How to Obtain a Commercial Loan Despite Bad Credit

While commercial lending rates are up, there are still many individuals and businesses that are finding it difficult to obtain the commercial loan they need. Fortunately, there are lenders that offer greater flexibility.

In 2017, small banks approved 49 percent of funding requests—quite a jump from 2008 when about 80 percent of small business owners received a rejection. That still leaves over 50 percent that are not getting approved and you may have found yourself one of these. Don’t give up on your dreams. There are other lenders that you can turn to when banks say no.

Hard money lenders are one of these options. They are usually private lenders that base their loan qualification standards on the collateral or assets of the property or business. While most banks require credit scores in the 700 range, private hard money lenders do not have these strict qualifications. They will want to know what your plan is for the business or property and what your exit strategy is. After all, this is how they will receive their capital as most offer interest-only payments for a set amount of time. These lenders offer short-term loans with terms that usually extend from 3 months to 3 years. Because they approve loans that have been declined by traditional lenders, there is usually an increase in risk and, therefore, a higher percentage rate often applies to the commercial loan.

These types of loans are helpful for young or new entrepreneurs who may not have the credit score required by traditional lenders. If you have a high-risk, high-return business strategy, a hard money lender may very well have the capital you seek. Many of these types of lenders are not risk adverse. In fact, if you can get them excited about your proposed business plan, have the necessary collateral, and some experience in your chosen segment, chances are good that you will leave with a loan. This doesn’t necessarily mean that all the required assets must come from the proposed business. Many individuals start their own business by using the collateral that has been established in their home or other investment properties.

What are Possible Exit Strategies in a Hard Money Commercial Loan?

Your exit strategy is an important part of obtaining this type of loan and one that you will want to consider before interviewing potential lenders. Here are a few of the strategies that businesses use: they sell the property or refinance with a more traditional lender after a property has been renovated or a business is showing a profit. Self-amortizing can also be considered, though it is a little risky. While most hard money lenders allow you to pay interest-only payments while you are developing your business or property, you may want to consider paying both principal and interest during the full duration of your loan so that it is paid off upon maturity. You will need to determine just how you will create this cash flow in order to be able to make the scheduled payments.

At Level 4 Funding, we offer hard money commercial loans that are quick to funding and require little paper work.

We offer three simple steps to obtaining your loan: a loan application, purchase contract and written approval, all of which can be accomplished in as little as 24 hours. Call us today to see if we may just be the lender that can make your dreams come true.

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 evaluate Commercial Real Estate Loans

There are many commercial real estate loan companies. How do you tell the good from the bad and the ugly?

Commercial real estate loan rates were ridiculously low until recently when rates started moving up. The ten-year government note has moved from 1.44% on January 1, 2018 to over 2.85% on Friday, January 9, 2018, with projections up to over 3%, 3.5% and 4% in the next 60 days. You most likely will not see current rates this low again in your lifetime. Commercial loans are at these low rates because commercial real estate loan companies are sitting on an ocean of cash, nearly $2 trillion dollars. Commercial investors still feel hesitant, however, to overextend with loans from the shock they experienced by the recession of 2008.

So just which commercial loan is best for you? A life Insurance company, a conduit, a credit union, an SBA lender, a commercial bank, a USDA Business and industries lender or even a hard money commercial lender? A life insurance company offers the most attractive commercial interest rates that are only 0.35% to 0.50% higher than the prime residential mortgage rates. Be aware, few life insurance companies will touch commercial projects smaller than $5 million. The project must be very standard and cannot be older than 20 years.

The next avenue which is available is a CMBS where commercial real estate loan rates are 50 to 65 basis points over the prime residential mortgage rate. For projects between $3 to $5 million and up, a conduit may be an appropriate choice for you. They will also finance older properties. For projects with good credit principals, banks and credit unions may be a good option. The rates run typically 0.75% to 1.50% over prime, 30 residential mortgage rates.

SBA and USDA Loans

SBA, if you qualify, should be considered first. The standard 7a SBA loan is 2.75% over prime floating. With the SBA you can quality for a 90% loan-to-value and the loan is fully amortized over 25 years. You must have a credit score of 700-plus and financials for the last several years. The USDA loan is less attractive. The loans are made through banks and guaranteed by the USDA and they are similar to SBA loans--2.75% over floating prime and fully amortized over 25 years. These properties must be located in eligible rural areas in order to qualify.

