Private Money Lenders in Arizona differ from conventional lenders in a number of ways. Understand the key differences so that you can determine which lender is right for your project.
To start, you need to understand that Private Money Lenders in Arizona differ from conventional lenders. These lenders loan to individuals and companies seeking to rehab a property. The Private Money Lenders in Arizona are also known as Arizona Hard Money Lenders. Utilizing this type of lender will allow you to compete for a property that you may have located, and a cash buyer is also competing for the same property. Additionally, private lenders will lower your costs of funds and allow you to leverage your capital so you can take your business to the next level.
Conventional lenders offer long-term loans so you can purchase a home to live in. These consumer mortgages have strict rules and requirements for underwriting. This is due in part to the financial crisis of 2008 when the government stepped in and changed the rules for securing a consumer mortgage.
Private Money Lenders in Arizona work with businesses and investors. Since they do not work with consumers for typical 30-year fixed mortgages, these types of lenders do not have to comply with consumer regulations. The loan, from private lenders, can be structured to the needs of the rehabber for flexible and fast financing. The loan will be priced to compensate the lender for the risk that they will be taking.
Short Term Loans
Conventional (consumer) mortgages will be offered in 15-year to 30-year terms. The private money loans (rehab loans) will run 6 to 18 months with most maturities within a year. Private rehab loans are not the vehicle to use if you are planning on rehabbing the investment property and keeping it. If you are seeking to purchase and rehab a dilapidated property, then this is the loan you want to utilize. This is the type of loan which is easy to purchase, rehab and sell the property. Underwriting rules are developed by the underwriter who is, in this case, a hard money lender. The lenders will evaluate each project on its own merits and determine the interest rates that will compensate the lender for the risk that they will take. The lenders have underwriting guide lines which differ from lender to lender. The hard money lender looks at such things as where the property is located and how fast it can be sold in case of a default. Most of these lenders will look at the borrower’s business plan, people involved, and the likelihood that the project can be completed profitably.
Unlike conventional lenders, borrowers often work closely with the hard money lender.
Once a conventional lender underwrites a mortgage, there is little communication with the borrower. With a Private lender (hard money lender) you will be establishing a relationship for the current project and future projects. Your success as a rehabber depends on how quickly the lender can act and get to closing, the interest rate which is charged, and working with you to get the draws as the project moves forward. At Level 4 Funding, we work with hundreds of private lenders. Call us for a no-obligation quote.
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.