Learn To Be A Fix & Flip Investor

Monday, October 14, 2019

Securing Your First Loans To Flip Houses in Arizona

Becoming a real estate investor by flipping houses is a great way to start a new career. But you will need to understand some of your options to get your first Loans To Flip Houses in Arizona.

Entering the real estate industry is a great way to grow your personal wealth, be your own boss and have the opportunity for almost unlimited income if you are willing to work hard enough. But what stops many people is the challenge of securing the first few Loans To Flip Houses in Arizona. The old saying that you need money to make money could not be more true than in the flipping business. Getting the first few projects completed at a profit is what allows you to continue to make more purchases and more profit.

One method used by many homeowners who are interested in flipping is called cash-out refinancing. This process basically allows homeowners to use the equity in their personal home to finance their first flip. You will be refinancing your current home for a new mortgage which is greater than the amount that you currently owe on the home. Then you have the excess cash to uses to make the down payment on your flip property as well as any repairs or renovations that you are going to make.

Cash-out refinance Loans To Flip Houses in Arizona will require that you have a minimum credit score of around 650 and that your debt to income ratio is below 45%. It is also recommended that you have 30% to 40% equity in your home. If you meet these qualifications then you are certain to be able to get a much better interest rate on your refinance than you would be paying if you were to use a credit card or some type of personal loan to finance your first flip.

Added Costs

Because these Loans To Flip Houses in Arizona are a mortgage refinance, you will be paying some additional fees that you would not be facing if you were to use a personal loan or credit card. In most cases, you will be required to pay closing costs of anywhere from 3% to 6%. In addition, you could end up with a higher interest rate on the refinance than you had on your original mortgage so that could cost you more over the life of the loan.

Compare Total Cost

In the end, you are looking for the most affordable financing that you can find to begin your flipping business. So most new flippers will explore all of their options and compare the total cost of each lender and type of loan. Options such as Arizona Hard Money Loans and home equity loans or a home equity line of credit might be a better option for you, but you will only know once you have completed an exhaustive search of all of your options and then compared the total cost of each option. Getting the lowest cost on your first few loans could be the difference between making no profit and leaving the business or making a solid profit on each flip and growing your business.

Dennis Dahlber Broker Ri CEO Level 4 Funding LLC

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.

Sunday, October 13, 2019

Requirements For Arizona Hard Money Loans

Arizona Hard Money Loans are not the same as traditional bank loans. And because of that, the requirements for these loans are also quite different.

Arizona Hard Money Loans differ from traditional bank and mortgage company loans in many ways, so it only makes sense that the requirements for these loans would also focus on different criteria. But for many borrowers, it is the different qualifications that make hard money so appealing.

Borrowers who have no credit will have a very difficult time getting a loan from a traditional bank because the approval process is based on the applicant’s credit score. The bank feels that without a credit history and a strong credit score, the borrower represents too much of a risk and the bank will decline the loan application. But Arizona Hard Money Loans are asset-based, meaning that they are based on the value of the property being purchased more so than the borrower’s personal credit history. So a person with no credit history can still qualify for hard money.

Likewise, a person who has bad credit is also going to be denied by a bank or a mortgage company with applying for a loan. In some ways, having bad credit is worse than having no credit at all. But a hard money lender is normally willing to lend to a person who as a 550 credit score or better. What the hard money lender is looking for is proof that you have an income so that you can repay the loan that you are requesting.

Fix and Flips

If the borrower is going to use the hard money for a fix and flip project, the lender could also be interested in the experience level of the borrower. Fix and flip projects can be tricky and therefore represent a higher risk to the lender. Each lender is free to set his or her own requirements but most will want to see the records of a few successful projects before they are willing to loan hard money for fix and flip projects. There is an added risk with any property undergoing renovations as until the project is completed, the property value could actually drop and no longer be worth as much as the balance on the loan.

Down Payments

Because the loans are based on the value of the property being used as collateral, the lender wants to be assured that the property will always be worth more than the balance of the loan. This ensures that if the borrower defaults on the loan, then the lender can take possession of the property and sell it to recover his or her investment. For this to work in the lender’s favor, the borrower must often make a large down payment on the property. In some cases, the lender will require as much as 25% down to be certain that the property holds instant equity. Understanding the requirements of Arizona Hard Money Loans also helps to explain some of the benefits and drawbacks and how the loans can be best used.

