Monday, April 30, 2018

How to Evaluate a Property for Hard Money Loans

Real estate property purchases will benefit by knowing some ways to evaluate a property to best obtain hard money loans. Level 4 Funding offers the following tips to best evaluate the property you wish to get a loan for.

When entering the commercial or residential real estate market with the intent to purchase properties, fix them and then sell them for a profit, there are some things you should consider… Especially if you are looking to obtain hard money loans to fund the purchase. The better you are able to evaluate the value and prospective value of the property, the easier time you’ll have persuading lenders to fund your loan.

While unconventional or private lenders that provide investors with hard money loans are primarily interested in the collateral for borrower has to offer. In the case of real estate investors, this is typically the property that is intended to be purchased with the loan.

So it’s important to know what these lenders are going to be looking at when it comes to the property at hand. If you can pre-evaluate these things with a “lender’s eye” you may have an easier time getting approval. Level 4 Funding provides the following criteria: protective equity, which offers investors protection again payment defaults, fluctuations in the market and devaluation of the property; mortgage to value ratio, the property’s percentage of appraised value or quick-sale value – the lower the mortgage amount to the value of the property, the better; resale probability (the quicker the better); the condition of the property – which can affect how much investment will be needed to put into it to make it resalable; and location. The latter is one of the most important aspects of real estate — “location, location, location.” Consider the location of the property above all things.

There are many factors to consider, and each lender may consider some factors more important than others.

While the above are just a few of the major ones, there is a multitude of things that need to be taken into consideration when looking at an investment property. Lenders may be able to advise you as to which they consider to be most important as it related to the current market conditions.

When looking at an investment property, evaluation is a major part of the process.

With certain properties that go on the market, particularly foreclosures, time is of the essence. However, it’s more important to make a complete and unbiased evaluation of the property before jumping in “blind.” By considering all angles and factors, you can make a more education decision as to whether or not this property will be a good investment, and if you will be able to obtain hard money loans based on its current condition. Level 4 Funding can help real estate investors evaluate their property purchases to order to come to a loan agreement for the right property. Call Level 4 Funding today to see how they can help you find the investment property that will become an investment in your success.

Sunday, April 29, 2018

Tactics to negotiate a better hard money deal

You may be seeking a hard money loan and looking for the lowest possible interest rate, but there may be additional costs you could be unaware of beyond the interest rate. You will be at a disadvantage if you aren't aware of these expenses and don't try to negotiate with your lender.

Some private lenders may earn their profits by charging fees rather than collecting interest payments. In the worst case scenario, an unscrupulous lender could lure in borrowers by advertising a low-interest rate, all the while charging them exorbitant fees. Even if a lender is reputable, borrowers should be aware of any additional expenses when it comes to their loan.

Private asset based lenders are business savvy and approach each loan as a business deal. There is always room to negotiate the terms of any business deal, and the same holds true for your loan.

The most apparent expense on an asset based loan is the point fee, which is a percentage of the loan amount which is paid by the borrower up front. You should do your best to negotiate the point fee because depending on the size of your loan this cost can be considerable.

You as a borrower need to be aware of the cost of your loan in points and any other fees that may apply.

Which fees can you negotiate when it comes to hard money loans?

In the first place, there's the underwriting fee, which is the cost of a lender's due diligence. The cost of underwriting can range from 750 to 2,500 dollars depending on an individual deals complexity. In addition depending on your circumstances the cost of servicing your loan could also be a factor. Loan service fees cover the cost of recording payments and generating reports, and this price can be considerable. A lender may charge a fixed monthly payment or charge a given percentage of the loan amount annually.

In addition, be aware of any late fees, or any potential change in your interest rate if you miss a payment. You will want to keep these fees as low as possible because if you miss a payment due to financial difficulties, higher interest rates and late fees will make it harder to catch up.

The main advantage of asset based lenders over traditional banks is that they are flexible and that their is always room to negotiate the terms of your loan. If you don't try to negotiate these additional fees you may be taking on an unnecessary expense.

Take advantage of the flexibility offered by hard money lenders

Some of the fees mentioned before may or may not apply in your case. But you should try to take advantage of the flexibility offered by private lenders. If you are a borrower with considerable experience and strong collateral on hand, in most cases your private lender will work with you to negotiate any fees.

In short don't look at an attractive interest rate when shopping for a loan. If you want to get the best deal possible, know the fees that are being charged and to do your best to negotiate.

