Best West Direct: March 2018

Saturday, March 31, 2018

Learn How to Select Hard Money Lenders

For many borrowers working with hard money lenders is a new concept. Borrowers are not familiar with the process or how to select a good lender.

Many borrowers are facing the challenge of less than perfect credit or a low credit score. And sadly, these people are under the assumption that they have not alternative to traditional lenders and banks. They are unaware of the service which is provided by hard money lenders. Though these loans are called non-traditional, they are still a very viable option for anyone who is unable to qualify for a traditional loan. But it is critical that a borrower learn how to select a good private lender to work with.

The first step might sound overly simplified but it is valid. Select a firm or individual who specializes in lending hard money. This ensures that you are working with a knowledgeable lender and one who can offer you terms which will fully meet your needs. You can learn a great deal about a lender by reading comments from other borrowers and investigating the lenders reputation. Any reputable lender will do what is best for his or her clients.

If you are new to private lending, it will also be helpful to limit your search to local resources. Working in-person will allow you to ask questions and establish a good working relationship with the lender as you learn the processes and intricacies of hard money. In addition, it will be much easier for you to check out the licensing information for local hard money lenders. This is an important step that should never be overlooked even if the firm is large and appears to be well known.

Seek Openness

As with any business, there will be certain privileged or proprietary information that the lender might not be willing to share with you. But all parties should have access to the loan information during the origination process. Be sure that your lender is willing to provide this transparency and that you are not getting a higher rate than originally promised. As you invest more time in speaking to the lender, you should not feel like some questions are being skirted or that there are aspects of the loan process the lender is not willing to discuss fully and openly.

Due Diligence Pay Dividends

Learning any new process takes time and effort. And working with hard money lenders is no different. You need to be willing to invest your time in learning the process as well as getting to know the lenders. Working with local lenders allows for a shorter learning curve and also gives you more peace of mind as you have been able to actually meet the lender and their staff. As you progress into more loans, seeking national lenders is a viable option to increase your opportunities and to locate more diverse loan options and offers. Be certain to carefully evaluate all of the lenders and all of the loan offers that you receive. Look for a lender who you feel comfortable working with and find very trustworthy.

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

Learn How to Select Hard Money Lenders

For many borrowers working with hard money lenders is a new concept. Borrowers are not familiar with the process or how to select a good lender.

Seek Openness

Due Diligence Pay Dividends

Technorati Tags: commercial loans,commercial lending,commercial mortgage

How to Qualify for Commercial Real Estate Loans

Understand that commercial real estate loans are nothing like residential loans, which means that the qualifications are drastically different as well. Understanding the qualifications before you apply for a loan is critical to securing the fund that you need.

First, it is important to grasp that commercial real estate loans and residential real estate loans have nothing really in common other than the word loans. The comparison is similar to that of a paper airplane and a jumbo jet; yes they both fly. So be prepared to learn about an entirely new set of loan qualifications before you embark on your first commercial loan application.

Lenders base a huge portion of their decision on your personal credit score when you are seeking a residential loan. And it is always good to have a respectable credit score, but it is not as critical when seeking a commercial loan. A credit score of below 600 will require an explanation but it is not a deal breaker. But a credit score of under 500 is likely to reduce your opportunities quite a bit. What lenders will be looking for to approve commercial real estate loans is a solid net worth. In general, lenders would like to see a net worth equal to the amount of the loan you are requesting.

Another important factor to qualify for commercial real estate loans is liquidity. The standard for liquidity varies among lenders but the rough average is 10-20% of the loan amount. What lenders don’t want to see is a borrower who scrapes up every last dollar that they have to make a down payment. Being cash poor could have catastrophic results if there is an unexpected expense which arises or some other type of emergency.

Your Experience

Your experience will also be a key factor in your approval. Demonstrating that you have the ability to manage the new property successfully means that you are most likely going to be able to make you payments on time and for the life of the loan. And if the property is quite large, the lender wants to know that you have the resources and staff in place to handle the management and ownership responsibilities associated with the property.

