Learn To Be A Fix & Flip Investor

Sunday, September 8, 2019

What are private money lenders, you think to yourself after a friend suggested that for solving your current funding problem. How are they different from a bank?

After some research and noting that private money lending falls under the term ‘Arizona hard money lending’, you still are not quite certain it is the answer for you. After all, it was just two years ago that your loan to pay for an apartment building renovation was called in and you didn’t have the funds to pay it off. The doctor had gotten everything, including the last payment. Your credit record will reflect that for certain even if you had since gotten the money and paid off the loan in full. Working for yourself had its advantages, but both of the banks you talked to recently, looked askance when you told them that your office was in the spare bedroom of your home and consults with clients were held on your porch from two comfortable chairs with a coffee pot nearby. Never mind that this setup cut down on expenses so you would have more money to pay the bills and not end up with rotten credit.

Private money lenders in Arizona funding opportunities covered a wide swath of areas, you discovered: bridge loans, commercial loans, and renovation loans just to name a few. Deciding that more investigation would be to your advantage, you ran the term through the computer, checked out the nearest three that sounded like they would be a fit for you and made appointments with them for the next day.

Are these lenders the right choice to fund my project, you thought as you looked over brochures and documents following your appointments. You had never done any business before that went outside of conventional lenders, like banks and mortgage companies. Even your car had been financed through your bank.

Private money lenders in Arizona set up their funding deals via collateral-based loans or secured loans as it was more commonly termed. A large percentage of the loans covered ‘fix and flip ‘projects, where the buyer bought a property in need of work, renovated it, and sold it as quickly as possible. The property normally had a lien attached by the lender in order to protect their interests in the event of the borrower’s being unable, for whatever reason, to pay back the loan. This arrangement, if done correctly, was a boon to both parties’ taxes and the lender’s fee is generally negotiable.

Another advantage stressed was the reason for the term private money lenders—this sprang from the fact that mostly the lenders are personal friends, business colleagues or relatives, thus the term ‘relationship based loan’ was frequently used also. This also covered companies (Arizona hard money or accredited) that had been set for this express purpose.

All of the lenders you talked to emphasized one thing: the borrower needed to check into the fine points of these loans since they are custom-designed for clients. Conditions range from the type of funding and interest charged to the length of time to repay. Normally a down payment is presented, interest payments made through the repayment term (normally a year) and the balance comes due at the end of that period. Occasionally a lender will charge a fee for early payoff.

Try a different road and see where it leads you. Check into private investing and learn if that better life you have been pursuing is closer to becoming a reality than you have thought.

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

NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About: 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.
© 2019 Level 4 Funding LLC. All Rights Reserved.

How to Get into Trust Deed Investment Arizona the Smart Way

Trust Deed Investment Arizona can help you grow your wealth quickly, but it’s not without risks. Learn about the potential pitfalls, so you can avoid them and make some serious cash.

When a loan is taken out for real estate, a trust deed or deed of trust is often used. It’s mandatory in some states, while others allow for this or a mortgage. The document indicates that the borrower and lender have an agreement and that a neutral third party is holding the property until the loan is paid back.

The lender gives the borrower money to purchase the property and, in exchange, the borrower gives the lender promissory notes tied to the deed of trust. Then, the third party, typically an escrow or title company, serves as a trustee and holds the legal title. The borrower ultimately remains responsible for the property and has full rights to obtain it. This is normally the natural course of things; the borrower pays his or her debt back and then receives the deed back from the trustee. However, if the borrower does not pay, the trustee takes control of the property. Unlike a typical foreclosure which requires a lengthy process, the trustee has a straightforward process that allows for the swift liquidation of the property and rapid repayment to the lender.

This in mind, trust deed investment in Arizona can be a great way to get substantial returns; often somewhere between 8-18%! However, it’s not without the potential for risk. For example, if the borrower defaults, you need to have a layer of protection which helps ensure you get your cash back. The servicing agent or trustee helps provide this, but it’s also essential to have terms built into the contract which compensate you for any potential losses due to the default.

Become Familiar with the Differences Between Factional and Whole Deals

One of the biggest differences in Trust Deed Investment Arizona is how many lenders or investors are involved. In many cases, people are investing in fractional deals. That means there are lots of people pooling their money together to fund a loan. While this does typically mean the individual lenders are risking less, it also creates issues if there’s a default and the investors must all move forward as a single unit. It can add onto the timeline considerably. With whole deals, there’s a single investor funding the entire loan. There are no other people to contend with when decisions need to be made and you can deal with issues swiftly.

Work with a broker but know how to evaluate a good deal on your own.

It’s important to have an understanding of Trust Deed Investment Arizona before you get into it, simply to provide reassurance that you’ve examined the deal with your own eyes and knowledge and that everything looks good to you prior to funding the deal. However, working with a seasoned broker is also advantageous, as they can help vet deals on your behalf and see to all the details as you move through the process. That way, you can continue reinvesting your funds and earning at a rapid pace.

