Learn To Be A Fix & Flip Investor

Friday, January 4, 2019

Documents Needed For Fix and Flip Loans in Arizona

Fix and Flip Loans in Arizona are much less complicated than a traditional loan. But there are still certain documents that you should have prepared when submitting a loan request.

Fix and Flip Loans in Arizona have a reputation as being much easier and faster to secure because they are being processed by a hard money lender rather than a traditional bank or lender. But the Hard Money Lenders in Arizona are still in business to make money and will want to see some documents to know that the deal is legitimate and that you have the knowledge and ability to complete the project. Having the appropriate documents ready for your lender will demonstrate professionalism and can be a great help in creating a successful long-term working relationship.

Most Hard Money Lenders in Arizona are going to charge a small fee of a few hundred dollars to process your application. This might be a fee that is waived after you have worked on several projects together but that is up to each lender. You will also need to provide proof of your credit score, which should be at least 550. A better credit score is likely to land you a better interest rate. In addition, the lender will want to see a few months of personal bank statements to see that you are responsible with your money and are paying your bills.

Fix and Flip Loans in Arizona represent a greater risk than many Hard money loans in Colorado because the property is likely to see a lot of demolition before it is improved. Lenders like to know that the borrower has experience in the industry and will be able to complete the project on time and on budget. To put the lender's mind at ease, this is a great time to submit a resume of sorts to demonstrate your level of experience. Creating a document to include your previous real estate purchases and fix and flip projects will always work in your favor.

Scope Of Work

Some fix and flip projects are very basic while others can be very in-depth. Creating a document to illustrate the scope of work that you are proposing for the project will assure the lender that you have a legitimate plan and also that you have a plan of action to improve the property and the property value. The scope of work can also be helpful when determining the length of time needed for the loan and the potential for an increase in the property value.

BECOMING SUCCESSFUL WITH AN ARIZONA AIRBNB LOAN

Sarah was new to being an empty nester. She had recently retired and both children were off to college. Sarah was use to a busy, hectic schedule—now she had nothing but time. To make a little extra income and occupy her time she became an ARIZONA AIRBNB LOAN host—renting out her two spare bedrooms in Phoenix. After two years, over 300 visitors and close to $60,000—she decided to buy property and grow her small business. The bank wouldn’t approve her, as most banks do not approve a second mortgage for a rental property, so she took out a hard money loan.

An airbnb in your home and an airbnb property are two different animals. When you simply rent out a room—that is all there is to it. When you rent out a property—you have to somehow obtain financing to purchase the property, and that is where the difficulty in becoming an airbnb host.

Gaining financing is an airbnb host’s biggest challenge. Because banks are more closely scrutinizing how properties are being used when it comes to new mortgages and refinancing existing mortgages it makes it difficult to gain approval on a loan for an airbnb. Mortgages on rental properties are viewed as risky to banks. Most banks will not even extend home equity lines of credit for an airbnb rental property.

HARD MONEY LOANS FINANCE ARIZONA AIRBNB LOAN PROPERTIES

A hard money loan is an asset-based loan in which a borrower receives funds that are secured by real estate. These loans usually range between 7%-15%. And although these rates are high compared to a traditional bank it is because they are short-term and riskier for the lender. The loan amount is determined by the loan-to-value (LTV). LTV is the loan amount divided by the value of the property. Most lenders will lend around 75% of the value of the property, but you can find 100% financing, as well. These are short-term loans typically ranging from 6 months to a year—but in certain situations the terms run up to five years.

Hard money loans are becoming popular with airbnb hosts, due to the simplicity of the loan. Most borrowers are pre-approved within minutes and have their funds readily available in less than 15 days. Hard money loans are not to be used as a replacement for a traditional mortgage, but can be used until approval for a conventional mortgage comes. These loans rarely carry early payment penalties, which means the borrower can pay it off whenever they have the finances.

Once a borrower can prove consistent income to the bank they have a higher likelihood of approval.

After two years and over $75,000 Sarah was able to prove her bank that this was legitimate extra income. She was able to pay off her hard money loan a year early and transition into a conventional mortgage on her airbnb properties. Thankfully, the Arizona Hard Money Lender was there when she needed a jump-start on her new small business career.

Thursday, January 3, 2019

EVERYTHING YOU NEED TO KNOW ABOUT PRIVATE MONEY LENDERS IN ARIZONA

Private money lenders in Arizona are simply non-institutional lenders who issue short-term loans for the purchase of an investment property. Sometimes, they issue these loans for renovations of an investment property, as well. These lenders offer loans for short-term fix and flip investments as well as loans to investors looking for quick funding or cash-out refinancing.