Income

As with any loan, there is a certain expectation for income. You need to have the income to pay the loan payment each month. This might be in the form of rental income once the property is up and functioning or it could be revenue from the business which is housed on the property, but the cash flow needs to be there to make the payments. Unlike on a residential loan, there is not real ratio such as debt to income that the industry uses as a standard. But you do need to demonstrate that there will be some type of cash flow to cover the loan payments for the life of the loan. All of these factors are blended to determine your ability to make the monthly payments on the loan that you are requesting unlike in a residential loan application where most of the weight rests on your income alone.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

How to Evaluate Hard Money Lenders

Selecting hard money lenders is very much like finding any other service provider to work with. The success of your loan and business relationship relies on your due diligence.

It can be very easy to get nervous when you are looking for a lender of any type. After all, you are going to ask this person or institution for money and that just makes most people uncomfortable and nervous. But the key to a successful search for conventional lenders or hard money lenders is remembering that you are their customer and that they are in business to offer you a service. Even if you are seeking a private lender because you have been rejected by a traditional bank, do not rush to accept the first loan offer that you get.

Start your search in the same manner that most of the world uses to find anything, the Internet. Does the lender have a legitimate website? Some websites are simply portals which are gathering information and then sending it off to potential lenders. This is not what you are looking for. A legitimate private lender will have a professional site which will provide you with contact information, general information about the lender, information about the type and size of the loans that they offer and their criteria for lending.

Once you have compiled a list of hard money lenders that you would like to speak to, take an additional step and check them out further. Search to see if they have any litigation pending against them or if there are issues pending with any investors which they might have. In some cases you can also learn what other borrowers have said by doing a google search of each lender. There are numerous sites where consumers report poor service or poor business practices by just about any service provider that you can think of.

As long as you have not uncovered any red flags, then contact each lender to set up an appointment to speak in person or a call if they are not local. At this time it is a good idea to have prepared a list of questions to ask each lender. These answers will allow you to compare each lender on the same criteria. You might ask what type of loans they most often fund or what dollar amount is their average loan. You will also want to inquire about their time frame for funding the request and their criteria for approval of the loan request.

Once you have gathered all of your information, you will want to calculate the total cost of each loan offer. Be sure to consider loan origination or processing fees and any other fees such as an early repayment penalty. This total cost should be your main criteria for selecting any hard money lenders. If you have two lenders who’s offers are the same then you can use more personal characteristics in your decision making process such as who you think will be the easiest to work with or who is located closer for more easy access. But be mindful of cost and the fact that you are going to be the customer.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Friday, March 30, 2018

Why Understanding the Basics Helps to Avoid Red Flags on Commercial Loans

Applying for commercial loans is normally a long process. It is important to avoid raising red flags to keep the process as stream lined as possible.

Understanding the basics of commercial loans is critical to completing a loan application correctly and not raising unnecessary red flags which will slow down or stop the application evaluation process. Most commercial loans are offered for between 5 and 10 years but the amortization period is up to 25 years. Requesting a loan for a longer period of time is not normally an option but can indicate to lenders that you might be concerned about your ability to pay the loan in full in the allotted time frame. A standard down payment of 20% to 25% is expected on commercial loans. Again, this is a fairly non-negotiable fact as is a loan to value ratio of 80% or less.

One of the first red flags that a borrower can trigger is by demanding an unreasonably fast loan approval process. Some loans and lenders require 90 days or more to process and fund a loan. In a best case, it will require at least 6 weeks to process a loan application even if you have previously worked with the lender and been successfully awarded funds. An experienced and confident borrower knows the timeframe involved and has planned accordingly. Trying to rush the process indicates either inexperience which could jeopardize your approval or that your financial situation is about to change and you want to get approved before your creditworthiness drops.

