Learn To Be A Fix & Flip Investor

Monday, April 29, 2019

What's the Difference Between Hard Money and Conventional Construction Loans?

Just like the real estate business, the lending business has changed a lot over the last several years, but one thing is always constant: investors need funding for their construction projects. So which route should you go: conventional bank loans or Colorado Hard Money Construction Loans? Let's look at which one is best for you.

Here's what you need to consider when you're looking at a traditional or a Colorado Hard Money Loan for a construction project:

How fast do you need your money? When you're building, sticking to the budget and schedule are two of the most important elements to success. With a bank or credit union loan, you might wait over 30 days to get your funds, and that's not including the application ordeal (which we all know can be a nightmare). The application process for Colorado Hard Money Loans takes 1-2 days and the funds can be in your account in a week or two.
What do you qualify for? Banks don't want to take on much risk, especially after the new restrictions that were put in place after the recession. Plus, they have complicated underwriting processes, so they put institution requirements in place for borrowers to qualify. They want you to have a certain credit score, they want you to have a healthy cash flow, and they want you to have a nearly spotless history. Colorado Hard Money Construction Loans come from private sources and are secured with collateral, so lenders aren't as worried about your credit score and financial history.
What loan structure do you want? With banks, loans are a one-size-fits-all affair. With hard money, lenders can tailor the loan to fit your needs, both in terms of collateral release and repayment terms.

Which Type of Loan is Right for You?

The answer depends on a range of factors. If you've been told no by the banks, a Colorado Hard Money Loan might just be the way to get your project the funds it needs to get off the ground. If you have the time to wait and don't mind the less flexible loan terms, the bank may be a better option. Ultimately, the right loan will depend on your priorities. Weigh the pros and cons carefully.

Hard Money Construction Loans in Colorado

If you feel like a Colorado Hard Money Construction Loan is the right move for you (or if you want to find out more), give us a call today! We offer loan values up to 90 percent LTV, 24 months interest only and rates from 9.5 percent.

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

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

Understanding How To Make Arizona Hard Money Loans Work For You

Borrowers need to understand how Arizona Hard Money Loans work to take full advantage of their benefit. Used correctly these loans can provide a huge ROI.

Arizona Hard Money Loans are simply another name for asset-based loans. What this means for borrowers is that the loan approval is based on the value of the property being used as collateral and not so much on the creditworthiness of the borrower. In addition, these loans are not funded by a traditional bank. Instead, they are offered by private lenders who are in business to make money from the interest on the loans that they make. And being that these loans are from private lenders, the terms, while normally shorter in term, can be much more flexible than a loan from a traditional bank.

Asset-based loans can be used to purchase just about any type of property including single-family and multi-family residential, commercial, land or even industrial property. It can be important to know what types of loans a given hard money lender specializes in, or if he or she will fund any type of property loan. The only stipulation is that Arizona Hard Money Lenders will not fund a loan for an owner-occupied property because of the additional rules and regulations on those types of loans.

Because these loans cannot be used for owner-occupied properties, these loans are normally used by real estate investors. Investors appreciate that hard money will fund much more quickly than a traditional loan and that the lenders are often far more flexible on the terms of the loan. In addition, because the loan approval is based on the collateral value and not the borrower's personal credit or credit history, borrowers can carry many Arizona Hard Money Loans which are not often possible in the case of a traditional lender.

Best Deals For Hard Money

Arizona Hard Money Loans are not the best choice for every deal, but they are tailor-made for some types of deals. The terms and process of funding hard money make them the perfect resource for real estate investors who are interested in fix and flip properties, land or construction loans or when there is a great deal of competition for a property. The fast funding allows the borrower to secure the property and then refinance to a longer-term loan.

The Fine Print

As a rule, hard money is normally a tool used for higher risk loans. And as such, the cost of the loan is a bit higher than a traditional loan. The rates will vary from state to state. Areas with more Arizona Hard Money Lenders will tend to offer more competitive rates as opposed to areas with fewer lenders. Typically, borrowers can expect to pay between 10-15% interest on hard money as well as 2 to 4% of the total loan in points. But for a fast approval process and less strict credit requirements, hard money is a great option for borrowers who understand these loans and know how to use them properly.

