Learn To Be A Fix & Flip Investor

Monday, October 29, 2018

Trust Deed Investing: Differences, Benefits, and Strategies to avoid risk.

You may have never heard of trust deed investing, learn some of the basics, benefits and some simple strategies to avoid risk when it comes to this type of investment.
A deed of trust is a security agreement which is secured by real estate, I.e., it’s a mortgage. The main difference between a trust deed and a regular mortgage are the parties involved and the specific regulations. With a mortgage for only two parties the borrower and the lender are involved. With a standard mortgages, there is a lengthy judicial process when it comes to foreclosures.
With trust deeds of trust, there are three parties involved, investor (beneficiary), trustee (trust deed broker) and trustor ( the individual borrower). Little, if any, court involvement is needed to foreclose on deeds of trust.
So how can this arrangement benefit you as an investor?
Here are just a few of the benefits of Trust Deed Investing in Arizona:
With deeds of trust a borrower (trustor) goes to a broker (trustee), the broker then funds the borrower's loan with funds received from you, the investor (beneficiary). This arrangement benefits you in the following ways:
• Easy: Trust deeds allow you to appreciate the benefits of real-estate investment without the hassle of managing the property yourself.
• Variety: There are of course many types of real-estate and just as many types of trust deeds allowing you to invest in a diverse array of properties, from residential all the way to industrial.
• Flexibility: Every deed of trust deal is different. Unlike bank loans which are subject to rigid guidelines and bank bureaucracy, trust deeds are private arrangements made between an individual broker, borrower and you the investor.
• Predictable: Unlike other investments where returns are somewhat uncertain, with trust deeds the borrower is contractually obligated to make regular payments. As long as the loan remains outstanding you can expect to receive a return.
That is unless your borrower defaults.
With trust deed investing in Arizona the primary risk is that the borrower defaults, here are a few strategies that can help you risk less.
Yes, trust deeds give you the right to foreclose if your borrower defaults, without court involvement. But what if the borrower files for bankruptcy? Well then the courts are involved, and you cannot foreclose as the borrower reorganizes their debts. As the borrower's bankruptcy proceedings make their way through the court, your deed of trust is essentially a worthless piece of paper.
Even after the borrower's bankruptcy closes and foreclosure goes through, foreclosed properties never really sell for their full market value, which equals a loss for you.
To mitigate the risk of default consider the following:
• Be sure your borrower can pay back the loan: Don’t just rely on what your broker tells you. Carefully review the borrower's financial history, to be sure that the borrower can pay back the loan.
• Don't just go after the highest yield: Don’t invest in high-interest trust deeds just because they offer a higher return on paper. The higher the borrower's interest payments, the higher the risk of default
• Start small and scale: Begin with small investments as they are less risky. As you do more of these deals and develop your own understanding of the process, you can then begin investing in larger loans.
By employing these strategies, you can avoid the risk of default and enjoy the benefits of trust deed investments.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com
Dennis Dahlberg Broker/RI/CEO

About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.© 2016 Level 4 Funding LLC. All Rights Reserved.
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Phoenix Fix and Flip Loans: How to use Crowdfunding to Invest and Make Money

You don't need to be an active house flipper to make money from flipping projects. You can avoid all the hassle of these projects and still earn a profit by financing fix and flip loans through online crowdfunding platforms. Learn some of the basics about what you should look for in these deals and some basic strategies to find the best way to invest in these types of loans.
Crowdfunding remains the most accessible way for individual investors to earn money from house flips without actually carrying out the renovations themselves. Crowdfunding usually takes place on an online platform and relies on you (the individual investor), to finance the loans listed on the site. These loans are then given out to active house flippers.
However, there some fundamental things you should look into before investing in these loans.
Expectations before investing in Arizona Fix-n-Flip Loans
Before investing in any loan, consider the platform, or the website on which you aim to make your investment. Be wary of crowdfunding sites that claim to charge absolutely no fees. In almost every case this is too good to be true. In general, these websites will charge you a percentage of the income you earn either on an annual or a regular basis. Obviously, you want to make your investment on the crowdfunding website that charges the lowest possible fees.
Consider the type of flip you are investing in, is the project a residential or commercial flip? Residential flips offer a smaller return over a shorter period, while commercial flips provide a potentially larger return over a longer period. So consider how quickly, and how much, of a return, you want from your investment.
Consider the borrowers details, ideally you want to someone with prior experience and a proven track record of successful projects. Also, do your best to understand the conditions of the surrounding market to get a sense of the project's potential. Developing an understanding of an individual borrower and their project might put your mind at ease.
Ideally, you also want to invest in loans in which the borrower has signed a personal guarantee, as this will indicate they have some personal stake in their project.
After you find the right loan, there are two ways to actually invest.
When it comes to investing in Arizona fix-n-flip loans, you risk less as a debt partner, but you can make more money by acting as an equity partner
When it comes to investing in these types of loans, you can choose to act as a "debt" or "equity" partner. Acting as a debt partner allows you get regular interest payments throughout the term of the loan. Most crowdfunded fix and flip loans, have terms of 36 months and charge interest rates of 8 to 14%. You earn these interest payments on a regular monthly basis, and once the term of the loan expires, you receive the remaining interest and principal.
Acting as an equity partner gives you a share of ownership in the property. In this case, once the flipped property is sold you earn a specific percentage of the profits earned by the borrower. The potential returns from an equity partnership can be far greater; however, there is more risk in this case. It's uncertain how much profit a flip will earn until the renovations are finished and the property is actually resold.
In short, crowdfunding presents the opportunity to earn money from house flipping without actually flipping homes yourself. Consider the platform, type of project and borrower you want to invest in and whether or not you want to act as a debt or equity partner.