Saturday, October 12, 2019

Rental Property Loans in Arizona for the Young Adult

Being young does not always mean that you are living day to day. Learning about Rental Property Loans in Arizona could change your life.

Many finance experts say that your first major real estate purchase should be a rental property. As a younger person, that might seem like a crazy thought. But in reality, it’s not a bad idea. You are young, you have very few bills and you are not accustomed to a large home with all of the creature comforts that you will have acquired in a decade or so. So why not keep living small for a few years and begin to grow your wealth?

You definitely need a place to live, but what if you could live in a portion of the property? Rental Property Loans in Arizona for multi-tenant homes is a great way to live affordably and let your tenant pay your mortgage. Rather than live in the spacious three bedroom main level of the home, you could live in the one bedroom apartment over the garage or in the lower level while a family pays all but a small piece of your mortgage. And all the while, you are building equity in the property. In a few years, with a great deal of your mortgage paid by tenants, you could move into the larger unit or even buy a home for yourself and begin to rent out the one bedroom as well.

Your first question is how to get financed for Rental Property Loans in Arizona if you are a younger person? The answer is as simple as two words. The secret is the down payment. If you can pay 25% or even 30% down on a property, then you will be able to get financed as long as you have a good credit rating and a steady job. The lender will see instant equity in the deal and know that the property represents solid collateral for the loan.

Getting The Down Payment

Most young investors don’t have 50k or 60k sitting in a savings account to make the down payment on a $200,000 rental property. But there are several ways to get the money if you are dedicated to your plan and want to have a tenant paying your mortgage. The most obvious method is a second income. This could be a part-time job, a second job or even a side gig that will make you some extra money. The secret is to never touch the money. Just put it away in an account and act like it is not real. In just a year or two, you could save enough to become a property owner and a landlord. Not only will you be saving your second income, but with less free time, you will be saving on entertainment expenses like moves and eating out as well.

Stay Smart

Even after you have saved enough to make the down payment, you could still keep working and saving to begin the process all over again. In the space of a single decade, you could obtain four Rental Property Loans in Arizona and own four properties which are bringing in money each month. And the best part is that you only made the down payment on each property and then a tenant paid the rest of the mortgage for you. By the age of 35, you could be well on your way to owning multiple rental properties which are over getting close to being paid off.

Friday, October 11, 2019

Red Flags on Arizona Hard Money Loans

Not all Arizona Hard Money Loans are the same. You need to be aware of a few red flags that can indicate that the loan or the lender is less legitimate.

Arizona Hard Money Loans are considered non-traditional loans only because they are funded by a private lender. There is no other reason for the term and it does not indicate anything about the legitimacy of the loan or the lender who is offering the loan. But many borrowers are unfamiliar with Arizona Hard Money Loans and because of their ignorance, they believe that these loans are in some way shady or less than desirable or legitimate. But it is also important to note that as with any industry, hard money has a few bad apples in the bunch. Knowing the red flags to look out for can save you the time and frustration of dealing with one of the few but bad lenders.

Not being forthcoming where documentation is concerned is never a good sign in any business. If a lender refuses to provide you with a complete set of loan documents to have them reviewed by a legal professional, then you should be concerned. Even though you are working with a private lender and not a traditional bank or mortgage company, the loan agreement is a legally binding document. And as such, you should have the right to have it reviewed prior to signing it. If the lender will not provide a set of documents then there is likely something less than legitimate in the documents and you should find a new lender.

A lesser red flag but one which should still get some attention is a less than helpful or responsive lender. If no one returns your calls or emails requesting information, then you should expect the same treatment after you sign the contract. This can mean that you could face slow funding or have no way to get a response on an issue or concern during the life of the loan. This poor customer service is all that you should expect if you continue to deal with an unresponsive lender.

Failure To Disclose

The terms of Arizona Hard Money Loans can vary a great deal because the lender is a private entity and not a traditional lender. For this reason, it is critical that you request a complete list of all fees and charges that you will incur for using the lender’s money. If the lender is not willing to provide this information in writing then you need to seek a new lender. It is very likely that the lender will charge you hidden fees which will greatly increase your costs and his or her profit.

Follow Your Instinct

Most importantly, you need to follow your instinct as you begin to deal with any lender. If you feel unusually pressured to sign or to sign a contract very quickly, then there could be hidden fees that the lender is trying to slip past you. If you feel unappreciated, and that the lender in inattentive, then seek a better lender with a higher level of service. Finding the right lender is critical to every flipper and ever purchase.