Another red flag jumps out if you appear to be withholding information or are intentionally providing vague answers. A lag in response time might not be because you are trying to hide information but even if it is because you are not well prepared or are disorganized, the result is still a negative mark against you. Requiring continued requests for the same information is not going to make the lender bored and cause them to stop asking. It is going to make them worried or more curious and they are going to dig even deeper to find the reason for your secrecy.

Be Realistic

Finally, requesting a loan which is in excess of the 80% loan to value standard is going to create unneeded issues. The first thought is that you have not completed you due diligence and you are unaware of the actual property value. This makes you look ill prepared and unprofessional. The other thought is that you are simply disregarding the standards set by the industry. This makes you appear to be unrealistic and also self-absorbed as if the rules do not apply to you. Neither of these will create a positive image for you with the lender.

Avoid Any Unnecessary Issues

Most commercial lenders adhere fairly closely to the industry standards for loan terms. Understanding these terms and being realistic with your request will keep the process moving at or ahead of the average pace. But trying to rush or refusing to honestly answer legitimate questions posed by the lender will only cause unnecessary questioning of your business and financial stability which could eliminate your chance of securing a loan.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Thursday, March 29, 2018

Commercial Real Estate Lenders

Shopping malls are turning into mixed-use developments and online shopping has increased the demand for distribution centers. Investors in this segment are looking for commercial real estate lenders that are familiar with this segment of CRE.

We’ve all seen the boarded-up shopping malls with empty parking lots and decaying signs. And so have commercial real estate lenders. Sears, J.C. Penney, Macy’s, CVS and RadioShack have all reported bankruptcies and store closures, leaving lenders looking for a different venue, or at least a different take on an old classic. Shopping malls have become mixed-use developments that include housing, boutiques, outside concert venues and chef-driven restaurants. And maybe a golf course or two.

The truth is that several of the major delinquent loans are backed by shopping centers. According to REBusinessonline, “Major loans that have fallen past maturity in the past year include several that are backed by shopping centers formerly owned by the Westfield Corporation that were later sold to other REITs.”

This includes the $240 million Westfield Centro Portfolio, the $140 million Westfield Chesterfield and the $110 million Westfield Shoppingtown Independence. Rouse Properties purchased Independence Mall after a few years of foreclosure proceedings. Their goal is to create an “open-air retail destination” with a focus on upscale dining and a grocery market as an anchor. This shopping center giant has been in a restructuring mode since 2014 and just recently announced its sale to a French company. Unibail-Rodamco will reportedly pay $15.7 billion to take over Westfield Corp. It will operate as a REIT in France, the Netherlands, the United Kingdom, and the U.S. Its uncertain if Westfield’s previous plans to seek approval to flatten the Promenade Mall in Woodland Hills, CA and build residences, offices, boutiques, restaurants, hotels and a concert venue is still on target, though chances are the French global property leader will have a similar remodeling plan in mind.

From Retail to Warehouses

Some have blamed the demise in retail and shopping centers on the online giants such as Amazon. But this expanding trail that leads from brick and mortar to mouse and keyboard has left an interesting opportunity for commercial real estate lenders and investors—industrial warehouse and distribution centers. According to American Banker, e-commerce sales are expected to reach $700 billion by 2022. And all those online purchases need a home. While most distribution centers are built on demand, there is a growing number of commercial lenders shelling out the bucks for speculative centers—centers that are selling just as fast as they can be built. In fact, with increasing demand, building in this sector is booming, vacancies are at an almost record low, and rents are rising. Mini-distribution hubs are on the rise as well. Atlanta, Dallas-Fort Worth and Chicago all made the top five in the amount of construction space geared for new warehouse and distribution centers.

Those in the business are looking for commercial real estate lenders who understand the business.

