Learn To Be A Fix & Flip Investor

Thursday, April 26, 2018

Which type of Hard money loan is right for you?

The "hard "asset being financed secures a typical hard money loan. But there are different types of asset-based loans, so how can you figure out which one is right for given your specific circumstances?

Asset- based lenders consider the value of the property which secures the loan rather than a borrowers credit score, so this type of loan can be more accessible for some borrowers.

The application process is easier than a traditional bank loan as borrowers don't need to provide extensive financial documentation in most cases.

Typical types of asset-based loans include commercial, renovation and cash-out refinance loans. Businesses rather than individuals take out commercial loans.This type of loan is short term, and it is not typically used to purchase real estate or to make long-term investments. Instead commercial loans should be used to cover short-term costs like equipment or inventory.

Borrowers use renovation loans to improve a property and then resell it for a profit. Refinance loans allow borrowers to quickly purchase a property and then later refinance to a traditional mortgage.

So what are some specific situations and how do they relate to these particular types of asset-based loans?

Evaluate your situation to determine which type of hard money loan is right for you

An asset-based loan could be a good solution if your business has sufficient collateral and you cant secure financing from a regular bank. If you want to renovate a distressed property, an asset-based lender is your best bet. Few banks are willing to issue renovation loans because raising the required capital is made difficult by government regulations. Traditional lenders also deem such projects too risky because there is a high risk of default if the borrower's project doesn't go according to plan.

A cash-out refinance loan can be ideal if you want to purchase an investment property quickly. A traditional mortgage can take several months to close. A cash-out refinance loan allows you to make the initial purchase while giving you the option to refinance to a long-term mortgage at a later date.

Whatever circumstances asset-based loans provide you with flexibility, but any lender you approach should be transparent and willing to offer advice.

Beware of hard money lenders that cant offer you specific advice about which loan is right for you

There are other types of asset-based loans of course, but a good lender will carefully consider your situation to find the option that can best meet your needs. You should look elsewhere if a lender isn't transparent or is unable to give you insight into your specific situation.

A commercial loan can be great for businesses owners with a lot of collateral, but who are ineligible for regular financing. A renovation loan can allows you to improve and resell a distressed property, and a cash out-refinance loan allows you to complete time-sensitive transactions. In short, asset-based loans are easier to qualify for, can be used to make speculative investments and can close quickly to complete time-sensitive purchases. Carefully consider your specific situation to find the type of loan to meet your financing needs.

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

Top Situations where a hard money loan is best

A hard money loan is any loan secured by a "hard" asset (i.e., An Asset-based loan). This type of loan can be your best option especially if you need financing to construct a new facility, to renovate a distressed property or if you need to make a purchase quickly.

Asset-based loans are typically short-term loans and are more expensive than traditional financing. Because of this higher expense, it is easy to ask, who would want this type of funding in the first place?

An asset-based loan is especially useful for real-estate investors who are speculating on a quick turn around when it comes to their project. Traditional lenders avoid relying on this kind of speculation.An obvious example is a fix-and-flip project, banks avoid financing these projects because there is no guarantee of a profit and the borrower could default in the end. Traditional banks are also wary of construction loans because they have to rely on the borrowers assumptions and success isn't guaranteed.

A hard money loan can be the help you need if you need to fund a renovation or construction project

There are other reasons to consider asset-based lenders for renovation or construction projects. Typically a bank raises funds for a mortgage by reselling it to a government agency like Fannie Mae or Freddie Mac. Banks won't be able to resell any mortgage on a distressed property that falls short of FHA guidelines.Therefore a typical bank will likely deny your application if you are trying to renovate a distressed property. Asset-based lenders raise their funds from private investors and have money on hand, allowing them to see past the poor condition of any property you intend to rehabilitate.

