Monthly Archives: April 2019

The Difference Between Banks and Colorado Private Money Lenders

April 28, 2019Uncategorizedbigdaddydennis

When you’re attempting to get funding for a fix-and-flip or a new business property, is it better to go with a bank or a Colorado Private Money Lender? The answer depends on a range of factors, so let’s look at some of the pros and cons.

Banks can offer lower interest rates. Why? Two reasons. First, banks have tons of retail customers who deposit their money into savings and checking accounts. They pay their customers very little in interest (almost always under 1 percent), so they can afford to lend out funds at a lower rate. Additionally, banks can draw on federal funds at incredibly cheap rates, so they can turn around and mark up their rates to make a profit.

Conversely, private lenders get money from individuals or groups of investors who are looking for a basic return. Private lenders also aren’t backed by a gargantuan system that supposedly “can’t fail.” Rather, they take on substantial risk, so they want the possibility of a higher return.

Why Go with a Private Lender Over a Bank?

If banks can offer lower interest rates, why would anyone want to go with a Colorado Private Money Lender? After all, aren’t interest rates the only consideration when it comes to borrowing money? Not so fast. Depending on your situation, the interest rate may be less important than other factors.

For instance, if you’ve had a blemish in your financial history or your credit score isn’t perfect, you won’t fit into the banks’ narrow box and you may get turned down. With a private source, you can sit down with them, explain your plans, show them your passion for the business and you have a much better chance of getting funded.

Moreover, with all their complicated underwriting and regulatory hoops, bank loans can take a long time to come through. If you’re in the fix and flip game or you’ve got your eyes on the perfect property, you don’t have the time to wait a month for funding. With private money, you can get approved in a matter of days and have that money in your account in a matter of weeks.

Finally, banks add a lot of extra costs on their loans that have nothing to do with interest rates. Private loans can have a fee or two, but they are nothing compared to conventional loans.

Getting Private Money in Colorado

Need a Colorado Private Money Lender? You’re in the right place. We have decades of experience in the Copper State, so what are you waiting for? Give us a call today!

Dennis Dahlber Broker Ri CEO Level 4 Funding LLC 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

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.

Here’s How to Figure Out Your Loan-to-Value Ratio in Colorado

April 28, 2019Uncategorizedbigdaddydennis

Looking for funding for a fix-and-flip or a refinance? Your loan-to-value ratio in Colorado is incredibly important. Here’s a simple way to figure it out.

If you’ve ever searched the internet to look for funding to buy a home, a commercial storefront, or an income property, you’ve probably come across the term “LTV.” The mortgage industry is full of confusing code words and abbreviations. For newcomers, being inundated with this jargon can feel intimidating. Like most things, though, once you cut through some of the dense vernacular, it’s not as complicated as it seems.

As an example, let’s break LTV down right now. LTV is short for “loan-to-value ratio.” It’s the amount of the loan you’re asking for compared to the value of the property you want to buy. In other words, it represents how much of the property you actually own versus how much you owe.

How to Calculate Your Loan-to-Value Ratio

Calculating your LTV is simple. To do it, simply divide the amount of the loan you’re asking for by the value of the asset that’s securing the loan (the property you’re buying).

Example: Let’s say you’re looking to buy a property that’s valued at $100,000. You have 15 percent of that in cash for a down payment, leaving you with the need to borrow the remaining 85 percent. In this case, your LTV ratio would be 85.

Those nice even numbers are easy to figure out in your head, but if things get a little more complicated, here’s a simple trick: open Google, type amount you need to borrow, followed by a slash and followed by the value of the property and you’ll get your LTV. In the above example, you would type in 85000/100000 and Google will spit out the answer: 0.85, which is 85 LTV.

Why Does LTV Matter?

It’s simple. A higher LTV means a higher risk for the lender. Even Colorado Hard Money Lenders don’t really want to take over your property; they want to be paid back in a timely manner. Also, if you have more of your own money invested in the property, you’re more likely to have a vested interest in keeping it nice and making on-time payments.

It’s not the end-all, but knowing your loan-to-value ratio in Colorado is an important factor in getting the funding you want. If you have questions about your LTV or anything else about Colorado Hard Money Loans, give us a call today!