Level 4 Funding has been in the industrial/warehouse segment for over 20 years. We work with over 200 private investors and understand the sectors that they specialize in. With this type of rolodex, we can get you the loan you need at the best possible rate. Closing can occur in as little as a few days, giving you the money you need to purchase that next warehouse, build a distribution center, or develop a mixed-use supercenter in record time. Call us for a no-obligation quote.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Wednesday, March 28, 2018

How to Make Money Using Hard Money Loans

Hard money loans are not suitable for every borrowers needs but they are perfect to meet some specific needs. Using this loan correctly can be a great way to grow your wealth.

Nothing in this world is perfect and likewise, there is no single type of loan that is perfect for every scenario. But there are several situations which are tailor made for hard money loans. Understanding the correct time to select a non-traditional loan is the first step to using this financial tool to generate financial security for yourself and your family.

In general, hard money loans have a higher interest rate and therefore the money is costing the borrower more than a traditional loan. But for every negative there is also a positive. And in the case of these private loans, the positive comes in several forms. The first of which is that the loan approval is based on the value of the collateral unlike a traditional loan which requires good credit scores and a strong credit history to secure a loan. Not only does this fact reduce the amount of documentation that a borrower needs to provide but it also streamlines the lenders approval time. All the lender needs to do is establish the current market value of the collateral to determine if the loan will be funded or rejected. This time savings can be critical when you are trying to purchase a property before another buyer makes a better offer.

Private lending options offer borrowers a faster turnaround time, less paperwork and do not rely on personal credit or financial stability. All of these facets of private lending make this a very viable solution when considering deals such as fix and flips, land loans or construction loans. In all three of these cases it can be very difficult to secure traditional finding. And without funding, it is impossible to make these deals and reap the rewards once the project is completed. But using a private lender will allow you to complete the funding and the deal to realize the profit in the end.

How and Why It Works

As you might have noticed, all of these potential money makers are short term investments which are time sensitive. It can be very difficult to secure a loan fast enough to purchase a great fixer upper to flip or to purchase unimproved land for a new construction project. Banks are not willing to lend money for these more risky ventures nor are they willing to expedite your request. But a private lender is willing to work with you to provide more flexible terms and a faster approval and funding to allow you to meet the shorter time line. Then, with the property secured, you can invest some time in finding less costly financing and refinance or you can make the necessary improvements and flip the property quickly for a large profit.

Making Private Loans Work for You

Hard money loans are not the solution for every deal or opportunity. But they do offer certain features which can make them the perfect financial tool to use to make money and increase your financial security. When used properly by a borrower who understands the process, the risks and the rewards, this type of loan offers a great return on investment.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

OCC Study reveals risks from Commercial loans

The OCC warns in its semi-annual risk report that relaxed underwriting standards may be putting some commercial loans at risk of default. Should you be worried?

The report warns that specific influences on the credit market may be causing some banks to lower borrower standards. "The credit market continues to be influenced by strong competition, particularly from non - bank lenders, and heightened asset valuations," the report claims. In effect, strong competition for new loans may be pressuring some banks to lower standards on borrowers.

The report also warns that the recent economic boom may be making some lenders complacent and that lenders may need to take greater caution in case of an economic downturn. "In addition, the long economic recovery and expansion may collectively increase lender complacency. In this environment, lenders need to focus on maintaining sound credit standards within risk tolerances and understanding the potential credit risks that may be exposed under less benign economic conditions."

The report claims banks need to be cautious and may need to diversify their lending activities. The authors of the report, the National Risk Coalition, cite commercial mortgage growth as a specific area of concern. The NRC claims,"increasing concentrations of commercial real estate (CCRE)loans highlight the need for sound risk management processes and the effectiveness in managing concentration risk for some banks."

In spite of the dangers key commercial loan metrics remain are strong

The report claims that key metrics of commercial credit quality such as delinquencies, nonperforming loans, and net charge-offs remain positive. These key measures improved over the second half of last year and remain elevated above historical averages. Commercial credit quality is stronger than any time since the 1980s according to the statistics. New business loans have moderated from the 25% growth levels seen in recent years but remain above GDP according to the report. Non-depository groups such as investment firms and finance companies receive the majority of these new loans.