The situation can become complicated if you finance your construction loan with an ordinary lender. Banks disperse construction loans according to a specific timetable and specific benchmarks. The lender could withhold funding if your projecting doesn't go according to plan. This scenario could be a disaster and could leave you unable to pay your contractors or to continue your project. The regulations that stifle traditional banks don't hamstring asset-based lenders so you can get increased flexibility when it comes the terms of a construction loan.

However, asset-based lenders outshine traditional banks when it comes to time-sensitive purchases.

When it comes to time-sensitive purchases, a hard money loan can be a win-win solution

A typical bank loan usually closes within 120 days, and the best investment properties don't stay on the market for long. Even the most qualified borrower won't see their application go through any faster because banks have to comply with their own guidelines and with government regulations.

Asset-based loans can close within a matter of days allowing you to complete a time-sensitive purchase. An asset-based loan gives you the flexibility to then refinance to a long-term mortgage, or to sell the property for a profit.

In short asset-based lenders are ideal for borrowers who know the potential of their project, who need flexibility or who need cash quickly to make the most of a potential investment.

Monday, April 23, 2018

Why you shouldn't just rely on appraisals when it comes to hard money

A traditional appraisal is usually the most crucial estimate of a properties value with a conventional mortgage. The situation can be more nuanced when it comes to hard money loans. There are additional factors that fall outside of the scope of an ordinary appraisal, and the amount of financing offered will depend on the valuation of your property. By having your an understanding of what a property might be worth you maximize your chances of qualifying for a more substantial loan.

The standard appraisal is a report given by a licensed professional and usually ranges between 5-70 pages in length. The report will detail information the appraiser used to justify their opinion about a properties market value. A more informal valuation is a broker price opinion, or BPO, which is much shorter than a detailed appraisal and is usually no more than 2-5 pages in length. The value of a BPO depends entirely on the individual broker. Another option is to commission a review of your initial appraisal by yet another appraiser to get a different perspective.

So why can't you solely rely on appraisals or other professional estimates? Appraising a property takes time and in some cases considerable resources. You also need to be aware of things that may fall outside the scope of a typical valuation if you want to qualify for a larger loan, especially when it comes to commercial properties.

When it comes to hard money loans, you benefit by going above and beyond the initial appraisal, especially when it comes to commercial real estate valuations

Having an understanding of what is property is worth is especially useful if you are dealing with commercial property.Know that anything that positively or negatively impacts a commercial properties ability to generate income will have a significant impact on its value.An ordinary appraiser might overlook the impact of a floor plan, the availability of parking or a properties accessibility in their estimate. The usual appraisal might also disregard the potential expense involved in bringing a property up to code or the cost of complying with environmental regulations.

It is vital to perform your own due diligence to see things an appraisal might have missed and to plan for any unforeseen expenses.With asset-based loans, the loan amount depends in most cases on the value of the underlying property. Having a thorough understanding of how your property is valued can help you qualify for a larger loan.

When it comes to hard money loans, always consider the future potential of your project to qualify for the largest loan

In all likelihood, an appraiser will underestimate a properties potential especially if you are renovating a distressed property. An appraiser will never attempt to estimate a properties value in the future, based on your renovations or pricing trends in the immediate area. Projecting the market value of a property is simply beyond the scope of an ordinary appraisal

It is up to you to perform own assessment when it comes to pricing trends in the immediate area, vacancy or occupancy rates, or any potential zoning changes in the future. Any of these factors could cause a property to rise or fall In value in the near future.

Entirely relying on an appraisal could blind you to a project's potential. Do your research and develop your understanding of specific things that could impact the value of your property in the future. You can thoughtfully discuss the potential of your project by performing your own due diligence, allowing you to qualify for the largest possible asset-based loan.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Saturday, April 21, 2018

Why you might consider a Hard Money Business Loan

If you are having trouble qualifying for traditional financing, a hard money business loan can be a great alternative to a conventional bank loan. With this loan you borrow against assets owned by your business, allowing you to qualify even if you have poor credit.