The Real Deal on Winning the Real Estate Game Using Colorado Hard Money Loans

April 28, 2019Uncategorizedbigdaddydennis

It IS possible to play — and even win — the real estate game using Colorado Hard Money Loans. Here’s a rundown of who they work for and why they can be a better choice than conventional bank loans.

Traditional bank loans and Colorado Hard Money Loans differ in a variety of ways, and those differences give borrowers a diverse range of options from which to choose when they need funding. Let’s look at some of the most important distinctions:

Because they have complex underwriting and tough regulations to abide by, banks love to do paperwork. They will check your credit score and if it doesn’t meet their minimum requirement, you’re out of luck. They will dig into your history and if you have a blemish or two, you’re out of luck. They will check your bank accounts and assets, and if you don’t have the dough, you’re out of luck. And, thanks to the recession, these qualification requirements got even more strenuous after the passing of the Dodd-Frank Act.

Conversely, Colorado Hard Money Loans exist outside the traditional banking system. The funds come from private investors, so there are fewer hoops to jump through. Yes, you’ll need to pass some basic sniff tests, but lenders in the hard money game are more concerned with your collateral, your plans, and your passion than your history, your bank account, or your credit score.

Operating outside the conventional system gives these loans another advantage over bank loans: they’re lightning quick. With all the paperwork and underwriting, a bank loan might take over a month to come through. Colorado Hard Money Lenders, on the other hand, can get you approved in a matter of days and you can have the funds in as little as two weeks.

Who Can Benefit from a Colorado Hard Money Loan?

Keep in mind that hard money comes with higher interest rates and shorter terms. These types of loans are perfect for people who want to make money in real estate but don’t have a spotless record or a shining credit score. They’re also ideal for people who want to move quickly to close a deal that might not be available for long.

Finding a Colorado Hard Money Loan

If you think a Colorado Hard Money Loan sounds like the right move for you (or you just want to find out more about them), give us a call today!

Why Colorado Hard Money Lenders Turn Down Borrowers (And What You Can Do to Avoid It)

April 27, 2019Uncategorizedbigdaddydennis

Colorado Hard Money Lenders are known for having low qualification requirements for their loans, but fix and flippers who are new to the game sometimes get turned down. We’ll tell you why and help you know what you need to get approved.

Let’s face it. We live in the age of the fix and flip. Every week, there’s a new show popping up about couples who do flips, and most us know at least one person who’s tried his or her hand at flipping. All of this can make it seem like a simple way to make millions overnight. And, yes, it can be lucrative, but you’ll need to have a strong strategy in place and know your numbers backward and forward. Even then, an inexperienced flipper can run into unforeseen issues that derail the project entirely.

One of the biggest problems new flippers run into is not knowing how much cash they need. Some lenders will fund up to 90 percent of the sale price, but you’ll often have to come up with the rest. Even more pressing, though, will be the costs of repairs. It’s an almost universal rule with flipping: it always costs more than you think. The best way to minimize this reality is to hire a trusted, experienced inspector who goes over the home with a fine-toothed comb.

The second biggest issue for first-time flippers is not having a plan. And having a plan, in this case, means more than just having a schedule and a basic budget for the work that needs to be done. Colorado Hard Money Lenders are taking a big risk on your dream, so they will want to know your timeline, exit strategy, and backup plan in detail. Here’s the good news: you can employ a range of professionals to advise you, hire a seasoned flipper, and consult with a contractor to get a solid plan in place.

What Else Could Stand in the Way?

This is the reality: even the more seasoned pros will run into issues on a flip. It’s the ways you prepare for and handle those bumps that will ultimately determine your success. If you’ve been turned down by banks and other lenders before, don’t give up hope. Rather, ask questions to see if there’s something you can do to increase your odds next time.

Here’s How to Get Started on Your First Flip

Every Colorado Hard Money Lender is different, especially in terms of what they’re looking for. The more you crunch the numbers and the better you prepare, the better your chances are of getting the green light. Here at Level4Funding, we work with experienced flippers, but we’re willing to listen to newcomers as well. If you’ve got a dream and a plan, give us a call today!

How to Make Money with Owner Occupied Colorado Hard Money Loans

April 27, 2019Uncategorizedbigdaddydennis

Owner-occupied Hard Money Loans in Colorado are fantastic for real estate investors who are just starting out but have dreams of making a big splash. Here’s how to leverage one to dip your toes into the real estate biz.