Smaller banks may be relaxing underwriting standards to fuel commercial loan growth, which could be a dangerous trend should an economic slowdown occur

Assessments by OCC evaluators reveal a gradual easing of borrower standards at many banks. Since the first quarter of 2016, the majority of banks have relaxed lending standards, rather than tightening them. The trend reflects a gradual easing of underwriting standards which began in 2013, as the economy started to recover from the recession. Even though banks are relaxing their standards, the report concludes that the majority of banks are still lending within their risk tolerances and are maintaining relatively safe underwriting practices.

However, there remains a concern that the growth in commercial mortgages may be putting some lenders at risk. Specifically smaller banks with less than a 1 billion dollars or less in assets. While business lending declined overall last year, the majority of new business loans originated from these smaller banks. Data indicates that these groups are supplementing a declining volume of residential mortgages with commercial mortgages. This narrow and specific focus on commercial mortgages may put these smaller financial institutions at risk if economic conditions change and more borrowers default.

However, the report also claims underwriting standards remain reasonable, credit quality is high, and that the economy is strong. Whether banks will heed the conclusions of the report remains to be seen.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Monday, March 26, 2018

How to Qualify for a Commercial Real Estate Loan

With all the varying requirements, it can be confusing understanding what one needs to do and expect when trying to qualify for a commercial real estate loan. Here’s a few of the basic documents and experience you need when applying for a loan.

No matter which type of lender you are working with, most will prefer that the borrower focus on a property when assessing a loan. This information should include the address and location, purchase price, intended use of structure, amount and scope of work, timeline for rehab, contractor bids and projected after-repair-value (ARV). The more information you can bring to the table, the better, such as drawings and environmental analysis.

The financial information regarding the project includes the rent roll or schedule of leases which basically amounts to the amount of income that can be expected from the property. If the property is under construction, a lender will want to see the general health of the particular market including the area’s vacancy rates and your plan for obtaining tenants. Having pre-leasing in place can be a big checkmark on the “yes” side when trying to obtain a commercial real estate loan.

They will also want to know what type of experience you have and any past investment projects in this specific segment of real estate. Some lenders will check the borrower’s qualifications such as credit history and bank statements. They will want to know your financial situation. Do you have other projects currently in the pipeline? If so, just how much debt are you currently faced with? If you have partners, the lender will want information on them as well. This will be their go-to in case of default.

Pro Forma

Other lenders require a pro forma for a commercial real estate loan. This includes the net operating income (NOI). Also known as EBIT or Earnings Before Interest and Taxes, it is, just that, and helps lenders understand what kind of cash flow you’ll be expecting. It equals all revenue from the property minus all operating expenses. The debt-service-coverage ratio (DSCR) is also part of this documentation and is calculated by dividing the Net Operating Income by the Annual Debt Obligation. The internal rate of return and cap rate are the final pieces of the pro forma puzzle. The internal rate of return is the rate of growth a project is expected to generate while the cap rate is the ratio of Net Operating Income to property asset value.

Conventional commercial real estate loans from banks and credit unions must adhere to strict rules and guidelines when it comes to financing an investment. For this reason, they are often more difficult to obtain loans from than one provided by a private hard money lender.

Traditional lenders will need to check your credit score as well as your creditworthiness. Hard money lenders, on the other hand, do not require income verification or credit references. These short-term loans usually fall into the one to three-year mark, though some will issue loans up to 5 years and allow extensions. Some lenders assess a prepayment penalty, usually 1 to 3 percent, while others do not—Important considerations when funding your project. It is much easier to qualify and faster to obtain funding for hard money real estate loans making them the loan of choice for many investors.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Leasing vs. Flipping: Two tactics to use your commercial loan

Learn which strategy is right for you when it comes to using commercial loan proceeds.