When it comes to businesses that apply for this type financing the value of their commercial property acts as collateral for the loan. The value of this underlying property is a more critical factor for this type of lender than a borrowers credit score. Those with low credit but with a lot in the way of collateral may find an asset-based loan a good financing strategy.

However, a Business owner will need to consider whether the expense of a loan matches their need for financing. Any type of alternative loan will almost always be more expensive than a traditional business loan.

Before applying for a hard money business loan, consider your need for financing and whether your need is proportional to any assets you might pledge as collateral.

With asset-based loans consider whether your need for financing matches the risk of losing any property you might pledge to back the loan. With this type of business loan there is the potential that the lender could seize your business or other personal property should you default.

However also consider the main advantages of asset-based loans. Because credit is a non-factor, they are easier to qualify for, less documentation is needed and these loans can close within a matter of days. These advantages may outweigh risks depending on your circumstances.

Why should you consider a hard money business loan over other types of alternative financing?

The interest charged on a typical asset based loan is usually 10-15 percent. The higher interest rate on this type of loan is due to the risk assumed by the lender by forgoing the usual credit checks. However, asset-based loans are still less expensive than other types of alternative financing.

You may have considered other alternative financing options which could be far more expensive than an asset-based loan. One example of alternative financing are merchant cash advances, which are loans backed by a percentage of your businesses future sales. Cash advances can consistently eat away at revenue stream, and APR can reach into the triple digits. Some methods of alternative financing may be less expensive, but could take much longer to close. For example, peer-to-peer platforms are one such type of alternative financing. While these loans may be less expensive than an asset based loan there is no guarantee that your loan will ever be fully funded. Asset based loans are less expensive than cash advances and are fully capitalized once your application is approved.

Always perform your due diligence to ensure any potential asset lender is trustworthy. Read online reviews of any potential lender to gauge the lender's honesty and the experience of their borrowers.

Asset based loans can be cheaper and can close faster than other types of alternative loans, making them a great option are you struggling to qualify for traditional financing or if your business needs cash quickly.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Friday, April 20, 2018

Tactics to secure a larger hard money loan: help your lender look past the LTV

You may already know that a hard money loan is a loan which is backed by a "hard" asset. The amount of financing you receive is usually a set percentage of the value of that asset, or LTV. Learn some strategies to help your lender look past the LTV in order to qualify for the most financing possible.

Giving loans at the lowest possible LTV is the primary way asset-based lenders protect themselves. A higher LTV means a borrower has less at stake in the event of default, and asset-based loans rarely exceed 75 percent in LTV. What if you need a larger loan which exceeds the standard 75 LTV benchmark? While LTV may be the most critical factor a lender will consider, there are other factors also taken into consideration, which can give you leverage to negotiate a larger loan.

Say you need a 760,000 dollar loan to finance the purchase of a million dollar property , in this case the LTV would be 76 percent. While the LTV on this loan is high, in this instance you would have 240,000 in equity invested which may be an amount significant enough to help your lender look past the LTV. You should also consider any other property you own, which could be used to back the loan ( a practice known as cross-collateralization).

If your home is worth 250,000 and you use it as collateral to secure the loan, in effect you have 490,000 of your own money backing the loan. These are just two specific instances were any reasonable lender could look past the LTV, but you should also take steps to demonstrate your strength as a borrower.

If you can, build your hard money lenders confidence in your strength as a borrower

Any reasonable lender will also consider your strength as a borrower and not just the LTV. Even though private lenders have a less traditional approach, the three C's of credit, capacity, and collateral still apply. Credit refers to your history of paying your debts on time. A reasonable lender might look past the LTV if you have a solid credit history. Capacity simply refers to your ability to service your debt on a monthly basis, so if you have a good steady income, you may qualify for a larger loan. LTV may be the most important factor when it comes to asset-based loans, but it is just only one factor a lender might consider. Evaluate your financial situation and demonstrate your strength as a borrower.