Private vs. Hard money lenders: The Differences

You may wish to finance your next investment property, but find yourself a bit confused about the differences between private and Phoenix hard money lenders. This article will attempt to clear up some of this confusion and some common misconceptions, so you can get a clear perspective and find the help thats right for you.
Some consider private money and hard money lenders essentially the same thing. But there are a few fundamental differences you of which you should be aware. It all comes down to the criteria these lenders use to evaluate borrowers, and these considerations can impact the type of deal you can secure.
The main difference between these two types of lenders is how they evaluate individual borrowers. Private lenders might consider all three C's of lending (credit, capacity, and collateral). Hard money providers generally only consider the value of the collateral on offer.
Therefore, private lenders may put scrutiny on aspects of your financial history such as your credit score. A private lender may also want to get a sense of your capacity or your ability to repay your loan. They might look into your financial history to ensure your income is sufficient to carry your current debts, usually this measurement is expressed as a debt to income ratio (DTI). If your credit score or DTI doesn't meet the private lender's criteria, you may not qualify.
In contrast, hard money providers mainly look at the value of the collateral on offer, i.e., the value or potential value of the property you aim to finance. However because collateral is the primary consideration in the case of hard money there are some misconceptions when it comes to this type of lending.
The main complaint about Phoenix hard money lenders is that they are less willing to work with borrowers
Because hard money providers mainly look at the collateral offered by the borrower, they assume a higher risk. Because of this assumed risk hard money is often more expensive than private money.
However, some assume that hard money providers are less flexible than their private counterparts. Because this type of lender only looks at collateral, they might have less confidence in a borrowers ability to repay. Therefore, if a borrower meets turbulent fiscal headwinds, many assume it's in a hard money providers best interest to foreclose on the property and resell it at a profit.
But this is a flawed assumption; because any reputable lender wants their borrower to succeed.
Foreclosure is a hassle, and no one wants to deal with it. So don't assume your hard money provider won't work with you if you run into financial difficulties.
Arizona Private Money Lenders may offer a better deal, but fewer borrowers may be eligible.
Going the private money route can result in a better deal. Because most private money providers look into your credit and your capacity to repay, and therefore they have more confidence in you as a borrower.
This confidence on the part of the private lender could give you the leverage to negotiate a better deal.
While private money may potentially be cheaper, it may also be less convenient. You may not qualify according to the standards of an individual lender. In addition, underwriting your loan could take a long time, and this application process could cause you to miss out on your investment opportunity.
But there are no hard and fast rules in the case of either private money or hard money, as every individual lender is different.
Just know that the primary difference is that private lenders may consider( may being the operative word here), all three C's of lending before approving an application, while hard money providers only consider the collateral on offer.
Private lenders might be able to offer cheaper loans, but the application process might also be less convenient when compared with their hard money counterparts. It is a catch 22. Private money might be less expensive but also less convenient. Hard money might be more convenient but it also might be more expensive.
However, don't make assumptions, every private or hard money lender is different. Ask any lender you approach about how they evaluate individual borrowers to see what type of deal you might be able to negotiate.