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What are Buy and Hold Loans?

Most real estate experts will tell you that Colorado Buy and Hold Loans are a great investment strategy that can transform your portfolio. But what exactly is "buy and hold" and is it a good idea for you?

Buy and hold real estate is pretty straightforward. In fact, it's exactly what the name implies — you buy a property and then hold on to it for a period of time. Most investors choose to rent the property out while they're holding it and then sell it once it's appreciated to a certain point. For the right piece of property, it's a win-win; you get a steady income for a few years, then a nice chunk when it sells. You can then roll that profit into another buy and hold.

To find a workable buy and hold property, you'll want something you can add value to. Turnkey buy and hold properties are few and far between and will usually go really close to asking price. Instead, look for a property that needs some cosmetic work or some basic updates. You don't have to completely rehab it. Usually, a new coat of paint, new floors and sprucing up the kitchen and bathrooms will suffice.

Getting Financing for Buy and Hold Real Estate

Once you've found the perfect property — whether it's a rehab or something that's almost ready to rent — you'll need to secure financing. If you've got nearly perfect credit and the financial past of a saint, you may be able to go through the bank. If not, you'll want to look into other options, like FHA financing, private money, or hard money. In fact, hard money Colorado Buy and Hold Loans are a great way to break into the game because they are flexible and can be tailored to your situation.

Want to hold on to the property for up to four years? That can be done. Need up to 90 percent loan-to-value ratio? That's doable, too. Want to convert into a longer-term loan? Easy as pie. Need to move lightning fast on a hot property? Hard money can be in your account with a couple weeks.

Go with Hard Money for Your Next Buy and Hold

Whether you're ready to take the plunge for your first buy and hold real estate investment or you're an old pro, we've got Colorado Buy and Hold Loans that will work for you. Give us a call today and we can discuss the details!

Sunday, April 28, 2019

5 Reasons To Use Arizona Commercial Hard Money Lenders

Arizona Commercial Hard Money Lenders are not the solution for every borrower. But there are several situations when hard money is a great option.

Traditional loans are generally more cost-effective than hard money, but there are many reasons that borrowers are often eager to work with Arizona Commercial Hard Money Lenders. As you might expect, you get what you pay for in hard money just as you do in most cases. And getting a more customizable loan is often worth paying a little extra for. In addition, borrowers know that their personal credit history will not be an issue as Arizona Hard Money Loans are based on the value of the collateral.

Getting a commercial loan quickly is not going to happen if you are working with a bank or mortgage company. But Arizona Hard Money Loans can process much more quickly because the approval is based on the value of the commercial asset and not the creditworthiness of the borrower. So in many cases, a borrower will gladly pay the higher rates for the faster funding offered by. Arizona Commercial Hard Money Lender

Another reason borrower turn to Arizona Hard Money Lenders is that they have been declined by a traditional lender. This could be due to lack of documentation, the age of the business or even the debt load of the business. You could also have personal credit issues which reflect poorly on your business and have caused a bank to shy away from working with you. In these cases, borrowers have the option to use the commercial property as collateral and are happy to work with a hard money lender.

You Need A Unique Solution

Most traditional lenders are not very creative and will only fund a very specific type of loan. But if you are looking to use multiple properties as collateral or if you need a more creative loan solution, then Arizona Commercial Hard Money Lenders are the way to go. Not only can you be more creative with the collateral for the loan but you can also request specific loan terms such as the repayment schedule or even the term of the loan. Arizona Hard Money Lenders are very familiar with creative loan terms and are willing to work with borrowers when traditional banks are not.

Lack Of Citizenship

There are many businesses in the United States that are owned by foreign nationals. And while this is a great opportunity for the business owner, it makes it very difficult for him or her to secure a loan from a bank or a mortgage company. But working with an experienced hard money lender, borrowers don’t need to worry about not being a U.S. citizen. Again, the lender is interested in the value of the property being used as collateral and not the credit history of the borrower. So, a foreign borrower has very little to do with the approval or denial of a hard money loan. Understanding these five reasons to use commercial hard money can be a great help to any commercial borrower who is struggling to secure a loan from a traditional bank or a mortgage company.