If you can thoughtfully consider your situation, you can increase your eligibility for a larger hard money loan

First consider the dollar value in terms of equity you have invested, knowing this number you can demonstrate to a lender exactly how much you have at stake. Take into account any other collateral you might have to back the loan and build your lenders faith in your strength as a borrower. Using any one of these strategies might help your lender look past the LTV which could help you qualify for a larger loan.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Tuesday, April 17, 2018

Tactics to secure a larger hard money loan: estimate the ARV

A hard money loan (i.e.,an asset-based loan) is any loan secured by the value of an underlying asset. Most of these lenders will only give loans of up to 65 percent of an assets market value.

But what if you intend to renovate a distressed property which is significantly undervalued at the time purchase? To secure more in the way of financing you need to understand what your property worth is after you’ve repaired it (the after repair value, or ARV).

Asset-based lenders could offer more financing if you can demonstrate the potential of a project. However, to explain a project's potential you need to understand property valuations. Relying solely on appraisals will limit your understanding and wont serve you in the long run as a real-estate investor. Professional assessments are also expensive and time-consuming.

Your best bet is to develop your sense of what a property is worth by comparing your estimates with that of a licensed appraiser. Educating yourself this way will develop your understanding of property valuations. An excellent way to start training yourself when it comes to property values is to use the comparable sales method.

You can begin to estimate the ARV yourself by utilizing the comparable sales method, which could help you qualify for a larger hard money loan.

The first step is to assess your subject property, look at its location, what is the neighborhood like and what impact does this have on the properties value? Figure out the lot size and determine the condition of the exterior. Find out essential details about the property, its size in square feet and its amenities (i.e., Number of bedrooms and bathrooms).

Find 5 to 10 properties similar to your subject through local listings. Only consider properties that have sold within the last 3-6 months, are in the same location and have a similar size and similar amenities. It is crucial that you don't look at distressed properties. Remember you are trying to determine your properties potential after you have made renovations.

After you have enough comparable properties, consider the ones that are the most similar and find the properties with the highest and lowest selling price to estimate a range of value for your subject property. These numbers will give you a sense of what the property will sell for after you make your repairs. With this understanding, you can thoughtfully discuss the potential of your renovation project with a lender and qualify for the best loan.

You can secure a larger hard money loan if you can explain the potential of your project

Even the most informed estimate of a properties value is only an educated guess. If you rely solely on appraisals, you aren't building your knowledge of property valuations. Using a simple comparable sales method is an easy way to increase your understanding of property valuations and the after repair value of your property. Having this understanding builds your lenders confidence in your project and increases your eligibility for a larger loan.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Sunday, April 15, 2018

HOW TO GET A HARD MONEY LOAN APPROVAL

You have located the property that seems undervalued. Now, how do you get a hard money loan approval to make your first project a reality?

Hard money loans are loans that are generally available from investors as opposed to banks. They are often used to finance real estate transactions, though businesses and those looking for bridge loans also turn to these types of lenders. If your credit score is not strong enough for you to get a loan from a bank, then this is the option for you. These can be used as “bridge” loans between construction and long-term loans. Others turn to hard money loans that they use for rehabbing projects before turning to long-term lenders that want a completed project or a fully leased project.

Some of the questions you should consider are:

1) Does the company you are considering doing business with have a legitimate web site as compared to the web sites that are designed to just gather names and pass it along to a third party.

2) Are there any lawsuits? Any forclosed properties? Are they in good standing with investors?

3) When considering a lender, what is their area of focus? What kind of project have they financed previously?

4) Is there a physical presence for the company, do they have someone you can talk to?

Hard money loans are designed for one to five years. At this time, you will need to refinance the loan or pay it off. Some lenders have the option to extend the loans for a period of time. Interest rates are higher than loans through banks, generally 10% to 20%. Hard money loans fund quickly, usually in as little as one week. This is much shorter when compared to conventional loans which can take up to 30 to 60 days for an approval.

