Each lender and all Arizona Hard Money Loans are different, which actually works in favor of most house flippers. Customizing the terms of the deal can help simplify every flip.
Simply put, Arizona Hard Money Loans are just short term loans that are funded by private lenders rather than traditional banks or mortgage companies. The security for the lender comes from the collateral used on the loan, which in most cases is the property being purchased. To create instant equity, the lender will often only provide around 70% of the property value in the form of a loan, and the borrower is responsible for providing the rest in a down payment. This also motivates the borrower to make the project successful as he or she has personal money on the line in addition to the hard money.
In the interest of full disclosure, Arizona Hard Money Loans do cost more than a traditional bank loan, but there are many benefits that come along with the larger price tag. Because you are applying to a private lender, the processes and requirements are not as stringent as those of a bank or mortgage company. In fact, many hard money lenders are willing to work with borrowers to customize the terms of each loan. All of these relaxed rules mean that your application process is shorter and far less stressful, and in most cases, you get the loan funded in a fraction of the time it would take a traditional lender to fund.
Now it is time to apply all of this information to a house flipping business. First, as a flipper, you know that a great deal only comes around once in a while. And when it does, there are many potential buyers clamoring to get the property. And no one who is forced to wait on a bank loan is going to have a chance at the sweetest deals. But hard money can be in your hand in just days to close a deal that holds great potential. In addition, these loans are short term, which is exactly what you want out of each flip. A quick purchase, reno, and sale are how you make your money, so your loan should be just as short and easy.
What About A Larger Scale Project?
So now you are worried about getting into a hard money agreement, only to discover that your flip is going to drag on longer than the term of your loan. And while that is not the perfect situation, it is workable. You will know very quickly when a fast flip turns into a major overhaul. And when that happens, you have the ability to begin to search for refinancing options with a traditional lender or possibly with your hard money lender, but for a longer time frame. For this reason, it is always wise to negotiate a no penalty for early repayment clause in all of your Arizona Hard Money Loans.
Know Your Terms And Your Needs
As mentioned, one of the greatest benefits of hard money is that you are working with a private lender who can offer some very flexible terms if you are willing to pay for them. So make sure you know exactly what you are looking for from each loan. Work with the lender to tailor all of the terms including the length of the loan, the interest rate and fees, and even the clauses for early repayment and the option to extend the loan term in the event of some unforeseen issue with the flip.
Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com
Dennis Dahlberg Broker/RI/CEO
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.
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