How to find the right hard money lender for your next project

Just because you cant secure a traditional bank loan doesn't mean you don't have other options, you may have considered a hard money lender but where do you start? What should you expect from a potential lender, and what will a lender expect from you?

A quick google search for private lenders should turn up an endless array of financing options. Because you might need a specific type of lender to match your particular project an online search can prove to be a little overwhelming. You could always try to be more exact with your search terms, trying things like ‘private rehab loans,' or ‘private construction loans.' Being specific with your online searches may help you find the lender that is right for you, but this isn't always the case.

Consider using one numerous lender databases available online to narrow down your financing options. The ideal database would allow you to aim your search for lenders based on the amount of financing you need or will enable you to search for lenders based on your specific project, (i.e., Renovation, construction, commercial, etc).

If you'd rather avoid the hassle of searching for a lender on your own, you could seek out a referral from a licensed mortgage broker. Local real estate investment groups could also put you in touch with lenders they have worked with in the past.

If you find the right lender, the question then becomes what should expect from them and how do you know you're getting the best possible deal.

What should you expect from a potential hard money lender during the application process?

Search relevant government databases to ensure your lender is licensed. Your lender should also be transparent throughout the process. Ensure that they meet their published guidelines related to fees and closing costs. You should also be wary of teaser rates offered by unscrupulous lenders.

Know that every private lender is different and will have their criteria when it comes what they expect from you as a borrower.Ask your lender to be transparent about any documentation you might need throughout the loan application process.

Know what your hard money lender expects from you to get the best deal possible

This type of loan is often used to finance rehabilitation and construction projects.If your seeking financing for renovation or construction, a lender will want to ensure that you are competent and knowledgeable about your project. In these cases, before approaching any lender, have details about the property you wish to purchase, a budget for your renovations and thorough projections about the future profitability of your project. You build up your lenders confidence and gain room to negotiate by demonstrating your understanding of a project's potential.

You need to have a detailed understanding of what your property is worth to qualify for the best possible loan. A private lender usually bases the amount of financing offered on the market value of the property you are purchasing. You won't qualify the largest possible loan if you don't have a good sense of what your property is worth.

Friday, April 27, 2018

How to Qualify for a Spec Construction Loan

First-time real estate investors could find spec construction loans a challenge to qualify for and very complicated. Get a sense for how construction loans are different from conventional mortgages and some strategies to maximize your chance of qualifying.

Construction loans differ from ordinary commercial loans in a variety of ways. They are more complicated than regular mortgages and funding is given according to a specific timetable. An initial amount of funding will be given to the borrower, and then the remainder of the loan will be dispersed on a monthly basis, or at the borrower's request. Most lenders will require verification of a borrower's expenses over the course of a construction project, which can create complications.

Construction loans are especially tricky to qualify for and are considered too risky by most banks. Most lenders have difficulty underwriting construction loans because they have to rely on the borrower's assumptions about the cost and profitability of a given project. Most lenders are especially wary of spec loans and consider them too risky because there is no guarantee of a future sale.

A spec loan is usually given on a short-term basis and is not meant to be a long-term mortgage. The aim of the borrower is to sell the property quickly after construction is completed. It is crucial that potential borrowers can demonstrate their expertise in order to qualify for a spec loan.

If you can talk up your expertise to increase your chances of qualifying for a spec construction loan

Your financial projections are what a spec lender will rely on to underwrite your loan and so it is essential to demonstrate your expertise. If a lender doesn't have faith that you will finish a project, or that you will earn a profit in the end, in most cases your construction loan won't be approved.

The best way to qualify for a spec loan is to give any potential lender confidence in your knowledge and experience when it comes to real estate. But there are additional strategies you can employ as well.

Specific tactics to help you qualify for a spec construction loan

Seek out lenders located near your construction site. A local lender will have an emotional investment in the area and will have a better understanding of your project's potential. Ensure you have enough capital up-front to make a sufficient down payment. Lenders will want an assurance that you have a sufficient stake in your construction project. The risk entailed by a spec loan usually entails a significant down payment.

Have a detailed understanding of your builders draw-process, meaning know how much your builder intends to spend at every step of your project and be sure this schedule matches the structure of your loan.

In short to qualify for a spec loan, demonstrate your expertise, find local lenders, have sufficient cash on hand and know your projects timetable. By employing these strategies, you maximize the chances of your spec loan getting approved.

Thursday, April 26, 2018

What is Hard Money?

Are you having trouble securing a loan? You may want to consider a hard money lender. Hard money loans are often provided by individuals or a group of investors that use property or other assets as collateral.