Collateral

The hard money loan is valued at the collateral value of the property not your credit score. Hard money loans are sometimes given to first time home buyers or to home owners that need a bridge loan so that they can buy the house of their dreams without having to wait for their first home to sell. Some hard money lenders fund 60%-70% of the after-repair-value(ARV). This leaves the remaining 30%-40% that you will need to fund. This generally refers to individual properties and not large commercial projects.

The lenders may ask for additional documents such as W-2s and bank statements. Protect yourself legally.

Most hard money lenders are not subject to government regulations. Have an attorney review all documents before you proceed and have an accountant review your projected cash flows. You should have all your documentation in a row such as the schedules and fees for the contractors and when and what they will be doing. Ultimately, you will need to repay the loan which usually occurs in 1 to 5 years. Have an exit strategy and know your lender. Many will consider extending a loan if you are having difficulty coming up with the final balloon payment. At Level 4 Funding, we’ve been in the business of hard money lending for decades and have a solid reputation behind us. Call us if you have any questions or concerns regarding this lending option.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Saturday, April 14, 2018

Why Choose Hard Money Loans?

When borrowers think of private lenders, they often don’t understand the benefits of this lending option. But hard money loans can offer many benefits to the right borrower.

Hard money loans are a very different creature than the traditional bank loans that most people are familiar with. Unlike their stogy counterpart, the terms and conditions to qualify for a hard money loan are quite relaxed in many cases. The biggest factor in landing these types of loans is the value of the real property being used as collateral. Lenders use the loan to value ratio to determine the loan amount they are willing to offer. In most cases the highest a lender is willing to go on LTV is 50% to possibly 75% of the value of the collateral. This insures the lender that the collateral will always hold more value than the outstanding balance on the loan should the borrower default.

Knowing that your loan will only be around two thirds the value of your collateral might seem odd but there are many other factors which work in the borrowers favor to offset that one possible downside. Hard money loans are a viable solution for anyone who needs a loan but does not have the stellar credit that banks or mortgage lenders are going to require. Sure the interest rate is going to be higher than a bank would charge but higher interest is the price you pay to secure a loan with bad credit. It is also a good first step to take to rebuild your credit.

When Time Is Money

Hard money loans are also a very appealing option when time is critical for a business deal. Time really can be money in the business world. And if you have the chance to get in on a great deal but need to do it quickly, then a traditional bank might not be able to fund quickly enough to meet your needs. The solution is a non-traditional loan to land the deal and then the possibility of financing a traditional loan to pay off the first loan, leaving you with a lower interest rate for the long term.

The Package Deal

Traditional loans are typically a one size fits all deal and it is the borrower’s responsibility to find a way to make it work. But a non-traditional, or asset based loan is something that can be tailored to meet the individual needs of each borrower. Private lenders have much more flexibility because they are not forced to follow the state or federal laws which apply to banks and other commercial lenders. For this reason, borrowers are willing to pay a higher rate to enjoy the comfort of a customized loan that offers terms to meet their needs. In addition, there is far less paperwork and red tape to deal with when applying for a private loan. So your stress level and time invested in the process are both much lower. Just as when selecting your home, you pay more for custom features when getting a custom loan but the price can be worth it to enjoy the added benefits.

Commercial Real Estate Loan Rates

Do you have an office building, a rehab, or a multi-unit apartment building? With commercial real estate loan rates at one of their lowest, now may be the right time to consider a loan for your next real estate investment.

If you are an owner or looking to purchase a commercial property, there’s good news to be had: Commercial loan rates remain at an all-time low. With the Federal Reserve promising four rate hikes this year, this may not be so in the future. For this reason, this may be the perfect time for you to purchase or refinance a commercial property. Level 4 Funding has the team that can help guide you through the process and help you feel like a well-informed purchaser. Let’s take a look at how commercial real estate loan rates work and the interest rates the different types of lenders charge.

If your Credit Score is 680, you’ve been in business in 2-plus years, and plan on occupying 51% of the building, you may qualify for a SBA 7 (a) loan. If your project is between $2 and $3 million dollars you may want to explore the opportunities for financing from insurance companies and conduit lenders.