Leasing and flipping are two of the most common ways to invest in a piece of commercial real estate. Every investor wants to make money, but an investor who leases commercial real estate intends to earn a steady stream of income.

The investor needs to purchase the property, so both approaches have the same upfront costs. Leasing allows investors to maximize the long-term potential of property with minimal risk. If one tenant leaves, another one should be not hard to find in most cases.Renting out commercial real estate is an ideal strategy in areas where the supply of commercial property is low, and demand is high.When it comes to leasing, additional returns can be earned as property values in the area improve, and rents appreciate.

However before committing to leasing as a strategy consider the commitment of time that is involved. Leases can include complex negotiations, require regular property maintenance and resolution of issues among individual tenants. Professional property management companies can alleviate some of these problems, but the added cost can stifle potential returns.

In contrast, flipping commercial property offers a quick profit and a minimal commitment of time

You can use a commercial loan to flip your investment property, but you should throughly understand the market

Flipping is the opposite of leasing commercial property and involves quickly selling a property for maximum profit. With this strategy purchase a commercial property that is substantially undervalued. The lower a properties initial purchase price, the higher the potential for profit.

But commercial real estate valuations are far more nuanced than residential valuations. Savvy investors should know how renovations on commercial property could impact its value. The wrong type of improvements on a property can restrict potential buyers and detract it’s marketability. For example, by converting a storefront into a restaurant space, buyers will be limited only to those who want to open up a restaurant. But the right type of renovations can significantly improve a properties ability to generate income and therefore substantially increase it’s value.

A thorough understanding of the local commercial real estate market, the types of businesses that are opening nearby and other types of due diligence are needed to flip commercial real estate successfully.

There are obvious risks involved in using a commercial loan to flip commercial property, consider these risks before closing an investment strategy

When it comes to commercial real estate leasing is usually a safer investment strategy. Tenants should not be hard to find if the property is in decent shape and in an ideal location. Depending on the terms of the lease tenants can take on the expense of improving the property themselves.

Flipping commercial real estate entails that an investor takes on the cost of the renovations themselves and any improvements can be costly and could restrict potential buyers. Additionally commercial properties are subject to a longer sales cycle. There is a chance that any renovated property could sit on the market for many months, or in the worst case years.

But as with any investment strategy, the higher risks involved with flipping commercial real estate can also offer greater rewards. Consider the market, understand commercial real estate valuations and perform the necessary due diligence when choosing whether to lease or flip a commercial property.

In summary, leasing is a good bet when property values are steadily increasing, while flipping is best in cases where a low-cost renovation can immediately raise a properties value.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Sunday, March 25, 2018

Can you make money by investing in hard money loans?

Consider using a deed of trust investment. A deed of trust investment allows you to earn steady returns and interest payments on the loans distributed by hard money lenders.

Deeds of trust may be an unfamiliar concept for many first-time real estate investors. A deed of trust is a promissory note in which a borrower promises to pay back the lender (i.e., you the investor). Your investment goes to the borrower in the form of a loan, and the borrower's property acts as collateral in case of default. You earn both the interest payments and any portion of the principle the borrower manages to pay off throughout the term of the loan. Because a real property secures them, deeds trust are relatively safe and can offer steady returns to novice real estate investors.

Investing in a deed of trust is also a great way to diversify your portfolio. A deed of trust investment allows you to act as a passive owner and earn income from a property without owning it outright. You also save money because you will not need to purchase the entire property upfront and you avoid the hassle of maintaining the property yourself. Deeds of trust can also offer higher returns over an ordinary saving or an investment account.

Use a hard money lender to get the help you need when it comes to investing in deeds of trust

Trust deed investment companies (TDIC's) connect investors with deeds of trust and usually known as "hard money" lenders. The loans issued by these groups are secured by the value of the "hard" asset which the borrower wants to finance. Often TDIC's use deed of trust investments as a way to raise capital for the loans they issue to prospective borrowers.

Some may consider merely acting as private lenders on their own behalf. If you have the money and you want to earn interest, you could always lend the money yourself.