If you need the loan quickly, and you have been turned down by traditional loan companies, a hard money loan may be a good choice. These loans are mostly based on collateral and not with your ability to pay or credit rating. If you default on the loan, then they take the asset and sell it to recoup the principal and interest of the loan. These lenders are not, however, in the business of selling defaulted property. They are in the business of making money by providing loans and, to that end, want you to succeed in your endeavor.

These loans are short-term in nature, one to five years, with a balloon payment at the end. Many, however, will offer extended terms if needed. There are many advantages to a hard money loan. Here are just a few: Speed--Since hard money lenders are more concerned with collateral then your financial condition, you will not be required to hand-over the mounds of paper work that traditional lenders are bound by. Flexibility-- Traditional lenders are very strict with their repayment terms while a hard money lender may be able to adjust the loan to fit your situation. Approval--The hard money lender is more concerned about the value of the collateral. Because of this, an investment property may give you a higher loan than a rehab.

Loan-to-Value Ratio

If you have been turned down by other lenders because of negative information on your credit report, don’t give up. These types of lenders can often find a way to work with you despite your credit challenges. Some offer loan-to-value ratios in the range of 75 percent. At Level 4 Funding, we offer LVRs as high as 90 percent.

Hard money loans make sense if you are fix-and-flip investor and will sell the property in a year.

A hard money loan can be perfect for this investment strategy because of it’s short-terms and quick-to-funding model. You will want to have your numbers perfected in order to make sure that you can sustain yourself and your project through the rehab. Don’t forget the cost of essentials such as utilities, taxes, and time to sale. Some lenders will evaluate the loan based on the after-repair value. This, however, adds risk to the lender and for that reason will carry a higher interest rate. In most cases, hard money loan can be funded within one week compared to 35 to 45 days for a conventional loan. The application can get approved in a day as compared to collecting retirement before you hear from a traditional lender.

Before you proceed, you will need the advice of good loan company that can guide you through the loan process. Contact Level 4 Funding to secure the guidance you need to help you succeed with the project you have in mine, and the many more to come.

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

Thursday, April 19, 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

Saturday, April 14, 2018

5 Tips to Successful Hard Money Loans

Hard money loans are a great way to begin a successful career in real estate. Following a few tips will ensure your success.

Any borrowing experience can be stressful if you are not well prepared. But understanding the process and knowing about a few tips to follow can make your first experience with hard money loans simple and successful. Even without personal experience this information will give you a confidence that you are making good choices and will have success with your project.

Picking the right lender is a very important first step in the process. You will want to do some research to make sure that the lender has a good reputation and has experience working with borrowers. You will also want to be sure that you are comfortable working with the lender and within the standard terms that the lender offers. Equally important is selecting the right property. You need to be sure that the numbers work on any property that you are considering. Remember that this is a business deal and there should be no emotional attachment to the property. If the numbers won’t end with you making a profit then it is not the right deal for you.

Being Prepared Is Critical To Your Success

Even with the fast funding of hard money loans, you need to have been planning for your purchase for a considerable amount of time. The loan is likely to be limited to 75% of the cost of the property so you will need to have access to the remaining cash. This down payment is your “skin in the game” and also represents your equity in the property. Having the time to save the 25% down payment also relieves the added stress that will occur if you are using another unsecure resource to borrow additional money. You will also want to be sure that you have carefully prepared all of your paperwork. This can include research on the property and your business plan for buying, improving and selling the property. Some lenders will also want to see documentation showing your cash reserve for any repairs or operating costs and proof of the down payment funds. Having your financials ready can help to reduce the time that it takes you to be ready to seek a loan when you find the perfect property.

Manage Your Expectations

It is critical that you begin each real estate purchase and project with a realistic time line. It can be easy to get over excited on the first few projects and start to believe that the work can be completed more quickly than you first estimated. But in almost every case, you will find that the initial time estimate is shorter than the time required to complete the entire project. Be sure to build in a little extra time as a buffer. This will allow you to complete the project without the added worry of defaulting on the terms of your loan. Hard money loans are a great tool to begin real estate investing but you must be sure to make good decisions and maintain realistic expectations throughout the process.

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

Friday, April 13, 2018

Hard Money Lenders: What Rehabbers Need to Know

You find a house that you would like to rehab and flip, but you have never done this type of project before. This is what you need to know when considering getting a loan through a hard money lender.