Commercial Real Estate loans have lower interest rates because they are collateralized by the commercial property. There are four factors that affect the interest rates for the Commercial loan. They are:

1) The Business and Customer creditworthiness: Your rate will be determined by the credit score of the customer and business, the higher credit score the lower rate.

2) Is the commercial real estate loan fixed or variable? A fixed rate loan is a loan that has a fixed rate for the term of the loan. The variable rate loan is reset from 1 to 5 years and will be adjusted based on current rates. Most people will not qualify for fixed rates.

3) What is the term and size of the loan? Hard money lenders offer loans with higher rates and shorter terms while conventional lenders offer longer loans with lower rates.

4) Prevailing Market Rates: Interest rates move up and down based on the government bond market. Keep informed about the movement in the government bond market and how they will affect your rate.

The Lender Has the Biggest Impact on your Rate

1) SBA loans--rates run 4.75% to 9.25%, the 504 loans are best for loans over $1, 000,000 and come in three parts: 50% from the bank, 40% from the SBA and 10% from the borrower. You will need a credit score of 680+.

2) Hard Money Loans--Rate run 10% to 18% and covers about 20% of the market. The rates are high because the loan is not based on the credit worthiness of the borrower but the value of the property. The loan-to-value runs around 55% for many hard money lenders.

3) Other Lenders--Only a small amount of loans come from Insurance companies and Conduits.

Commercial loans can be structured in three ways: fully amortized loans, interest rates resets, and balloon payments.

You may want to purchase commercial Real Estate or refinance a commercial property. There are wide varieties available for high credit scores and lower credit scores. Call and counsel with Level 4 Funding to find what works best for you in your situation. We offer rates as low as 7.99 percent.

Thursday, April 12, 2018

Alternative Business Loans Arizona Entrepreneurs Best Option

Exploring alternative business loans, Arizona start up and small business owners could be surprised by their options. There are many reasons that an alternative loan could be your best choice.

Traditionally, when a business owner needs money to fund a startup or to grow a fledgling business, the first stop is their local bank. But there can be many hurdles to overcome when seeking a loan from a traditional lender. Alternative lenders provide business loans Arizona small business owners actually have a chance of securing and that is just one of the many benefits that they offer.

There are two main benefits to working with an alternative lender. The first is that the approval rates are much higher than a traditional lenders and the second is the fast approval and funding time frame. As an independent entity, there is not the mile of red tape to slog through with most alternative resources so borrowers enjoy a much better customer service experience for the most part and a higher success rate.

When alternative lenders offer business loans, Arizona borrowers will discover that the lenders tend to be more flexible on terms as well as qualifications for the loans. Alternative loans are therefore a good option for a business looking to finance inventory or for working capital which is not something that banks will approve. In addition, the alternative lender is not as likely to require that the business owner use personal assets as collateral for the loan. Which offers the borrowers more confidence in the lender and personal security as well.

Personal Credit is Not an Issue

Poor personal credit is often a factor that will derail business loans Arizona business owners are seeking. Banks are not willing to process a business loan without a deep dive into the personal financial status of the company owners and even some of the other major officers of the company. That is not an issue for alternative lenders as they are primarily interested in the merits of the business and not the owner’s personal finances.

Time is On Your Side

Anyone who has applied for any type of loan from a bank knows that the process can be long and arduous. A personal mortgage loan can take weeks to process. But a business loan application can actually drag out for more than three months. By the time a bank is willing to fund a business loan, the need for the money could be gone, the opportunity could be lost and the business could even be floundering. Business deals are often time sensitive, but traditional lenders tend to overlook that fact. Great opportunities to grow a business don’t appear every day, so business owners need to be prepared to act when the opportunity arises. Securing a loan from an alternative lender is a great way for an Arizona business owner to maximize an opportunity to expand, diversify or land a huge client that might otherwise have gotten away.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Tuesday, April 10, 2018

Important Considerations when Choosing a Hard Money Lender

Hard money lenders are many real estate investors choice for funding, yet many just getting into the field know little to nothing about this lending option. Let’s take a look at what this type of lender can bring to the table.