A lot of people love the idea of getting into real estate investment. After all, it’s a great, time-honored way to build wealth. Many back down, though, when they see how expensive it can be to get started. That’s where owner-occupied loans come in. They offer dreamers with a bit of entrepreneurial spirit the opportunity to build, even when they don’t have a lot of scratch to bring to the table. Before we look at how to use one, let’s look at how they differ from a typical loan.

As the name implies, owner-occupied means you intend to live in the property you are buying. HUD homes and foreclosures often require you to do this for at least a year before converting it into a rental property, and many HOAs also have a similar requirement (though these can be much longer).

Non-owner occupied means the purchaser won’t be living at the residence. These are important distinctions when it comes to the mortgage industry. An owner-occupied loan will generally receive better terms because the lender sees it as a smaller risk.

A Great Bet for People Just Starting Out

When you’re first starting out on your journey to real estate domination, you usually don’t have the fat wallet and a great credit history that banks drool over. Owner-occupied Hard Money Loans in Colorado are secured with collateral and they use funds from private investors, so lenders are more concerned with your tenacity than your bank account and past transgressions. Even better, they come through in a matter of days, meaning you can jump on that dream property faster than with a bank loan. And, here’s the beautiful thing that happens when you end up living on the property: you fall in love. You learn all the nuances of the home; you put your blood, sweat, and tears into it to make it the best it can be. The love and attention you give it will pay dividends a few years down the road when you’re ready to sell or convert it into a rental property.

Get Ready to Grab Your Paint Brush

If you’ve found a great property and you’re ready to grab a paintbrush and start your adventure, give us a call. We can talk about your dreams and figure out the best way to finance them.

How to Find and Finance a Rental Property

April 27, 2019Uncategorizedbigdaddydennis

If you’re thinking about becoming a landlord for the monthly income and property appreciation, you’re probably full of questions about how to make it happen. Here’s a guide that covers all the basics, from researching properties to getting a Colorado Rental Property Loan.

Research, research, research. Take a course on real estate. Make friends with local agents. Read up on property values. Study the trends of every neighborhood in your area. Being well-informed will go a long way toward making the right decision about your investment property.
Know your cash flow situation. To figure out whether you can make money as a landlord, you need to crunch the numbers. Know how much you can afford by figuring the following expenses into your calculations: mortgage, maintenance, insurance, taxes, utility bills, and any association fees.
Find the right financing for your situation. If you’ve got near-spotless credit, a sizeable down payment, and a great history, you may be able to go through the banks or credit unions. You might get a low interest rate, but securing a bank mortgage is more difficult these days, plus they can take a while to come through. Private loans may be a better alternative. Regardless, knowing your options ahead of time is important.
Find a good price. Now that you know how much you can afford, you can begin your search for a property. Look to pay 10 to 20 percent below market value. To find that gem, work with an agent with plenty of experience in the area, or look for a property that needs repairs or updating.
Set your rental price. Consult with other landlords, check out the ads for rentals in the area, and use online rent pricing tools to arrive at a good number. Obviously, you need to make sure you’re making a good profit after the mortgage, taxes, and monthly maintenance.
Screen tenants. Here’s where you can save yourself the most stress. Finding a responsible, clean renter who pays on time will make all the difference. To do this, get a background check, call previous landlords, and think about paying for a screening service.

Getting a Hard Money Colorado Rental Property Loan

If the banks and credit unions are turning you down (or you just prefer to work outside the conventional banking system), a hard money Colorado Rental Property Loan might be the way to go. You’ll use collateral to secure the loan, so you won’t have to jump through the same hoops.

Colorado Rental Property Loans in Colorado

Level 4 Funding offers Colorado Rental Property Loans of up to 90 percent LTV with flexible terms and no prepayment penalties. Plus, you can get funded in a matter of days! Call us today to find out how.

How a Bridge Loan Saved This Colorado Family

April 26, 2019Uncategorizedbigdaddydennis

Can a loan help a family find a safe haven? This is the story of John and how a Colorado Bridge Loan helped his family survive a tough road.

