Each state has different processes and laws for buying rental properties. This article will reflect Arizona specifically.
So, you are considering buying an investment property in Arizona—and you are wondering what the process looks like. The first thing you need to do is determine your budget. Keep in mind that this will be a home for someone other than yourself and so it must meet certain criteria—this usually means you will need to make some repairs and upgrades on it. When obtaining financing these rehabilitation costs need to be included.
Once you find a property—the next step is negotiating a price. After that, you will have a home inspection process and appraisals. But, unless you have cash—where is this money coming from?
TRADITIONAL LENDING VERSUS HARD MONEY LENDING FOR ARIZONA RENTAL PROPERTY LOANS
So, you have been pre-approved by the bank, but now you must go through the long, tedious process of obtaining approval. Using traditional funding is a lengthy process that can easily take up to 90 days—banks have a very strict underwriting process that slows everything down. Many times, investors lose the property to a cash buyer. The problem borrowers run into with investment properties is these are non-owner occupied loans—meaning the owner will not live in the home. There are some specifics you ought to be aware of. First, you will certainly have a higher interest rate and closing costs will be higher, as well. Your down payment will be much higher than your owner-occupied home, also. With conventional mortgages banks will require that borrowers maintain a certain amount of money in reserve at the time the loan closes—reserve requirements typically range from two to six months of total monthly housing per property—think how much that will be after two or three investment properties.
Many investors choose hard money loans for rental properties. With a hard money loan chances are your down payment will be smaller and it is possible you could have no required down payment. The approval process is quick—it is possible to receive same day approval and funds within a week. An investor can compete with all cash buyers easily using a hard money loan. You are also able to borrow more with hard money lending. When banks require your down payment that is their security threshold. With hard money lending for an Arizona rental property, the security is backed with the property.
Hard money loans can be a great starting point for Arizona investors.
Hard money loans can be extremely helpful if you do not have the large down payment required for an Arizona rental property or the time to save money for the down payment. They can also be beneficial for competing with cash investors. Arizona Hard Money Lenders can help you through the process and start expanding your real estate investment portfolio.
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
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 the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.