Hard money lenders are not held by the same regulations that banks and credit unions must operate under. Because of this, they can offer loans to individuals and businesses with less than stellar credit. Many are private individuals who specialize in several types of real estate investment strategies from multifamily to office to the fix-and-flip model. These types of loans are asset based, meaning that the lender will look at your collateral as the prominent element of the loan. These types of loans are good for investors just getting in to the real estate investment model.

Another positive to those that operate under less regulation is that they are much quicker to funding. This becomes important when an investor is looking to get into a property, do some quick renovations, raise the property value, and get it on the market or obtain a loan from a traditional lender that is based on the property’s new value. If you end up developing a long-term relation with a hard money lender, you will find that you can often receive the funds you need for that next investment property in as little as a few days, compared to a month or more from other types of lenders.

Be sure to check the small print. Are you working with a hard money lender that offers a no-penalty clause for early payments? A pre-payment penalty states if you pay your loan back in full before the actual due date, a penalty will be assessed. The fee is percentage-based or the amount in interest that you would have paid for a set number of months. This can lead to tens of thousands of dollars. If you have an existing loan with a pre-payment penalty, be sure to assess fees before paying off the loan in full to determine if this is the right strategy for you.

Know Your Exit Strategy

While your property may be acting as collateral, hard money lenders do not want to be in a position of laying claim and having to foreclose on a property due to unpaid debt. For this reason, they will want to know your exit strategy. An exit strategy is how you plan on paying off the debt. Most of these loans are short-term, anywhere from 3 months to five years, making this component an important consideration for both the lender and the borrower. A few options are to refinance with a commercial mortgage, renovate and sell, or pay the debt off with business capital.

Know your exit strategy before considering a hard money lender. Going in with strong collateral and a good exit strategy are keys when considering going after a hard money loan.

At Level 4 Funding, we work with hundreds of private hard money lenders. Our rates start as low as 7.99 percent with terms that run anywhere from 3 months to 5 years. Call us to see if we are the right brokers for your next real estate investment deal.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Saturday, April 7, 2018

The Difference in Hard Money Loans

Many people, before they delve into the world of real estate investments, think of hard money loans as those you obtain only if you have poor credit and are desperate. Those that have been in the business for a while understand that they are an important lender to have in your lending portfolio and that many have different requirements and protocol.

Hard money loans are often obtained from private individuals that specialize in various types of real estate loans. The rates they offer vary dramatically and can range anywhere from 10 percent and 1- or 2-point origination fees, depending on your terms, to 18 percent interest on a short term loan with a 5- percent origination fee. An origination fee is designed to cover the cost of entering into and processing the loan agreement. Some lenders will roll your origination fee into the loan balance while others require payment upfront. Compare loan APRs along with fees in order to determine who is offering you the best loan.

You’ll find underwriting processes, or loan determinations, very different among lenders of hard money loans. For many, creditworthiness and credit scores are not even considered in the approval process. For others, it is an important consideration. When evaluating what you bring to the table, which includes your down payment as well as your collateral, some will only consider the LTV or loan-to-value ratio while others consider the ARV or after-repair-value. If you’re looking for a loan amount based on the after-value, you will need to come to the table with a solid background in your chosen real estate investment as well as budget and expenses that includes contractor fees.

Some hard money lenders specialize in specific types of properties. For instance, you will find hard money loans specifically for fix-and-flip models while others are solely investing in manufactured homes with land. Obviously, it’s important to find out what types of investments they are willing to loan on before wasting any time with a lender that does not specialize in the type of loan that you need. Generally speaking, most will not lend on an owner-occupied residential property thanks to Dodd-Frank regulations.