Everything was going great. John graduated from high school at 16 and college at 19, an accounting wunderkind, and landed his first job in finance at the tender age of 21. Soon after, he met Mary and fell madly in love. After a wild few years of travel and exploration, they settled down. First came Alex, a precocious boy with a shock of blonde hair that gave him movie-star good looks in high school. Then came Laurie, a sweet girl with dreams of being a fashion designer.

Along with the kids came the need for a bigger house. After all, the kids needed their own rooms, Mom needed space for her stay-at-home business, and the whole family needed a kitchen that could accommodate everyone’s food needs. They found a nice 4-bedroom in a high-end development outside of Denver and the kids thrived. Alex was a triple threat, playing baseball, football and basketball at the local high school, while Laurie excelled in her studies and did every extracurricular option the school offered.

Then, a perfect storm. The recession hit. John was laid off. It came time to pay for Alex’s college tuition and room and board. Mary’s business dried up. Now, the family was stuck with a mortgage payment they could no longer afford. They decided to sell but it was too late. The market was belly up and no one was interested in a big house in the suburbs. Plus, that big house in the suburbs had lost half its value in the meantime.

Still, it was their only option. The house sat on the market for a month. Then 2 months. Then 3 months. John and Mary found side work, but it was barely enough to stay afloat. Soon, they would drown. They wanted to downsize to something affordable but without the proceeds from their current house, there was no way they afford to buy something else.

Finally, after nearly 6 months of trying to sell the house, John found a buyer. They would be able to sell the house, but the process would take two months. In the meantime, the family was able to take out Colorado Bridge Loan. It allowed him to get into a smaller house with a more affordable mortgage while he waited for the current house to close. When it did, life calmed down. They turned the Colorado Bridge Loan into a new mortgage with ultra-low rates. That new, low-stress lifestyle meant that they could pay for Alex and Laurie’s tuition, take vacations and ride out the recession.

Is It Possible to Flip Houses in Colorado with Little to No Money?

April 26, 2019Uncategorizedbigdaddydennis

It might seem impossible, but it is possible to do a flip without any money down. One way is a Colorado Fix and Flip Loan, but let’s break down all the options.

There are three common ways to get a property for no money down that you intend to flip. Here they are:

Wholesaling the fix and flip. Wholesaling means selling a purchase contract before you’ve even bought the property or properties. To do this, you’d find an investor (or a network of investors) and use a document called an Assignment of Contract. This document says that another buyer can take over your buyer’s rights before you’ve closed on the property. You and the investor would share the difference in the profits. This method can be better than plunking all your money into a property, but it also involves a lot of expertise and a silver tongue.
Using Private Money. If you can find a cash partner, you can divide the cost — and, more importantly, the risk — with another person or two or three. Those people could be family members or friends. Or they could be an investment group that goes in together on a smart real estate move. This option is good for people who have at least some experience fixing and flipping properties.
Hard money Colorado Fix and Flip Loans. If you have an existing property that’s paid off, you can use that as collateral for a Colorado Hard Money Loan. Colorado Hard Money Loans have more relaxed qualification criteria, so even if you have bad credit or foreclosure in your past, you may be able to get funding. They are typically offered for short periods of time — often between three months and a year — and the interest rates can be higher than a traditional bank loan. This type of loan is ideal for people who already own property and have some experience flipping (although sometimes hiring an experienced contractor can be enough).

Finding the Right Fix and Flip Property

Whether you go with private money, wholesaling or hard money, you’ll need to spot the opportunities that will make investors willing to invest. Make sure you’re running all the numbers and leaving enough potential profit for everyone to make money. We recommend buying in an established neighborhood or one that’s up-and-coming.

Colorado Hard Money Loans for Flipping Properties

We have a lot of experience in the Colorado Fix and Flip Loan business. If you’re looking to make a sound investment with little or no money down, give us a call today to see how we can help make it happen.

What Happens If You Default on a Colorado Hard Money Loan?

April 26, 2019Uncategorizedbigdaddydennis

It’s the scenario borrowers (and lenders) dread the most — what if you can’t pay back your Colorado Hard Money Loan? Let’s look at some of the consequences. Hint: they’re not as scary as they may seem.

Everyone who borrows money has the intention to pay it back. And every lender lends money with the intention of getting it back. In a perfect world, this harmony would remain intact. However, life can be messy. There are unforeseen circumstances that get in the way. The property that looked golden ran into all sorts of roadblocks that killed your profit. The city’s unreasonable laws messed you over royally. The timeline you’d so meticulously planned went off the rails and you just don’t have the cash to make the payments.