Try These 4 Tactics to Secure Arizona 90% Hard Money Loans

Trying to secure Arizona 90% hard money loans can be a challenge. However, you can increase your eligibility by applying some tried-and-true strategies.

1. Partner up. Often times, Arizona 90% hard money loans in Arizona are reserved for those with lots of experience and a stellar track record. If you don’t have this, bring a partner on board who does and be sure to listen to the tips and advice they provide along the way. If you can’t find someone with a strong enough background to get you 90 LTV, explore alternatives, such as someone with at least a little background and some cash to add to the down payment.

2. Score a deal. The less you pay for the property, the lower your loan-to-value rate will be. Auctions have incredibly steep competition these days, which makes it so much harder to get a good deal that way. You may have better luck networking with other investors or working a neighborhood and connecting with a potential seller before he or she puts the property on the market.

3. Leverage a portfolio. If you already have another property paid off, you can leverage it as well. For example, let’s say you’ve got a property that’s worth $100,000 and you know it will be worth $200,000 after you sink $50,000 into it. You negotiated a deal and will only pay $90,000, but that means you still need $140,000 to purchase it and make repairs, leaving you $60,000 short. You can leverage other properties you already own to help bridge the gap.

4. Show your lender what you can do. Don’t lose heart if you can’t get 90 LTV right away. Instead, try to find projects that will allow you to move forward using the cash you do have. Once you’ve developed a reputation for completing projects successfully, the offers you receive will improve. It also helps to work with the same lending team for repeat projects, as you’ll develop rapport and your team will become eager to work with you more often.

Come Up with a Win-Win Solution

Getting approved for Arizona 90% hard money loans in Arizona really comes down to reducing risk for the lender and there are lots of ways to create a win-win solution. For example, you may be able to pay a higher interest rate to get more cash up front. Or, if you’ve got really great credit, you can leverage that to show your lenders that you’re not a financial risk. Try to look at it from the lender’s perspective and consider what it would take you to loan to someone under the circumstances you’re in.

Get a helping hand from an experienced broker.

Find an experienced broker who routinely helps get Arizona 90% hard money loans in Arizona off the ground. He or she will be able to tap into multiple avenues to get you the cash you need. Failing that, they’ll provide you with insights to help improve your eligibility for financing and better terms as well.

Why New Borrowers Strike Out with 100 LTV Hard Money Lenders

On the hunt for 100 LTV Arizona hard money lenders and not having luck? There are a few fundamental reasons why this happens.

Oftentimes people just getting into fix-and-flips or real estate in general are all fired up and ready to go. They’ve learned a bit about the industry and either have some expertise in home repair or believe they can manage a crew effectively. All they need is just a little bit of cash to get started. And, they’ve heard that 100 LTV Arizona hard money lenders are the place to get it.

Then, reality sets in. After connecting with a bunch of people who work in lending and scouring forum boards, it starts to look like 100% funding doesn’t exist. People do talk about it, so it must, yet it’s quite elusive for newcomers to the field. What gives?

Generally speaking, it doesn’t really happen. Some companies may use it as a draw to pull people in, while others may provide 100%, but only to borrowers they know incredibly well who have already completed several successful deals with them. The reason is straightforward. If the lender gives you 100% of the value and you don’t come through with your end of the deal, he or she is going to lose bigtime.

Set Realistic Expectations When You Start in Real Estate

Chances are, you will never find true 100 LTV hard money lenders in Arizona. Something more like 80-90 LTV is attainable when you know the investor and they’ve seen what you can do. However, newcomers usually qualify for closer to 50-70 LTV. Investors want you to have some skin in the game and need to see that you’ve got what it takes before they’re willing to bet on your projects.

If you’re savvy, you can increase your eligibility in other ways.

While you may not see true 100 LTV hard money lenders in Arizona, you can put less of your own money on the line by adapting your strategy. For example, you can bring on a partner with more experience, which could get you closer to 90%. You might also be able to leverage multiple properties, which will get you 100% of the funds you need by tapping into your portfolio. Lastly, you can try to negotiate a better deal with the seller. Naturally, the less you pay for the property, the lower your loan-to-value will be. If you’ve tried all these options or none of them work, there are two other avenues to try. First, spend a bit more time learning about the process and offer to work as an apprentice or assist another person doing what you want to do. The information you take away from the experience will prove invaluable and you’ll make new connections. Secondly, have a conversation with a broker. A really great broker will provide you with the information you need to be more successful in the future. It may be hard to hear that you’re not ready to jump in just yet, but the advice you’re given will be pure gold.

Top 3 Things to Consider When Taking Out Commercial Private Loans in Arizona

Commercial private loans in Arizona come from individuals rather than banks. It’s important to learn the benefits and pitfalls to know if this type of lending is right for you.

