So, what is a Private Loan? It is a loan made, in this case, to a real estate investor and is secured (collateralized) by real estate. Private Money Lenders California are typically given a first or second mortgage that secures their legal interest in the property thus securing their investment. We are not talking about high Loan-To-Value (LTV) ratios the banks and savings and loan institutions make on homes. We typically employ low LTV ratios to our Private, also called Hard Money Lenders California, to increase security of the loan. Standard LTV ratios are usually under 75% of the value of the property securing the loan and frequently as low as 60%. This means additional security on the investment.
For example, if a property is valued at $100,000, Hard Money Lenders California would usually not loan more than $75,000 dollars on the property. That’s a 75% loan-to-value ratio. This approach taken by private money lenders California is obviously a much safer approach from that taken by conventional lenders. These banks get into trouble because they make loans at a 90%, 95%, or even 100% loan-to-value ratio leaving them no equity for transfer costs, if they are ever forced into a position where they have to take back the collateral property. It is in the best interest of the hard money lenders California to minimize risk and maximize return and this is why private loans should not be made without a 25%+ safety net.
Dennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027111 Congress Ave |Austin | Texas | 78701
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.