Phoenix Fix and Flip Loans: How to Make Money in Apartments

When it comes to fix and flip loans and apartments you need to have a strategy to pay off the loan as soon as possible. The following article will tell you where to find the best deals, how to value apartments and how you can use simple income boosting strategies, to maximize the value of your apartment property, quickly earn a profit and pay off the balance of your loan.
Before you take out a loan to flip an apartment, you need to find the right property.
Finding apartment properties to flip is a bit tricky, as most apartment buildings are sold off-market. Landlords don't want to alert tenants to possible changes in ownership, and so they avoid listing their properties outright. So to find apartment properties with the most potential you need to get in touch with local real estate brokers, who can give you a sense of which properties are available.
After finding a potential property to flip, consider the following:
• Is the property is in an exceptionally dilapidated condition: Is there an immediate need for physical improvements, If you can, then make these improvements, and you can quickly boost the properties value and resell it at a profit.
• Consider outside factors that could increase the property's value in the near-term: Are new public amenities like hospitals and schools about to be constructed nearby? If the answer is yes, then you may not need to spend any money to see the properties value appreciate.
With Phoenix fix and flip loans and apartments evaluate each deal based on the income potential of the property
The main difference between flipping apartments versus single-family homes is a matter of valuation. Residential properties are valued based on comparable sales, which limits the potential returns from residential flips. With commercial properties, I.e., apartments, the income generated by the property determines its value. Therefore the potential returns from an apartment renovation can be enormous, depending on how much you can raise the amount of income generated by the property.
When it comes to valuing apartment buildings, the value is usually set based on the market cap rate (annual income/ fair market price) divided by the overall annual revenue generated by the property.
So if your apartment earns 120,000 dollars in income annually and the prevailing cap rate is 5 percent= 120,000/.05= 2.4 million dollars.
This nuances of this valuation process are beyond the scope of this article.
However before taking out any loan you need to have a strategy in place to pay it off quickly. You also want to earn a profit by causing the value of the property to appreciate as quickly as possible. So when it comes to apartments, what's the fastest way to raise a properties value? Raise rents.
With fix and flip loans and apartments your best bet is raising rents which present a low cost way to boost value and pay back your loan quickly.
With any flipping project, you need a short-term strategy to boost a properties value, to pay off your loan and earn a profit as quickly as possible. When it comes to apartment flips the best way to boost value is to raise rents.
Obviously can be amoral or unethical about this, the improvements you make should justify any rent increases. However, in some cases you can still raise rents without paying for any improvements at all. If a property is charging rents that are exceptionally low, you can raise rents to a reasonable standard and quickly earn a profit.
Even a small increase in rent can dramatically boost the value of an apartment building. Consider the first example where the property was valued at 2.4 million dollars
• 120,000 (annual income) /.05 (cap-rate)= 2.4 million dollars.
This property is a 20 unit building, and each unit brings in 500 dollars in rent per month. If you were to raise rents by 50 dollars the property will earn 1,000 dollars of additional income per month, or 12,000 in extra annual revenue.
While this might not seem like a lot, this small increase in rent, based on a 5 percent cap rate, equates to a new valuation of:
• 120+12=132,000 (annual income)/.05 (cap-rate)= 2.64 million dollars.
So in this case that extra 12,000 dollars in income resulted in a 240,000 dollar increase in the properties value. As you can see, the sky is the limit when it comes to apartment flips. But of course there is math and then there is reality. So things wont always work out according to plan.
Nevertheless, before taking out a loan on an apartment property, find a reputable real estate broker and look for properties with:
• Easy low cost fixes that could raise value,
• Properties where new public amenities are being constructed which will increase the value of the property without any cost to you, and above all,
• Look for properties that are charging below market rents.
Raising exceptionally low rents to a reasonable standard is the fastest, and cheapest way to quickly raise the value of an apartment, allowing you to pay back your loan and earn a profit in the shortest possible amount of time.

Sunday, October 28, 2018

House Flipping Loans: Is Local Private Money the Right Help For You?

When it comes to house flipping loans and private money you need to first understand what private money actually is and where it can be found. Learn some basic strategies to find the help that's right for you
Private money is a vague term, but it refers to any private group or individual with enough capital to lend. So where you should you look for this type of lender?
You might begin your search online, where you will likely find many “private lenders,” but most of these are really hard money providers. Its difficult to pin down what exactly private money is, especially when compared to “hard money.” In truth, the differences are insubstantial, financing is financing after all.
The only real difference between private hard money that you should be aware of is that hard money often entails higher interest payments when compared with private. Hard money providers usually charge between 12 to 15%, while private lenders typically charge between 8 and 12%.
However truly private lenders are usually individuals that can offer far more flexible loan terms in comparison with other types of financing providers.
If you look online you likely wont find a truly “private lender,” that offers this type of flexibility, so then where should you begin your search?
When it comes to Arizona Private Money Lenders, the best way to find the right help for you and your deal is to ask around.
The best way to come in contact with private money providers is to attend real estate networking events. At such events talk to other house flippers to get a sense of their experience with various local private lenders. You should ask questions like how quickly were their loans funded? What were the specific terms of their deal? And how willing was the lender to negotiate these terms with them?
Above all, you want to find a lender that is willing to negotiate. Because when it comes to private money you want to take advantage of flexibility this type of financing offers.
When it comes to truly Arizona Private Money Lenders, if you can do your best to secure an equity partnership which can help you avoid the expense of carrying a loan.
You might not even have to make any payments on your loan if your private lender chooses to act as an equity partner in your project. In this case, the proceeds of your resale will pay off the remaining loan balance, while your lender receives a share of the profits you earn.
To negotiate this type of deal, you’ll probably need to find a truly private lender. Hard money is a great financing option in the case of flipping projects, but these are lenders, not investors, and they will give you a loan which you will have to pay back with interest.
If you want to find a true private investor for your next project you should avoid beginning your search online. Perform your due diligence by asking your fellow real estate developers about their experience with local private lenders. Once you find a lender that has a good reputation, see how much room there is to negotiate. If you can try to arrange an equity partnership with them which will help you avoid the expense of carrying a loan.