Working with a TDIC allows you to benefit from their knowledge and experience when it comes to the real estate market and the rules and regulations related to lending. The lender can underwrite the loan, take care of legal obstacles, perform the necessary due diligence and in some cases service the mortgage directly.

Level 4 Funding is an Arizona based hard money lender and can guide you through the process of investing in deeds of trust

Level 4 funding will perform the necessary due diligence on any deed of trust investment, ensuring any mortgage you invest in is of the highest quality. Level 4 funding differs from other TDIC's. Because Level 4 has already issued any mortgage you invest in whereas competitors may need your investment to fully finance their loans. With Level 4 Funding you have added the safety of knowing that any loan invest in already has a steady payment history.

To qualify you will need to make a minimum investment of 50,000 dollars, and your investment cannot exceed 10 percent of your total net worth or annual income. For more information about a deed of trust investment at Level 4 funding click here.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Reasons to use a hard money loan for your next fix and flip project

A hard money loan (or an asset-based loan) offers you the benefits of flexible terms and quick approval. Learn why you should consider this type of loan for your next fix and flip project.

Fixing and flipping single-family homes is the subject of many popular television programs and no doubt most readers will be familiar with the process. An investor purchases a single family home, upgrades and repairs it and then sells it for a profit. Every fix and flip project has the same goals, to maximize market value, minimize the cost of renovations and to sell the property in the shortest time possible. But starting any fix and flip project also comes with the added cost of the financing.

Consider using a "hard" money loan to finance your fix and flip project. The value of the investment property secures this type of loan. This type of lender is likely to consider the potential value you can achieve with your project, instead of your credit score. Hard money loans can clear within a matter of days, which makes them ideal when you need to act quickly on a great investment opportunity.

A hard money loan can be the ideal financing solution for your house flipping project

A traditional mortgage will be hard to secure if your investment property is particularly distressed.The majority of regular banks fund their loans by selling them to Fannie Mae or Freddie Mac.More than likely your property will fall short of FHA guidelines, making the sale of the mortgage to Fannie or Freddie impossible.

Traditional lenders are also wary about the potential for default should your project not go according to plan. Generally it is not worth the effort for a regular lender to underwrite your loan or to thoughtfully consider your proposals.

Most asset-based lenders consider the potential of your project rather than your credit score or your properties current condition. If you are a seasoned house flipper, or you can talk up your specific plans, more than likely you can qualify for a asset based loan. Asset-based loans can also close quickly which allows you to take advantage of immediate investment opportunities.

If you intend to flip a home in Arizona consider using Level Four Funding as your hard money lender

Level 4 Funding offers short-term financing which is ideal for house flipping projects. Levels 4 offers interest-only loans which gives you the benefit of lower monthly payments. Level 4 Funding can also finance to 85 percent of your next house flipping project, whereas most other asset-based lenders usually only offer up to 75 percent. With Level 4 Funding you'll need to spend less of your own money up front to get your project started. Level 4 Funding offers flexible loan terms, with a minimum term of less than a month allowing you to pay off the loan at your convenience.Level 4 Funding can also close loans within a matter of days, which will help you get your project started quickly.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Tactics for refinancing your commercial loan

When it comes to refinancing commercial loans, you naturally want to qualify for the largest loan with the best terms. Learn some strategies to help you refinance your commercial mortgage

Once your commercial mortgage matures, why should you refinance, rather than selling the property? Refinancing can improve your monthly cash flow and if your property has appreciated in value, refinancing will enable you to pull out additional equity tax-free.

There are some significant differences when comes to refinancing commercial real estate. A Residential mortgage is usually fully amortized and can have terms of up to 30 years. Commercial mortgages have shorter lifespans of 5 to 10 years, and commercial borrowers typically need to refinance their mortgages on a regular basis. But The biggest difference between commercial and residential refinancing is the impact of net operating income on commercial property values.