Private money lenders in Arizona frequently offer no prepayment penalties to investors. Pre-approval typically happens within 5 minutes and funding in as little as 2 weeks. Private money lenders in Arizona offer loans that are secured by hard assets (real estate). Private money lenders in Arizona can be anyone—your neighbor to an established private lending company. Typically, when people talk about Arizona Hard Money Lenders they are referring to to Arizona Hard Money Lenders. Private money loans work for every situation from short-term fix and flip to a long-term buy-and-hold.

Private money lenders in Arizona are sought by property flippers who plan to rehab and sell the property that is being used as the collateral for the financing. This is ideal because the investor expects to sell within one year. As soon as the property sells, the loan can be paid off.

HOW TO UNDERSTAND THE APPROVAL PROCESS OF PRIVATE MONEY LENDING

The approval process when it comes to private money lending is much quicker than a traditional bank loan. Since the loan is backed by the value of the property that is being used—that is the Private money lenders in Arizona biggest concern. The lenders may not be as concerned about repayment because often there is greater value for them to resell the property in case of default. Because Private money lenders in Arizona do not use a traditional underwriting process adjustments can be negotiated in regard to the repayment schedule. This is beneficial for the borrower and can afford them more opportunity to pay back the loan during the decided loan terms. Conventional bank lenders are notorious for having rigid and extremely strict rules—and although a private money lender will adhere to criteria concerning the borrower it will be significantly less that what is required from a bank. The bottom line when it comes to private money lending— these are asset-based loans that have flexible loan terms.

What do I need to provide a private lender with to determine pre-qualification?

A private money lender will typically require: 3 months of your personal bank statements, deeds to your assets, and require you to answer simple questions such as—the address of the property and desired loan amount. During the funding phase lenders will look at more in-depth documentation such as the scope of work, appraisals, contractor bids and appraisals. For more information contact us at level4funding.com.

BENEFITS OF USING A ARIZONA HARD MONEY LENDER

Lillian had been down on her luck the last few years. She had lost her job and hadn’t found fill time employment. To add to that she had recently gone through a divorce—a divorce that had left her credit badly bruised.

Lillian had been a principal of a private school for over 20 years when the school suddenly shut down. She had searched high and low for employment for over a year. The best job she could find was as a substitute teacher, but that wasn’t enough money to pay the bills and help her son through law school. She had wracked her brain to come up with something that could get her back on a good financial track.

One day she was visiting with an old friend that had recently started flipping houses. Lilian was intrigued. When she told her friend that she wanted to talk to the bank about taking out a loan her friend quickly educated Lillian on hard money loans. Lillian’s friend explained how banks are uncomfortable lending to fix and flip projects, due to the risk and uncertainty involved. Also, and Lillian didn’t need to be reminded of this, she didn’t have the best credit. Lillian wasn’t comfortable with talking to a Arizona Hard Money Lender—she didn’t know anything about them. The truth is— most people don’t know what a Arizona Hard Money Lender is.

HOW A ARIZONA HARD MONEY LENDER CAN HELP YOU

Investors are frequent borrowers of hard money loans. Hard money loans are most popular due to time efficiency. A borrower can be pre-approved in a matter of minutes. Funds are typically dispersed in less than two weeks. This is vital for investors in order not to lose a deal. Fix and Flip loans are popular loans that Arizona Hard Money Lenders finance. Hard money loans are short-term loans—most are 6-12 month terms. However, they can be extended up to 5 years, depending on the situation. These terms are ideal for a flip—as investors want to flip the house quickly. Another benefit of hard money loans are the payments—they are interest only payments for the life of the loan. A balloon payment is due at the end of the loan.

Investors aren’t the only people that Arizona Hard Money Lenders can help. Arizona Hard Money Lenders base approval on a borrower’s assets versus credit. In Lillian’s case, for example, her credit had been damaged, but she wanted to begin flipping houses. Not only do banks frown upon flip loans; a person with her credit score would never qualify for a conventional mortgage. Although, Arizona Hard Money Lenders will look into your financial life—they will not base their decision solely on your FICO score. A hard money loan would work well for a borrower that is in need of a home and working on their credit. As stated before, these loans can run longer than the typical 6 to 12 months. If a borrower can’t qualify for a conventional mortgage, they may qualify for a hard money loan. These loans can work while the borrower transitions in to a more traditional loan.

Arizona Hard Money Lenders are not required to follow the strict federal guidelines as banks are required to—they are flexible.

