quality of your tenants or using renovations to raise rents.

Other things to consider when it comes refinancing you commercial loan

Always seek counsel about your strategy and your specific situation, but the following tactics should help you get the best loan at the best terms.

Use refinancing as a way to reposition your investment strategy or even expand your portfolio. The additional funds you get from refinancing can be used to repay your initial loan, any initial investors, or could be used to improve the property itself. Better yet you can use the additional funds from refinancing to purchase another piece of commercial property. Therefore refinancing can be used as a strategy to expand your investment portfolio and earn more money on a monthly basis.

Refinancing in all cases should improve your monthly cash flow. Refinancing to a loan with higher monthly payments and less favorable terms is of course not a good idea. Refinancing should entail lower monthly payments or should allow you to cash out any additional equity from your investment property.

Strategize to qualify for the best loan with the best terms. Know when your current loan matures and invest in the property accordingly. Over the duration of your loan ensure the condition of your property does not deteriorate. Better yet take consistent steps to improve your property over the term of your mortgage.

You should also aim for full occupancy before refinancing. Most lenders will offer favorable terms on properties with 90 percent occupancy over a period of 90 days. Losing tenants will drastically reduce the income from the property and therefore reduce its value.

In the end, the crux of refinancing a commercial loan is to optimize the profits a property can generate which will enable you to refinance at the best terms.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Saturday, March 24, 2018

Why Hard Money Lenders Only Fund 75% of a Property’s Value

Understanding why hard money lenders will only finance 75% of a property’s value will allow you to be better prepared for requesting a loan. It will also help you to understand what other factors can make your request more desirable to lenders.

Loan to value ratio is the most critical factor to all hard money lenders when they are evaluating a loan request. In general, the loan amount cannot exceed 75% of the current market value of the property. This is because the property is being used as the collateral for the loan, which is not unusual. Home mortgages are secured by the home being purchased as well. But in the case of commercial properties there is more information that must be taken into consideration.

Unlike home values which are fairly static, commercial property values are much more volatile. There are several events which can impact a commercial property’s value which are not considered to be factors in residential property values. The economy has a much greater impact on commercial properties the residential. A downturn in the economy or a single industry does not extend to every consumer who owns a home, but it does have an impact on every business. And as competitive as industry is in the country, a slight downturn in the economy is certain to cause some businesses to fail.

Likewise, a downturn in a certain industry would not cause all of the homeowners in a neighborhood to sell their homes or abandon them. But it could result in many businesses closing in a single area which would quickly drop the value of commercial properties in the area. All of these factors must be considered when a commercial property is being used as collateral.

The Hard Money Lenders Thought Process

Knowing that the value of commercial properties can fluctuate a great deal and can change very rapidly, the lenders want to be certain to always have a way to recover their investment. This means never having the current balance of the loan near the current market value of a property. Over the years, the 25% margin has become an acceptable industry standard among hard money lenders.

How to Use This Knowledge

Knowing that the market value of a property is critical to getting hard money approved, there are ways that you can build additional confidence with a lender. Selecting a property in an area that is thriving is always smart. Also, selecting a property which is not dependent on a single industry is helpful. Knowing that any business could use the property provides more options to rent or sell the property at a better price in the future. In addition, location can have a huge impact on the perceived value of the property and therefore its actual value. Being easily accessible is important for any business who relies on consumers visiting their location. So a property near an expressway or major street is more desirable than a location in a rural area or one that is difficult to drive to. Consider all of these factors and try to select a property which will hold its value well. This will make your loan request much more appealing to a lender.

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How to Think Like Hard Money Lenders

When you are seeking a private loan, it can be helpful to learn to think like hard money lenders do. This will help you to prepare for the process and to know which information will be critical to the decision to fund or reject your request.

When you are making your first request for hard money, it can appear to be a very odd change from completing the myriad of paperwork required by a traditional lender. It might even feel as though you are ill prepared for the meeting because you are not carting in piles of bank statements, credit reports and income statements. And if you are, then you are going to be surprised and embarrassed when your lender is less than impressed and wants nothing to do with all of your paperwork. Hard money lenders are a different breed and they are looking for completely different information to evaluate your request and determine if they will approved your loan.