Although an effort has been made to quote current rates, this is a fluid market and, as pointed out, rates have increased since the first of the year and are fluctuating.

Once underwritten, residential mortgage companies can sell the mortgage to Fannie Mae or Freddie Mac. The illiquidity of the commercial market, since they do not have an agency to sell their underwritten mortgages to and these types of loans are seen as higher risk, results in commercial mortgages 0.35% to 1.50% higher. Before applying, you need to get all your ducks in a row including property type, projected cash flow, age of property and projected operating expenses. For many real estate investors who require quick capital for their next project, a hard money loan is the answer. Call us at Level 4 Funding for a no-obligation quote.

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 Top Differences to Watch for with Private Hard Money Lenders

While there are over 600 private hard money lenders in the U.S., no two are created equal. Understand the differences and what to look for when choosing a lender for your next project.

Looking for a short-term loan quickly? Need 7 to 10 days? Looking to purchase residential and commercial property for purchase and renovation? Obtaining quick capital via a private hard money lender may be your best option. In fact, this is one of the primary forms of financing for first-time real estate investors. Let’s take a look at what are the marked differences among the various lenders.

Some private hard money lenders focus on properties in relatively good condition, while others will fund properties in poor condition if you come aboard with a good business plan and the numbers to back it up. This includes an in-depth look at renovation costs, time frame, and market. You will also need to include the monthly costs that you’ll incur during the renovation process such as utilities, insurance, loan interest and property tax. Some companies and private investors loan only on the LTV or loan-to-value, while others will consider the ARV or after-repair-value. For instance, some will issue a loan up to 80 percent of the LTV or 70 percent of the ARV. If your model is to rehab properties in poor condition for a fix & flip, you’ll want to be sure to ask your potential investor which value they consider when funding a project.

Buy-and-hold investors, on the other hand, obtain private hard money lenders in order to ensure quick capital. After renovation is complete, they look to more traditional loans for longer terms and lower interest rates. You’ll find many private investors that specialize in one segment of real estate. For instance, there are hard money lenders that invest only in the office or multifamily segments, while others focus on the fix-and-flip model. You’ll want to be sure to find one that is comfortable and knowledgeable in your area. There are even hard money lenders that fund residential loans. These are, in most cases, considered bridge loans—short term loans that bridge from one property to another such as when home owners buy a new home before their old home sells.

Interest Rates and Average Lender Fees

Going into this arena of commercial lending, it’s important to be aware that the interest rates are going to be higher than conventional mortgages because the hard money loans are shorter terms, interest-only payments, and increased risk for lenders. The interest payments are considered “holding costs” and are monthly fees incurred prior to selling or refinancing. These interest-only payments result in lower monthly payments. When you agree to a loan with a hard money lender, there can also be what are known as “loan origination fees” or “points.” Additional fees that the borrower may be required to pay include closing costs, appraisal costs, application fees, prepayment penalties and loan extension penalties.

At Level 4 Funding, we offer loans from 7.99 percent APR with 90 percent LTV.

In addition, we do not charge prepayment penalties and can often fund within days. Because we work with hundreds of private investors, we can usually find an investor in your niche who can offer you the best terms and rates for your project. Call us today for a no-obligation quote.

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 Find your Next Big (and Cheap) Project and Commercial Loan

One of the many ways real estate investors make money is by finding properties that are below market value. Let’s take a look at the many avenues savvy investors look to when searching for these types of projects and the commercial loans to fund them.

In order to make money in this often lucrative, though challenging, investment strategy known as real estate, you must be patient. I know, you’ve ran into those multimillionaire real estate developers that seem to be flying at 100 miles per hour, without brakes, and whom patience is definitely not a virtue. I can guarantee you, however, that behind the scenes is someone with an analytical mind that exhaustively researches the next property for development.

In order to really make the big bucks, you’ll need to find property that is below market value—a prospect that is actually easier than it sounds. In order to buy a property below the market value, you’ll need to know just what the market value is. One of the best ways is to get to know a real estate agent in your market area and develop a good, solid business relation. They provide comparative market evaluations daily and will understand the market in a way that no one, just entering the fray, could comprehend. What you don’t want to do is use sites such as Zillow or even tax assessments, which can be way off the mark.