Time is of the essence when purchasing a property. Especially in today’s market when many sellers are faced with multiple offers. It’s important to have a lender you can work with in a moment’s notice and one that you can develop a long-term relationship with. Various lenders have different requirements. Hard money lenders will either loan on appraised value after repairs or others will loan on the purchase price. You want to find the lender that will loan on the appraised value. A breakdown of the fees will be given to you by the lender, some of them are loan points; closing fees that can include escrow amount, document fees and notary fees; and the interest amount.

Once the hard money lender decides to proceed on your opportunity, you will have a response such as: “We will lend you 60% of the ARV (appraised repair value), 5 points, 500 document fees, 6-month balloon payment loan at 10%.”

Assuming the property is appraised at $200,000, then your loan will be 60% or $120,000. Upfront costs are $6,000 points plus $500 doc fees. $1,167.60 is the loan payment until the property is sold or 6 months is up.

The Lending Process

1) Talk to the lender to see what they require and what you will need

2) Find a proper deal and put it under contract

3) Contact the lender again and inform them about the property you found, repair costs and what you think the ARV is

4) Have the appraiser value the property, either from the loan company or a list that the lender has supplied you

5) If the lender requires, place the documents they need in Escrow

6) The lender will inform you if they will or will not fund the loan, at what amount, and under what terms

7) You set the date to close the loan, either at the title company or the lawyer’s office. The loan company will issue the checks. If the buyer has cash coming back, the loan company will issue this check as well

In recapping, a hard money loan can be used to acquire distressed properties. The speed of the loan is much faster than conventional financing, usually 2-3 days compared to 30-60 days.

The hard money loans are for terms of 1 to 5 years with interest rates of between 10% to 20% and points between 4% to 7%. The advantage of using a hard money lender is that there is a low threshold for the securing of the loan. It is based mainly on the property value and not your credit or income. A drawback is that, with some lenders, you will need to have the cash to do the repairs and either flip the house or rent it within 6 months. Contact Level 4 Funding to talk with the people who know how to guide you through the process. It’s important to consult with experts as you move forward, especially if this is your first adventure into rehabbing.

Tuesday, April 10, 2018

Tips for Success When Using Hard Money Lenders

Borrowers can tend to be in a hurry when they are seeking hard money loans. Sadly that can lead to making a poor choice as a result of not checking out options for hard money lenders.

Finding the perfect property can be very exciting. The potential for making a great profit can make many new real estate investors rush through the process of selecting a lender. But using hard money lenders is no different than using a bank or a mortgage lender. And borrowers should always follow the same process when selecting their lender.

As with any business deal, you will want to complete some research on all potential lenders. This will tell you how long they have been in business, who they typically loan to and the types of loans that they normally offer. You might also be able to read customer reviews online or testimonials. All of this will let you know what other borrowers experiences have been with each of the hard money lenders that you are considering.

Talking to each lender will also give you a good feel for their level of interest in their clients. If the lender asks about your plans for the property, how you are financing the repair expenses and about comps in the area then he or she is interested in not only getting his or her money back but also in your success. Working with a lender who has a genuine interest in seeing you succeed will make the process much less stressful. Hard money lenders who are interested in creating long term relationships will express interest in each project. In addition, they will be more willing to work with you on creative or different terms than they normally offer.

What to Watch Out For

Bait and switch is a sure sign of an unethical lender. In these events, the lender offers great terms that the borrowers can’t refuse. Then as soon as the borrower verbally commits to the lender, the lender supplies a loan offer with drastically different terms. In most cases the interest rate is much higher and there are other hidden fees added to the final cost of the loan. A catch and release situation is where the lender charges several fees upfront that the borrower must pay before getting the actual loan offer. Once the borrower pays the fees then the lender ignores the borrower and never provides a loan offer. The lender gets to keep the fees and the borrower is faced to find a different lender. Both of these cases are certain signs of dishonest lenders.

Just Another Service Provider

When you are seeking any type of loan, don’t be intimidated by the lenders. Think of them as you would any other service provider and complete your due diligence to be sure that you are doing business with a reputable lender. An honest lender will not be offended by questions about their standard terms or loan practices.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Sunday, April 8, 2018

How to Benefit From Hard Money

Many borrowers have heard the term hard money but are not familiar with this type of loan or how it can be used. But understanding these loans can open up many opportunities for financial success.

A hard money loan is normally a short term loan that is offered by an individual or private lending group. The loan offer is based on the value of the collateral and not the borrower’s credit score or credit history. This makes asset based lending a very useful tool for certain real estate deals and other conditions when a traditional bank loan is not possible.