The key to securing hard money is nailing the loan to value ratio. This is the ratio between the amount you are requesting and the current value of the property. Most hard money lenders are looking for an LTV of 65-75%. There are some lenders who will also consider the property’s after repair value as well but that is not a standard practice. With that in mind, those lenders will also want to see your business plan to renovate the property and your budget to make sure that the numbers are in line with their estimate for the renovated value of the property.

Know the Critical Term

Knowing that the loan to value ratio of the property is the key to getting a loan, you need to be certain that you have enough of a down payment to make the loan request fall into the desirable range for the lenders. Understand that the lender is protecting his or her investment by only lending up to 75% of the value of the property. In the event that you are unable to make your loan payments, the lender will need to take possession of the property and sell it to get their investment back. And the only way to be sure that they get their full investment back is to know that the property will always be worth more than the balance of the loan. Hard money lenders are not being unfair or trying to take advantage of borrowers, they are simply practicing good business and protecting their investment.

Think like a Lender

Understanding the lenders point of view will only help you to better prepare yourself for requesting a loan. Knowing that the most important factor is the LTV and not your credit score or credit history will save you a lot of time and paperwork. You can then invest that time into researching the current value of the property and procuring funding to make the down payment you will need to meet the LTV ratio. In addition, you can invest your time in creating your renovation schedule and budget to demonstrate that you will be quickly and efficiently adding value to the property as soon as you take possession of it. All of this information will help to ensure that your hard money request gets funded.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

How to Find Hard Money Lenders

There are various reasons that people turn to hard money lenders, but knowing the benefits is only half of the challenge. Now, you have to find the one that is right for you.

Hard money loans are often issued by individuals or companies. At one time, they were considered “last resort” loans for people or businesses with imperfect credit. In today’s world of fix & flip investors and contractors in need of quick funding, they are a part of most businesses and individuals lending portfolios. People often turn to hard money lenders when they are in need of a bridge loan that keeps them afloat until a property sells or is renovated. Other’s use this type of loan due to time constraints and when initial capital is required in a matter of weeks instead of months, such as when a hot property hits the market.

So, just where do you go to get these quick-to-fund loans? Ideally, it’s best to work with a lender that specializes in your specific business model or real estate segment. For instance, a hard money lender that understands construction loans will offer monthly quick-payout draws as well as interest-only payments, both of which are designed to take the stress off you and your company as you progress through the building process.

There are also hard money lenders that specialize in the fix & flip or buy-and-hold real estate segments as well as multifamily, office, warehouse and storage complexes. If you do not have a direct reference from a fellow business associate, you can turn to the many listings on the internet. If using this approach, be sure to look for recommendations from established businesses and don’t be shy when addressing your concerns. If you find a qualified lender that you can trust and has a large rolodex of private lenders to draw on, you will most likely find yourself turning to this funding source time and again for many of your capital needs.

Things to Consider When Interviewing Lenders

There are a few basic questions that you will want to address when undergoing an interview with a potential lender. One of the most important is their loan-to-value ratio (LVR). Because hard money loans are asset based, the loan value is determined by the appraised value of the property. Some lenders will use the potential value of the property once renovation has been completed, otherwise known as the after-repair-value or ARV. This approach, however, is very risky and, for those lenders willing to take this chance on you and your abilities, will often mandate a higher-than-average interest rate. Many lenders stick to about a 70 percent loan on the value of the property.

At Level 4 Funding, our loan-to-value goes as high as 90 percent with 100 percent of rehab for fix & flippers.