Improve the income you receive from commercial property to improve the terms of your commercial loan

Net operating income has a considerable impact on commercial real estate values.

The value of commercial property increases if it can generate more income, regardless of property values in the immediate area.

Before refinancing the best strategy is to increase the amount of income your property generates. By maximizing the profit you receive from a property, you increase its value and can refinance to a larger mortgage with better terms. Some strategies to maximize cash flow could include improving the number or quality of your tenants or using renovations to raise rents.

Other things to consider when it comes refinancing you commercial loan

Always seek counsel about your strategy and your specific situation, but the following tactics should help you get the best loan at the best terms.

Use refinancing as a way to reposition your investment strategy or even expand your portfolio. The additional funds you get from refinancing can be used to repay your initial loan, any initial investors, or could be used to improve the property itself. Better yet you can use the additional funds from refinancing to purchase another piece of commercial property. Therefore refinancing can be used as a strategy to expand your investment portfolio and earn more money on a monthly basis.

Refinancing in all cases should improve your monthly cash flow. Refinancing to a loan with higher monthly payments and less favorable terms is of course not a good idea. Refinancing should entail lower monthly payments or should allow you to cash out any additional equity from your investment property.

Strategize to qualify for the best loan with the best terms. Know when your current loan matures and invest in the property accordingly. Over the duration of your loan ensure the condition of your property does not deteriorate. Better yet take consistent steps to improve your property over the term of your mortgage.

You should also aim for full occupancy before refinancing. Most lenders will offer favorable terms on properties with 90 percent occupancy over a period of 90 days. Losing tenants will drastically reduce the income from the property and therefore reduce its value.

In the end, the crux of refinancing a commercial loan is to optimize the profits a property can generate which will enable you to refinance at the best terms.

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Saturday, March 31, 2018

For many borrowers working with hard money lenders is a new concept. Borrowers are not familiar with the process or how to select a good lender.

Seek Openness

Due Diligence Pay Dividends

For many borrowers working with hard money lenders is a new concept. Borrowers are not familiar with the process or how to select a good lender.

Seek Openness

Due Diligence Pay Dividends

Understand that commercial real estate loans are nothing like residential loans, which means that the qualifications are drastically different as well. Understanding the qualifications before you apply for a loan is critical to securing the fund that you need.

Your Experience

Income

Selecting hard money lenders is very much like finding any other service provider to work with. The success of your loan and business relationship relies on your due diligence.

Friday, March 30, 2018

Applying for commercial loans is normally a long process. It is important to avoid raising red flags to keep the process as stream lined as possible.

Be Realistic

Avoid Any Unnecessary Issues

Thursday, March 29, 2018

Shopping malls are turning into mixed-use developments and online shopping has increased the demand for distribution centers. Investors in this segment are looking for commercial real estate lenders that are familiar with this segment of CRE.

Wednesday, March 28, 2018

Hard money loans are not suitable for every borrowers needs but they are perfect to meet some specific needs. Using this loan correctly can be a great way to grow your wealth.

How and Why It Works

Making Private Loans Work for You

The OCC warns in its semi-annual risk report that relaxed underwriting standards may be putting some commercial loans at risk of default. Should you be worried?

Monday, March 26, 2018

With all the varying requirements, it can be confusing understanding what one needs to do and expect when trying to qualify for a commercial real estate loan. Here’s a few of the basic documents and experience you need when applying for a loan.

Learn which strategy is right for you when it comes to using commercial loan proceeds.

Sunday, March 25, 2018

Consider using a deed of trust investment. A deed of trust investment allows you to earn steady returns and interest payments on the loans distributed by hard money lenders.

A hard money loan (or an asset-based loan) offers you the benefits of flexible terms and quick approval. Learn why you should consider this type of loan for your next fix and flip project.

When it comes to refinancing commercial loans, you naturally want to qualify for the largest loan with the best terms. Learn some strategies to help you refinance your commercial mortgage