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The Difference Between Banks and Colorado Private Money Lenders

When you're attempting to get funding for a fix-and-flip or a new business property, is it better to go with a bank or a Colorado Private Money Lender? The answer depends on a range of factors, so let's look at some of the pros and cons.

Banks can offer lower interest rates. Why? Two reasons. First, banks have tons of retail customers who deposit their money into savings and checking accounts. They pay their customers very little in interest (almost always under 1 percent), so they can afford to lend out funds at a lower rate. Additionally, banks can draw on federal funds at incredibly cheap rates, so they can turn around and mark up their rates to make a profit.

Conversely, private lenders get money from individuals or groups of investors who are looking for a basic return. Private lenders also aren't backed by a gargantuan system that supposedly "can't fail." Rather, they take on substantial risk, so they want the possibility of a higher return.

Why Go with a Private Lender Over a Bank?

If banks can offer lower interest rates, why would anyone want to go with a Colorado Private Money Lender? After all, aren't interest rates the only consideration when it comes to borrowing money? Not so fast. Depending on your situation, the interest rate may be less important than other factors.

For instance, if you've had a blemish in your financial history or your credit score isn't perfect, you won't fit into the banks' narrow box and you may get turned down. With a private source, you can sit down with them, explain your plans, show them your passion for the business and you have a much better chance of getting funded.

Moreover, with all their complicated underwriting and regulatory hoops, bank loans can take a long time to come through. If you're in the fix and flip game or you've got your eyes on the perfect property, you don't have the time to wait a month for funding. With private money, you can get approved in a matter of days and have that money in your account in a matter of weeks.

Finally, banks add a lot of extra costs on their loans that have nothing to do with interest rates. Private loans can have a fee or two, but they are nothing compared to conventional loans.

Getting Private Money in Colorado

Need a Colorado Private Money Lender? You're in the right place. We have decades of experience in the Copper State, so what are you waiting for? Give us a call today!

Here's How to Figure Out Your Loan-to-Value Ratio in Colorado

Looking for funding for a fix-and-flip or a refinance? Your loan-to-value ratio in Colorado is incredibly important. Here's a simple way to figure it out.

If you've ever searched the internet to look for funding to buy a home, a commercial storefront, or an income property, you've probably come across the term "LTV." The mortgage industry is full of confusing code words and abbreviations. For newcomers, being inundated with this jargon can feel intimidating. Like most things, though, once you cut through some of the dense vernacular, it's not as complicated as it seems.

As an example, let's break LTV down right now. LTV is short for "loan-to-value ratio." It's the amount of the loan you're asking for compared to the value of the property you want to buy. In other words, it represents how much of the property you actually own versus how much you owe.

How to Calculate Your Loan-to-Value Ratio

Calculating your LTV is simple. To do it, simply divide the amount of the loan you're asking for by the value of the asset that's securing the loan (the property you're buying).

Example: Let's say you're looking to buy a property that's valued at $100,000. You have 15 percent of that in cash for a down payment, leaving you with the need to borrow the remaining 85 percent. In this case, your LTV ratio would be 85.

Those nice even numbers are easy to figure out in your head, but if things get a little more complicated, here's a simple trick: open Google, type amount you need to borrow, followed by a slash and followed by the value of the property and you'll get your LTV. In the above example, you would type in 85000/100000 and Google will spit out the answer: 0.85, which is 85 LTV.

Why Does LTV Matter?

It's simple. A higher LTV means a higher risk for the lender. Even Colorado Hard Money Lenders don't really want to take over your property; they want to be paid back in a timely manner. Also, if you have more of your own money invested in the property, you're more likely to have a vested interest in keeping it nice and making on-time payments.

It's not the end-all, but knowing your loan-to-value ratio in Colorado is an important factor in getting the funding you want. If you have questions about your LTV or anything else about Colorado Hard Money Loans, give us a call today!