Of course, loan-to-value is just part of the equation. The other all-important consideration is the interest you’ll be paying on your loan and the terms the lender offers. At Level 4 Funding, our interest rates start at 7.99 percent with terms anywhere from 3 months to 5 years. Call us today for a no-obligation quote.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Why You Should Repair Your Credit Score to Obtain Commercial Loans

If you can rebuild your credit score, you have a much higher chance of getting approved for *commercial loans**. Most lenders want to see a clean credit history and a high credit score, so Level 4 Funding offers ways to build and restore your credit to help you get the loan you need.*

Before you can repair your credit, you need to know what state it’s in. First, obtain your current credit report from one of the three recognized credit bureaus. You should be patient and take plenty of time to review your credit report and history. You should also look at your previous business patterns and habits. Do you continue to make the same bad decisions? If you can recognize a pattern with the way you handle your finances, you can change your habits for the better… and begin to improve your credit score. If you have less than desirable credit, it’s going to be a lot tougher to obtain approval for commercial loans, so you should really put all your effort in here. You need to take some time to review your credit history by obtaining your report from one of the three recognized credit bureaus. Really scrutinize your business habits that have led you to earn less than desirable credit. Seeing the report can also help you recognize how you can break these patterns so you can make progress towards improving your credit.

Yes, most people in America have debt and it’s okay — and even good — to have some debt. But too much is… too much. It will make lenders wary about your ability to pay back their loan, and that’s not good when it comes to trying to get loan approval. Try to pay down debts and the amount you owe as much as possible. Take a close look at your financials, your budget and figure out how you can tighten things up so you don’t have to get too far into debt. You can also consider having all your outstanding credit combined onto one card to you can consolidate payments and perhaps even negotiate a better interest rate for your commercial loans. Having just one payment can help you keep track of on-time payments as well.

If you have good business relationships with your suppliers and vendors talk to them about your loan plans and ask them to make a report on your behalf. Make sure you make timely payments to supplier and vendors because being in good standing can help your credit score improve.

If you have any unused, paid off accounts, closing them can affect your credit score too – this can improve your chances of getting approved for your commercial loans needs.

Once again, review your finances, see which accounts you have paid off but that are still open and then for any of those that you are no longer using, send a request letter for those to be closed. You can ask for a return letter from the creditor that proves your account balance is zero and that the account is now closed.

It’s not a quick route to perfect (or near perfect credit).

The bottom line is it takes time to build or repair your credit. However, it's a lot easier to secure commercial loans via traditional lenders if you have stellar credit. Ultimately, it will benefit you and your business, as you will be in a better position to negotiate better rates. Making some big changes in the way you handle your business finances is a must when repairing poor credit. Start small and make little changes that will eventually pay off in a big way. It’s not impossible and though it may take some time, it is worth it once you’ve got your credit on track and you are able to move head with your business with a loan that you secured with your new high credit score!

Technorati Tags: commercial loans,commercial lending,commercial mortgage

How to Prepare to Speak to Hard Money Lenders

Being prepared is the best way to ensure that you can get offers from hard money lenders. But the secret is in knowing how to prepare.

It can be very stressful seeking a loan. Many people hate to feel that they owe someone money even when it is for a legitimate loan or mortgage. But being well prepared can help to eliminate much of that unnecessary stress and also can help to ensure that you get the loan that you need. Approaching hard money lenders for a loan is not exactly like going to a bank or a mortgage company to ask for a loan. And in some ways this is very good because the process is less complicated but that can also make it more nerve wracking.

A conventional lender is going to present you with a huge packet of forms to complete and then send you on your way until you have all of the paperwork completed and submitted. But the process of a hard money loan is less dramatic. So you will want to be sure that you are prepared prior to your first meeting so that you can give the lender all of the information that they will request. Not only does this allow you to appear very professional but it will also speed up the process even more.

Hard money lenders are really only interested in the value of the property which is going to be used as collateral on the loan. They don’t want to hear your life story and why your credit score is lower than the average consumer. So don’t volunteer too much but be ready for all of the questions pertaining to the property and your plans for it. The first question is going to be the address of the property, which is easy enough to supply. You will also need to provide a few photos of the property to show its current condition. In addition, you should provide any appraisal that you have gotten or valuation that you have completed for the property. This is the main information that the lender is going to use to determine the current value of the property and what the collateral will be worth to them.