1. You’ll probably be looking for a hard money lender. Although Commercial private loans in Arizona can come from virtually any non-institutional source, such as friends, family, acquaintances, and professional connections, chances are these people aren’t breaking down your door to hand you cash. Hard money lending is different in that these investors are actively seeking deals to fund, though you’ll probably have to connect with a broker to find the right one for your needs.

2. Most specialize in real estate. Although you can borrow from an individual under a variety of circumstances, most who work in the commercial sector serve the real estate industry. In these cases, the property being purchased backs the deal. However, businesses can use their buildings and property to secure funding for other ventures too.

3. You’ll need to have some of your own cash to get the deal off the ground. Lenders focus on loan-to-value, shortened to LTV. To get the LTV, you’ll take the amount you want to borrow and divide it by the value of the property. For example, if you have a commercial building you want to leverage or are purchasing a home to flip, its value is $100,000, and you want to borrow $80,000, your LTV is 80%. This is actually a good place to be, but some won’t go higher than 60 LTV and others will provide well-qualified borrowers with solid plans 90 LTV. Either way, you’ll have to have some of your own cash to get started.

Your Eligibility Does Not Rest on a Credit Score

One of the great things about leveraging Commercial private loans in Arizona is that your credit doesn’t always matter. While each potential lender has his or her own requirements, and some do care about credit, you’ll see less of this in the hard money sector. That’s because the value of the property backs your loan. With traditional lending options, the person giving you cash is betting on you and looks at your history to see if you’re the type of person who’s likely to make good on a loan. Obviously, individuals care about this too, but they use different logic. If you’ve got a good deal that’s going to make you money and you’ve put some of your own cash into it, you’re going to stick with it. In the even that you don’t, they’re still protected because the property has value.

If you can prove you’ve got a successful plan, you’re likely to get funded.

When it comes to commercial private loans, a lot of the approval process has to do with examining the plans you’ve made and ensuring the numbers add up and offer a solid profit margin. Particularly when you work on the hard money side, you’ll also need to ensure you can pay off the balance when it comes due. They’re short-term options, so most pay them off by selling the property or refinancing at the end of the term. Lastly, you’ll want to work with a broker who can help ensure you’re matched with the right individual and best possible terms. That way, you’ll keep more money in your business and will have a smoother process overall.

How to Know if Bad Credit Commercial Mortgage Lenders are the Real Deal

We’ve all seen the ads for Arizona bad credit commercial mortgage lenders and some of the deals look great. As the saying goes, though “all that glitters is not gold,” so it’s important to find out what a financing company is bringing to the table before you sign up,

Arizona bad credit commercial mortgage lenders usually all work on the same premise. It’s hard, if not impossible, to get a loan if you’ve got rotten credit or haven’t had a chance to establish credit yet. Sure, some will let you use your personal score instead of your business score to try to qualify, but that doesn’t necessarily help. After all, data from CNBC concludes that the median score for an approval right now is 759, which is an “excellent” FICO score. Meanwhile, the average person has an average FICO score of 704. About 75% of the loans are going to people who have a score over 700, which means most of us—even those of us who have been diligent for years—are not going to qualify. So, there’s certainly a great need for alternatives.

However, each lender approaches providing this underserved market with funding a little bit differently, and knowing the nuances of the trade can help you identify whether a lender is really going to help you or if they’re full of smoke and mirrors or plan to charge you an arm and a leg for their services.

For example, entities which say they’ll lend to everyone or have an unusually high approval rate often have a trick up their sleeve. No lender can fund every deal—they’d lose money hand over fist. Some deals are simply bad ideas. In that case, the company may be trying to give you a false sense of security to encourage you to apply or are outright lying to get you in the door, neither of which is a good sign.

Work with Someone Who Knows How to Evaluate Your Deal

The second trick Arizona bad credit commercial mortgage lenders use to get you in the door is a one-size-fits-all approach. They fund all sorts of deals and aren’t particularly knowledgeable in the areas they serve. For example, if you do fix-and-flips, you want a local who knows the industry establishing your terms. If you’re planning to start a grow operation, you want someone who can accurately evaluate your business plan to see if it’s viable and will yield returns. If the person funding your project has no experience in your specialty, they can’t accurately assess what you’re bringing to the table. Worst case scenario, they’re getting behind you on a plan that will go bust; best case, they may not offer you the best possible terms because they erroneously assume your deal is riskier than it really is.

Beware of companies with a high number of complaints.

It probably goes without saying, but it’s important to check into the reputation of Arizona bad credit commercial mortgage lenders before you jump in. You want to choose someone who has been in business for years—a company that’s too new could be green or may have changed names to escape a bad reputation. A company that’s been around for an extended period of time, on the other hand, will probably have a few bad reviews simply because they’ve worked with the general public a lot, but should have overall good sentiments. This provides extra assurance that you’ll have a good experience too.