The Main Reason Real Estate Investors Choose Hard Money Loans

One of the main reasons real estate investors choose hard money loans is because they are often quick to fund. Many of these types of lenders will fund in as little as a week or less, in comparison to the month or two that traditional lenders take due to underwriting processes and extended time to funding. If an investor finds themselves in a bidding war, having cash on hand can often mean the difference between starting their next renovation or still searching for that ideal property.

At Level 4 funding, we provide funding for all types of real estate investments including multifamily, construction, business and office.

We offer loans with no prepayment penalties and with terms that can be extended. Our popular construction loans start at 9.5 percent APR with 24-month terms and convenient monthly draws. Call us for a no-obligation quote.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Wednesday, April 4, 2018

Real Estate Values Are Continuing to Climb Up to Record Levels Again! You’re Making Moola Again!

Technorati Tags: Private Hard Money lender,fix and flip,hard money lender

With a booming economy and a strong GDP coupled with low
interest rates, home values in the South West are marching to
new record highs. Southern California home values are approaching
the boom prices that last occurred in 2006. Many home owners
are selling their homes within days, and the demand is continuing.
Some home owners are receiving multiple offers and builders are
experiencing very strong demand. Although the demand is not as
it was in 2006, with home builders using a lottery system to pick the
buyers and buyers camping at the sales office for days, there has
been a steady increase in demand.

Las Vegas had the biggest dramatic swing in prices. From the
peak in 2006 to the bottom in 2002 sellers were getting out of their
homes by the 1,000’s. However, over the past 5 years prices have
increased an average of 14%/year with the last 12 month's average around 12%.
San Francisco is the hottest market with prices rising like a rocket and demand
is at a very hot pace.

Over the past 5 years San Francisco price increased a
whopping 15%/year. However the past 12 months have slowed
a little with an appreciation of 10%.

(For a PDF of this Graph Click Here)

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC

Learn To Be A Fix & Flip Investor

Featured Post

The Big Show is Coming to Town.

Thursday, April 26, 2018

Which type of Hard money loan is right for you?

The "hard "asset being financed secures a typical hard money loan. But there are different types of asset-based loans, so how can you figure out which one is right for given your specific circumstances?

Top Situations where a hard money loan is best

A hard money loan is any loan secured by a "hard" asset (i.e., An Asset-based loan). This type of loan can be your best option especially if you need financing to construct a new facility, to renovate a distressed property or if you need to make a purchase quickly.

Monday, April 23, 2018

Why you shouldn't just rely on appraisals when it comes to hard money

Saturday, April 21, 2018

Why you might consider a Hard Money Business Loan

If you are having trouble qualifying for traditional financing, a hard money business loan can be a great alternative to a conventional bank loan. With this loan you borrow against assets owned by your business, allowing you to qualify even if you have poor credit.

Friday, April 20, 2018

Tactics to secure a larger hard money loan: help your lender look past the LTV

Tuesday, April 17, 2018

Tactics to secure a larger hard money loan: estimate the ARV

Sunday, April 15, 2018

HOW TO GET A HARD MONEY LOAN APPROVAL

You have located the property that seems undervalued. Now, how do you get a hard money loan approval to make your first project a reality?

Saturday, April 14, 2018

Why Choose Hard Money Loans?

When borrowers think of private lenders, they often don’t understand the benefits of this lending option. But hard money loans can offer many benefits to the right borrower.

When Time Is Money

The Package Deal

Commercial Real Estate Loan Rates

Thursday, April 12, 2018

Alternative Business Loans Arizona Entrepreneurs Best Option

Exploring alternative business loans, Arizona start up and small business owners could be surprised by their options. There are many reasons that an alternative loan could be your best choice.

Personal Credit is Not an Issue

Time is On Your Side

Tuesday, April 10, 2018

Important Considerations when Choosing a Hard Money Lender

Saturday, April 7, 2018

The Difference in Hard Money Loans

Wednesday, April 4, 2018

Real Estate Values Are Continuing to Climb Up to Record Levels Again! You’re Making Moola Again!

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