Whether you want to start flipping houses or you are in need of a loan while you fix your credit, a Arizona Hard Money Lender can help you. These are asset-based loans and Arizona Hard Money Lenders have flexibility, unlike traditional lending institutions. No matter what you want to do—the likelihood is there is a hard money loan that will work for you.

How Much Do Hard money loans in Colorado Cost

Hard money loans in Colorado can be a very useful tool for real estate investors. But before you sign the loan documents be certain that you understand the total cost of the loan.

When you go to a bank to secure a traditional loan, the loan officer will often show you a document that shows the total cost of the loan. It will include the interest and all of the fees and is presented in an effort to show borrowers the total in the interest of full disclosure. But that is not always the case when you are working with a private lender for Colorado hard money loans. The documents, fees and even the terms of the loans are left to the discretion of the lender as a private entity or individual. So it is up to you to ask the right questions and request all of the information before agreeing to the terms of any hard money loans.

The first question that most borrowers have is about the interest rate for the loan. This is often very straightforward, much like a traditional loan. But remember that the private lenders can include clauses in the loan agreement that would increase the interest rate if a payment is late. So be sure to verify that the interest rate will never change during the life of the loan for any reason.

Fees for hard money are similar to those of traditional loans. Some lenders will charge a lump sum for processing while others will charge points to cover all of the administrative costs. Points are calculated at 1% of the loan per point so 2 points on a $100,000 loan would be a $2,000 fee. Fees, on the other hand, can vary greatly from lender to lender. A processing and underwriting fee is common to cover the overhead and administrative side of the process. An appraisal fee is charged on every hard money loan and that is really just a pass-through to a licensed appraiser who will evaluate the property and provide the lender with the current market value of the property.

Questionable Fees

There are some fees that are less common and are often considered to be a signal that the lender might be less than legitimate or desirable. If the lender requests a large application fee which is none refundable, then you might want to seek a new lender. There are people who pose as Hard Money Lenders in Arizona who do nothing more than collect application fees and then disappear. Referral fees are also not too common and can be a sign that the person is not really a lender but is running a scam. Be sure to check out the lender and the person involved in the referral with the Better Business Bureau to verify that both are legitimate.

Trust Your Gut

Lenders who are providing Hard money loans in Colorado are in business to make money. So if a loan sounds too good to be true then it probably is. Check out the lender and compare the terms to other offers to determine if you are getting a fair and reasonable offer or if you might have found a scam that is nothing more than someone stealing money. Always ask for a list of the total cost of the loan in writing to be sure that you understand the cost and that the lender is legitimate.

Why Use Hard Money Loans

There are many reasons to use Colorado hard money loans. Understanding these uses can be a great help in growing your personal wealth.

The term Hard money loans in Colorado is often misunderstood by many consumers. They picture a less than scrupulous lender who might be working out of a shady office or back alley rather than a professional individual who is simply in the business of loaning money to make money. In some cases, the lender is a single person or in other cases, it is a group of people who are working together as a group. But the main difference is that this loan is coming from a private source and not a traditional bank or other lending institution.

One of the biggest benefits of using Hard money loans in Colorado is that the loan is secured with collateral rather than the borrower's creditworthiness. In many cases, a borrower will have a low credit score or no credit history and is unable to finance through traditional means. In addition, people who are recently divorced can have a difficult time reestablishing their credit and need another option when buying a home. And people who are self-employed, work freelance or have seasonal or fluctuating income can have a difficult time meeting the stringent requirements of a traditional lender when it comes to proving their income. But hard money offers this segment of the population a legitimate option for borrowing money to purchase a home or invest in the real estate market.

Another group of people who are fond of Hard money loans in Colorado are property flippers. These real estate investors know that finding a great property requires fast financing to secure the purchase. A bank is going to require a lot of documentation and time to process a loan even for an applicant with stellar credit. But a hard money lender is willing to process and fund the loan in a fraction of the time because the property becomes the collateral for the loan.

Stopping A Foreclosure

Homeowners who are at risk of losing their home due to a financial hardship are also going to benefit greatly from hard money. These loans allow the homeowners to use the equity that he or she has in the home to refinance in a sense and pay off their original mortgage. In some cases, the homeowner will then refinance into a new traditional mortgage at a later time or others will sell the home to pay off the hard money loan. But what this does for the homeowner is protect the equity that would have been lost had the mortgage company foreclosed and taken possession of the home.

Hard Money Rules

There are state and federal laws which forbid Hard Money Lenders in Arizona from lending to people who obviously have no way to repay the loan. But if you can meet the payments of the hard money loan then this is a solid and legitimate option for you. Even with a credit score below 600, borrowers can qualify for hard money and begin to rebuild credit or establish a new career in real estate.