Being funded by a person or a small group means that a loan application can be very quickly evaluated and granted. This makes a hard money loan very attractive to a borrower who need funding very quickly to secure a purchase. The drawback is that the loan will carry a larger interest rate and also higher fees in most cases. But the borrower is willing to pay a higher rate for faster funding. Some borrowers will then refinance once the property is purchased while others will keep the short term loan as they are planning to flip the property very quickly.

Another reason that these loans are popular is the fact that they are based on the collateral and not the borrower’s credit. Having bad credit or no credit is not a crime but sometimes it can feel like it is. Getting a traditional loan or mortgage with bad credit is nearly impossible. So people with less than good credit are happy to pay a higher interest rate to get the loan that they need to purchase a property. And the lenders are willing to take the increased risk of lending to a person with bad credit because they are earning better interest. It is a win for both parties involved in the loan.

Novice’s In Real Estate

Getting into the real estate business is not difficult but you need to have the funding to get through the first few deals. Once you have bought, renovated and flipped a few properties, you will have built up a nest egg to uses for future purchases. But getting the money for that first purchase can be very tough. Banks and mortgage lenders are not interested in taking a risk on an unknown entity. But hard money lenders are willing to assume the risk to reap the greater reward.

Many Reasons to Pay the Higher Rates

Being money conscious or even thrifty is good in any business. But there are times when you just need to pay a little bit more to get what you are looking for. Having bad credit, no credit or no credit history are all good reasons to pay the higher rate to secure an asset based loan. The increase in the fees is a much better option than not getting the loan and missing a great opportunity to make a deal and turn a great profit.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Monday, April 2, 2018

The Top Differences to Watch for with Private Hard Money Lenders

While there are over 600 private hard money lenders in the U.S., no two are created equal. Understand the differences and what to look for when choosing a lender for your next project.

Looking for a short-term loan quickly? Need 7 to 10 days? Looking to purchase residential and commercial property for purchase and renovation? Obtaining quick capital via a private hard money lender may be your best option. In fact, this is one of the primary forms of financing for first-time real estate investors. Let’s take a look at what are the marked differences among the various lenders.

Some private hard money lenders focus on properties in relatively good condition, while others will fund properties in poor condition if you come aboard with a good business plan and the numbers to back it up. This includes an in-depth look at renovation costs, time frame, and market. You will also need to include the monthly costs that you’ll incur during the renovation process such as utilities, insurance, loan interest and property tax. Some companies and private investors loan only on the LTV or loan-to-value, while others will consider the ARV or after-repair-value. For instance, some will issue a loan up to 80 percent of the LTV or 70 percent of the ARV. If your model is to rehab properties in poor condition for a fix & flip, you’ll want to be sure to ask your potential investor which value they consider when funding a project.

Buy-and-hold investors, on the other hand, obtain private hard money lenders in order to ensure quick capital. After renovation is complete, they look to more traditional loans for longer terms and lower interest rates. You’ll find many private investors that specialize in one segment of real estate. For instance, there are hard money lenders that invest only in the office or multifamily segments, while others focus on the fix-and-flip model. You’ll want to be sure to find one that is comfortable and knowledgeable in your area. There are even hard money lenders that fund residential loans. These are, in most cases, considered bridge loans—short term loans that bridge from one property to another such as when home owners buy a new home before their old home sells.

Interest Rates and Average Lender Fees

Going into this arena of commercial lending, it’s important to be aware that the interest rates are going to be higher than conventional mortgages because the hard money loans are shorter terms, interest-only payments, and increased risk for lenders. The interest payments are considered “holding costs” and are monthly fees incurred prior to selling or refinancing. These interest-only payments result in lower monthly payments. When you agree to a loan with a hard money lender, there can also be what are known as “loan origination fees” or “points.” Additional fees that the borrower may be required to pay include closing costs, appraisal costs, application fees, prepayment penalties and loan extension penalties.

At Level 4 Funding, we offer loans from 7.99 percent APR with 90 percent LTV.

In addition, we do not charge prepayment penalties and can often fund within days. Because we work with hundreds of private investors, we can usually find an investor in your niche who can offer you the best terms and rates for your project. Call us today for a no-obligation quote.

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Monday, April 30, 2018

Real estate property purchases will benefit by knowing some ways to evaluate a property to best obtain hard money loans. Level 4 Funding offers the following tips to best evaluate the property you wish to get a loan for.

Sunday, April 29, 2018

You may be seeking a hard money loan and looking for the lowest possible interest rate, but there may be additional costs you could be unaware of beyond the interest rate. You will be at a disadvantage if you aren't aware of these expenses and don't try to negotiate with your lender.

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