Explain Your Plan

The next information that the lender will want to gather is about your offer price and any proposed renovations that you will be doing. It is a good idea to have a basic business plan in place to show the renovation budget, the timeline and your projected increase in the property value as a result of the renovations. The final piece of the puzzle for the lender is to understand how you plan to repay the loan. Are you planning to keep the property and rent it out? Are you going to sell the property and use the proceeds to repay the loan? And finally they will ask for the exact amount of the loan that you are requesting.

Fast and Easy

Providing all of this information in a single quick meeting not only shows your respect for the hard money lenders time but also shows that you are a well prepared professional. Having a plan and demonstrating it will let the lender know that you are serious and will be getting this loan from him or her or from a competitor.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

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A hard money loan (or an asset-based loan) offers you the benefits of flexible terms and quick approval. Learn why you should consider this type of loan for your next fix and flip project.

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When it comes to refinancing commercial loans, you naturally want to qualify for the largest loan with the best terms. Learn some strategies to help you refinance your commercial mortgage

Saturday, March 24, 2018

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Understanding why hard money lenders will only finance 75% of a property’s value will allow you to be better prepared for requesting a loan. It will also help you to understand what other factors can make your request more desirable to lenders.

The Hard Money Lenders Thought Process

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When you are seeking a private loan, it can be helpful to learn to think like hard money lenders do. This will help you to prepare for the process and to know which information will be critical to the decision to fund or reject your request.

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If you can rebuild your credit score, you have a much higher chance of getting approved for *commercial loans**. Most lenders want to see a clean credit history and a high credit score, so Level 4 Funding offers ways to build and restore your credit to help you get the loan you need.*

How to Prepare to Speak to Hard Money Lenders

Being prepared is the best way to ensure that you can get offers from hard money lenders. But the secret is in knowing how to prepare.

Explain Your Plan

Fast and Easy

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Featured Post

Monday, March 26, 2018

Traditional commercial loans often take more than a month to obtain when you consider the time to approval and then funding. Find out how you can obtain your next commercial real estate loan in a matter of days.

With all the varying requirements, it can be confusing understanding what one needs to do and expect when trying to qualify for a commercial real estate loan. Here’s a few of the basic documents and experience you need when applying for a loan.

Learn which strategy is right for you when it comes to using commercial loan proceeds.

Sunday, March 25, 2018

Consider using a deed of trust investment. A deed of trust investment allows you to earn steady returns and interest payments on the loans distributed by hard money lenders.

A hard money loan (or an asset-based loan) offers you the benefits of flexible terms and quick approval. Learn why you should consider this type of loan for your next fix and flip project.

When it comes to refinancing commercial loans, you naturally want to qualify for the largest loan with the best terms. Learn some strategies to help you refinance your commercial mortgage

Saturday, March 24, 2018

Understanding why hard money lenders will only finance 75% of a property’s value will allow you to be better prepared for requesting a loan. It will also help you to understand what other factors can make your request more desirable to lenders.

The Hard Money Lenders Thought Process

How to Use This Knowledge

When you are seeking a private loan, it can be helpful to learn to think like hard money lenders do. This will help you to prepare for the process and to know which information will be critical to the decision to fund or reject your request.

Know the Critical Term

Think like a Lender

There are various reasons that people turn to hard money lenders, but knowing the benefits is only half of the challenge. Now, you have to find the one that is right for you.

If you can rebuild your credit score, you have a much higher chance of getting approved for commercial loans. Most lenders want to see a clean credit history and a high credit score, so Level 4 Funding offers ways to build and restore your credit to help you get the loan you need.

Being prepared is the best way to ensure that you can get offers from hard money lenders. But the secret is in knowing how to prepare.

Explain Your Plan

Fast and Easy

If you can rebuild your credit score, you have a much higher chance of getting approved for *commercial loans**. Most lenders want to see a clean credit history and a high credit score, so Level 4 Funding offers ways to build and restore your credit to help you get the loan you need.*