Now that you know what it’s worth, let’s find out where the deals are. Real Estate Owned (REO) properties are a good place to start. These represent properties that have gone through the foreclosure process, are bank-owned, and can be found in the MLS. All banks handle these types of properties differently. Some are willing to negotiate a price that is far below the listed price, while others are less prone to price reductions. There is, however, a lot of competition for these types of properties and multiple offers is not rare. Some prefer owner-occupied homes while others will give cash offers precedence. Foreclosed HUD homes are another alternative. This is a little more difficult because these homes are government owned and, as you can imagine, purchasing one is filled with rules and regulations. Ideally, work with a Realtor who understands the system. These homes can be found on hudhomestore.com.

Short and Estate Sales

Short sales are another avenue to below market values. These are owned by private sellers who owe the bank more than they are able to sell their home or property for. You must be quick with these types of properties because it is often the first offer that the bank accepts. While at one time, these types of properties took months to close on, banks are now quicker in their decision-making process. Estate properties can also be good prospects. These types of properties may need to sell quickly due to creditors, tax issues or family dynamics. Then, of course, there is the “We Buy Ugly Homes” approach that investors undertake to find homes that are not listed for sale. And what will all of these types of properties require? Access to cash or a commercial loan that provides quick funding.

As you can see from these types of search options, most all of them require quick acting and quick capital. So, just where can you find a commercial loan that funds in a matter of days instead of weeks?

At Level 4 Funding, we can provide the hard money commercial loan you need for your next real estate investment project in less than a week. Call us today to see if we can help you purchase your next investment property tomorrow.

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

Get ready, the Donald is getting ready to SCREW YOU!

Whoa, are you ready for it? You are going to get screwed! I don’t think the Donald is going to actively go out of his way to cause you harm.

You see his hands are tied, but he has to do something before it is too late.

I don’t know if you have noticed it yet, but there is an ugly monster in the corner of your room, and under your bed who is fast asleep, and quietly taking no action.

Don't believe me? Ask our kids, they will tell you also.

It’s a horrible monster, who when it wakes is going to eat you alive; you, your family, your savings and everything around you.

It’s going to be horrible, like something you and I have never seen.

Luckily the monster is asleep and causing little harm.

BUT the Donald knows it is there lurking in your room.

He’s keeping an eye on it and figuring out a way to KILL IT before it awakes.

Kill it in in its sleep; get it now.

I don’t know if he can, but he’s working on it.

So what’s this monster look like?

It’s the trillions of dollars in debt that is inching up every day.

It’s going to get you!

The Donald said that when it reaches 20 Trillion it’s to longer fixable, past the point of no return. (It’s past 20 Trillion now) It’s beyond the path of control.

It’s going to become a living monster that is going to get us. All of us.

However, the Donald is working on a plan to kill it.

Basically there are three options possible to kill it.

Option 1. The first plan that the Donald is trying to do is what he said in his campaign.

Make America Great again. What does this mean? It means getting our GDP up to historic levels. Not just 3%, but even higher. How about a 10% GDP? When we are booming, our cash flow can kill the monster. 

That’s what he is hoping for. Kill it with growth. Make so much money that the trillion of dollars can be paid off with a week’s worth of income.

Possible? I don’t know, but this path is the least painful path, compared to the two other Options that will kill the monster.

Option 2 is to inflate it away.

That’s it. Devalue the dollar to the point that 20 Trillion is nothing. Give everyone a pay check that is 10 times more than they are making today. Prices go up, income goes up, but the debt stays where it is.

This is possible, and the Donald thinks that this could happen. The recent tax plan made sure that your taxes rates were indexed to inflation. Wow, did you see that? If the dollar crashes our effective tax rate stays the same. We will be paying a boat load of money in taxes, but your effective tax rate is not going to go up.

Option 3 is to pay it off.

Good luck with that option.

There is not enough income to pay it off. It would require doubling EVERONES' taxes for the next 10 years and cutting social security and all entitlements out completely. No more handouts anywhere for anything.

Don’t think this is going to happen.

Another option that most politician are taking, is to leave it alone and hope it does not wake up.

But it’s going to wake up.

It's past the point of no return.

The wakeup alarm is ringing and the monster is starting to wake up.

Do you see it in the corner, starting to stretch its ugly muscles?

Its Yawning and scratching its back and with one ugly, mean eye open looking directly at YOU!

It’s going to get you, so get ready!

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: credit score,christians credit score

How to Develop an Exit Strategy When Obtaining a Hard Money Loan

An exit strategy is, in essence, your plan for paying off your hard money loan. It is a plan that you will want to develop before you sit down with a lender.