How To Understand House Flipping Loans

Not every loan works for every project so it is important that you understand all of the aspects of Arizona house flipping loans. This is a huge first step in a successful project.
Flipping houses can be a great business and a great way to build your personal wealth. But it can also be a very difficult business is you are not familiar with the financial needs and the criteria for that makes good house flipping loans. You will quickly learn that a traditional loan is not a good fit for most flippers. The biggest drawback on a traditional loan is the extended time frame to secure the loan. In addition, you need to have very good credit to qualify for most bank loans. But fortunately, there are much better solutions for your house flipping loans.
The best way to avoid all of the runaround and document requirements is to avoid the traditional lenders. Using a private lender is a lot faster and easier. The cost can be a little bit higher but in most cases, you can tailor the loan to meet all of your needs including a fast approval and funding process. These types of loans are called Arizona Hard Money Loans or asset-based loans and they are offered by a private lender or a small group of people who function together as a private lender.
The lenders are not looking at your credit history, income or even your credit score to decide if they are willing to loan you the money. For asset-based lending, the determining factor is the value of the property that you are buying. The lender requires that you use the property as collateral for the loan so that it is secured. All the lender is concerned about is that the value of the collateral is always greater than the balance of the loan.
Calculating the Amount of House Flipping Loans
Lenders who focus on these Arizona Hard Money Loans have a set loan to value ratio that they are willing to offer borrowers. The LTV is normally somewhere between 70% and 80% of the value of the property. There are two reasons for this choice. First, this assures the lender that the property will always be worth more than you owe in the event of a default on the loan. Second, the lender knows that you are very motivated to get the deal done as you have invested your own money in the project to reach the asking price. This is known as having some skin in the game and is a good motivator.
Know The Terms
Flipping houses in Arizona can be a great business and can grow very quickly if you are aware of the proper types of funding for these projects. In addition, you need to understand that the conveniences of hard money only come at a higher cost. So it is important that you find the best deal possible to begin your home flipping business and ensure your success.

Learn To Be A Fix & Flip Investor

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Monday, October 29, 2018

Trust Deed Investing: Differences, Benefits, and Strategies to avoid risk.

You may have never heard of trust deed investing, learn some of the basics, benefits and some simple strategies to avoid risk when it comes to this type of investment.

Here are just a few of the benefits of Trust Deed Investing in Arizona:

With trust deed investing in Arizona the primary risk is that the borrower defaults, here are a few strategies that can help you risk less.

Phoenix Fix and Flip Loans: How to use Crowdfunding to Invest and Make Money

Expectations before investing in Arizona Fix-n-Flip Loans

When it comes to investing in Arizona fix-n-flip loans, you risk less as a debt partner, but you can make more money by acting as an equity partner

Private vs. Hard money lenders: The Differences

The main complaint about Phoenix hard money lenders is that they are less willing to work with borrowers

Arizona Private Money Lenders may offer a better deal, but fewer borrowers may be eligible.

Phoenix Fix and Flip Loans: How to Make Money in Apartments

With Phoenix fix and flip loans and apartments evaluate each deal based on the income potential of the property

Sunday, October 28, 2018

House Flipping Loans: Is Local Private Money the Right Help For You?

When it comes to house flipping loans and private money you need to first understand what private money actually is and where it can be found. Learn some basic strategies to find the help that's right for you

When it comes to Arizona Private Money Lenders, the best way to find the right help for you and your deal is to ask around.

When it comes to truly Arizona Private Money Lenders, if you can do your best to secure an equity partnership which can help you avoid the expense of carrying a loan.

How To Understand House Flipping Loans

Not every loan works for every project so it is important that you understand all of the aspects of Arizona house flipping loans. This is a huge first step in a successful project.

Calculating the Amount of House Flipping Loans

Know The Terms

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