Thursday, October 10, 2019

Non-traditional Loans to Flip Houses in Arizona

Flipping houses is a unique business and it requires some specific services. Loans To Flip Houses in Arizona offer investors the speed and short-term needed to turn a great profit.

Flipping houses is a process that has become very popular in the last decade. But this newer type of real estate investment deal needs a rather unique type of financing as compared to the traditional mortgages that most homeowners use. Loans To Flip Houses in Arizona need to meet the time frame and other terms that flippers rely on to make their deal profitable. So most flippers elect to use non-traditional finance options.

Hard Money Loans To Flip Houses in Arizona are short-term loans which are funded based on the value of the property and not the creditworthiness of the borrower. These privately funded loans are often called asset-based loans because the property being purchased is the collateral for the loan. Borrowers like that these loans can be approved quickly and that the funding is also much faster than a bank or mortgage company. But all of this convenience comes at a higher interest rate than a traditional loan.

Cash out refinance loans are another option that is available to homeowners who have equity in their personal residence. Most lenders require about 30% to 40% equity in the home and a credit score of about 650. The interest rates are fairly reasonable at up to about 6% but you will need to pay closing cost which will increase your total cost on the loan. In addition, the time frame can be as long as 45 days to get the refi completed and the cash in your hands.

Save The Fees

Another option that many homeowners choose is a home equity line of credit. The beauty of this option is that you can have the application and approval process completed long before you are ready to purchase a property, which allows you to make a fast offer and know that the money is in place to close the deal. In addition, there are no closing fees associated with a line of credit. It is open but costs you nothing until you decide to use the money. Then you begin to pay the interest once you use the money. An added benefit is that the interest you are paying on the HELOC could be tax deductible which will save you even more money in the long run.

Picking The Best Loans To Flip Houses in Arizona

Having many options is always good but it is especially important when you are flipping houses. The most critical factor in a flip is staying on budget to turn a profit. So acquiring a loan affordably allows you to invest more in the renovations to increase your earning potential. A smart flipper will always compare the total cost of all potential loans before selecting the best lender and the best overall loan cost for each deal. Knowing your options, how each loan works and how much it will cost are all factors that will have a huge impact on your success and profitability.

Wednesday, October 9, 2019

How Your Credit Score Impacts Arizona Hard Money Loans

It is important that borrowers understand how a low credit score can impact Arizona Hard Money Loans. But it is also important to know that it does not eliminate the potential for a loan.

The Internet is full of stories about borrowers who managed to get Arizona Hard Money Loans without having good credit. And the fact is that there are lenders who will make loans to borrowers with a credit score in the low 500’s. But it is also important that borrowers understand that even though the loan approval is not based solely on your creditworthiness, your credit score will have some impact on what you pay to use the lender’s money.

Arizona Hard Money Loans are also called asset-based loans because the loan is approved and funded based on the value of the property being purchased. This property becomes the collateral and is the lender’s security in the event that the borrower defaults on the loan. But the lender is more interested in having the borrower repay the money and the interest than having to go to the trouble of foreclosing on a property and selling it to recover his or her funds.

The best way for a hard money lender to be certain that the borrower will repay a loan is to look at the borrower’s credit score and credit history. A high credit score means that this borrower is very likely to repay the loan with no issues which decrease the lenders level of risk. But a person with poor credit is less likely to repay the loan which means the lender is facing a greater risk. Many hard money lenders are willing to accept that higher risk that comes with a low credit score but in return, the lender is going to charge a higher interest rate.

Low Credit Will Cost You

A credit score below 600 will still get you a hard money loan, but you can expect to pay as much as 20% interest on the money being borrowed. In addition, the lender might not be willing to loan you as much money as he or she would a person with a higher credit score. And you might even pay additional fees for the increased risk the lender is assuming. As a private lender, the fee structure and interest rate are up to the lender and are not regulated in the same manner as a traditional lender.

Arizona Hard Money Loans Are An Option

As a borrower with bad credit, there are not as many traditional loan options available to you. And even with a score in the low 500’s, hard money is still available but at a higher cost. The most important facet for any borrower is to evaluate the total cost of all loan options that are available and select the one which offers the best overall cost and terms. Using hard money could be costly but if it is the only option, it will allow you to begin to rebuild your credit and your assets.