Exit strategies are crucial for obtaining a hard money loan. Many of these lenders offer interest-only payments as you develop or renovate your project. They obtain the big payoff upon completion when you have succeeded in your “exit strategy” and can repay them in full. For those of you in the fix & flip model, your exit strategy is fairly easy to define. You rehab and then sell the property.

Selling the property, then, is your exit strategy. Because timelines can change in the world of construction and rehab as well as finding qualified buyers, it will be important that you look for a hard money lender that does not charge a prepayment penalty. You’ll also want to come to the table with improvement plans that include costs and potential market value as well as comps and average time on the market.

If your real estate segment falls into the buy-and-hold model, selling will, obviously, not be an appropriate exit strategy. A strategy that does work is refinancing. Many traditional lenders that offer lower interest rates with longer terms will not loan on properties in poor conditions. Once you have the property renovated and a suitable tenant, your chances of obtaining a traditional loan are greatly elevated. It could be that you needed a loan quickly to jump on a property that just hit the market. Many investors obtain funding from their hard money lender in order to accomplish a quick buy and then refinance at a later date.

The Sale of Assets

The sale of other assets such as real estate or accessing additional funds such as money from IRAs, the stock market, or business interests is another exit strategy. You may wonder why, in this case, the borrower wouldn’t just dip into their additional assets and bypass the loan process all together. For many investors, time is a crucial component in their investment strategies and waiting while other assets sell may cause them to miss a prime property or opportunity. In essence, you are obtaining a bridge hard money loan. These types of short-term loans simply “buy some time” and act as a “bridge” from either one loan to the next or one property to the next.

Don’t feel like you have to stick with one exit strategy. Blended strategies can often be the best solution depending on the situation.

And just what is a blended strategy? This type of exit strategy utilizes a combination of all of the above to create a strategy that works the best for your particular situation. For instance, if you cannot obtain the full loan amount upon completion of the project, you can sell an asset and reduce the LTV so that a traditional lender will consider financing. Whatever your exit strategy, be sure to check with Level 4 Funding before obtaining your hard money loan. We have years of experience and can help you develop an exit strategy that works well for your 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

Why some hard money lenders in Texas will turn you away

When Casey moved to Texas, he had dreams of making a name for himself in the real estate industry. He quickly realized it was not as easy as the shows on Bravo make it look. Hard money lenders in Texas are not the only ones that are on the chopping block when it comes to loaning money.

If you have been following Level 4 Funding for a while, you probably have read a few times that it is fairly easy to borrow a hard money loan. This is true, for the most part, when you are looking for a potential lender you are free to pick and choose who you want to borrow from. If a certain lender is offering an interest rate that is out of your range, then find another. If the lender you are talking to is not willing to lend you the money are seeking, you do not have to work with them.

For some borrowers, like Casey, the lender may turn you away if they feel the property is not going to return their money. There are usually certain standards that hard money lenders in Texas look for when they are considering lending someone money for a property.

Someone that is playing to win

The real estate business can be extremely unforgiving if you are not prepared and careful when you are looking at properties. Many lenders will not lend to you if you are not risking anything for the investment. Most lenders expect you to pay a large enough down payment on what you plan to purchase.

This is a sign of good faith that you are willing to stick your neck out for the property so you can recoup your money. In Casey’s situation, he was not willing to put a large enough amount that would suffice the risk that the lender was taking. He could have gotten another person to invest with him, but this was his first property. The down payment was the least of his problems.

When in doubt know, your way out

Most people that get into the business try to look for homes that will have a higher resale value during closing. When experienced investors are looking for a property they can flip for a profit, they make sure they have a plan to pay back the loan if all else fails. Hard money lenders in Texas look for borrowers that have an exit strategy if the property fails to make a positive return.

Casey did not think of this when he was planning on purchasing the derelict duplex in a fairly rough neighborhood. Since many people were moving out and Casey did not have enough money to buy the rest of the city block, it was unlikely the building would have a positive return.

Setting yourself up for success counts in real estate

Planning accordingly with allow you to seek out any lender you choose. For Casey being new to Texas and not knowing how things worked he ultimately failed. Take a page from Casey’s book and remember this: do not be like Casey. Take the extra hour to look up potential investors, and forget about being frugal when it comes to a down payment.

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