With a bank loan, you might default and receive notices for months before the bank would take your property back and evict you. Then, the short sale or foreclosure would be on your record for years and years to come and that can put a serious damper on your ability to make a living or find housing.

Three Scenarios After Defaulting on a Colorado Hard Money Loan

But what about a Colorado Hard Money Loan? By the harsh sound of the name, Colorado Hard Money Lenders would knock on your door and break your fingers, mafia-style and threaten to make you sleep with the fishes.

The reality is much different. Hard money comes from private investors and is sometimes brokered by third parties and this changes the rules a bit. Many lenders are willing to work with you and come up with a repayment plan that works.

Some lenders will have a clause in the contract that will up the interest rate if you default. For example, the rate could go from 7.5 percent to 11 percent. This gives the borrowers more time to come up with the payment and gives the lender incentive to let things go on longer.

A lender could also foreclose on the property, just like the bank. However, unlike the bank, there is another option. Rather than be foreclosed upon and have that on your record for many years, you can often choose to give a deed in lieu of foreclosure. This may satisfy the loan, leaving you free and clear, and leaving your credit score and history intact.

Colorado Hard Money Lenders in Colorado

Every Colorado Hard Money Lender is different and every Colorado Hard Money Loan can be customized to fit your situation. Call or chat with us today to find out how much you can get and how we can work together to get you the funding you need.

Do Colorado Hard Money Loans Affect Your Credit?

April 25, 2019Uncategorizedbigdaddydennis

Because Colorado Hard Money Loans are private loans that operate outside the traditional banking system, we get this question a lot around here: will a Colorado Hard Money Loan affect my credit? Let’s break it down as clearly and succinctly as possible.

The answer to this question comes down to the differences between a conventional bank loan and a Colorado Hard Money Loan. When you get a common mortgage or loan through the bank, they will run your financial life through a system of checks to see if you’re the type of person who will pay the loan back. This will include peering into your bank account to make sure you’ve got enough for a sizeable down payment and looking at your financial history to make sure you haven’t had any major blemishes. The folks at the bank will also run a credit check to look at your score and see if you’ve had a short sale, bankruptcy or foreclosure in the past. If you have, or if your score doesn’t pass muster, they’ll reject you flat out.

When they check your score, your credit will take a small ding, typically in the range of five to 10 points. If you end up defaulting on the loan, your credit score will take a major hit and it could haunt you for years to come.

Loans from Colorado Hard Money Lenders work differently in several defining ways. For one, they’re offered by private investors so there aren’t any major regulatory hoops to jump through. More importantly for our purposes, they’re secured by collateral. This means that the lender knows he or she will be able to recoup a loss in a worst-case scenario. Because of this, lenders aren’t as concerned about credit scores and past histories. In fact, some may never even check your credit score, meaning you wouldn’t even take the small hit you would from a bank.

What if You Default on a Colorado Hard Money Loan?

If you fail to pay back a Colorado Hard Money Loan, the lender can often take action. First, they would probably try to work with you. Barring that, they can foreclose on the property. However, many lenders will also accept a deed instead. It’s an important distinction — in the case of a foreclosure, your credit will be affected. With a deed, your credit will remain untouched.

Where Can You Find Out About Colorado Hard Money Loans?

If you’re thinking about going the hard money route, you’ll want to find out as much as you can first. We’re here to help. Give us a call or chat with us online at any time to find out what type of loan will work best for your situation.

Level 4 Funding Private Hard Money

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Monthly Archives: April 2019

The Difference Between Banks and Colorado Private Money Lenders

Why Go with a Private Lender Over a Bank?

Getting Private Money in Colorado

Here’s How to Figure Out Your Loan-to-Value Ratio in Colorado

How to Calculate Your Loan-to-Value Ratio

Why Does LTV Matter?

The Real Deal on Winning the Real Estate Game Using Colorado Hard Money Loans

Who Can Benefit from a Colorado Hard Money Loan?

Finding a Colorado Hard Money Loan

Why Colorado Hard Money Lenders Turn Down Borrowers (And What You Can Do to Avoid It)

What Else Could Stand in the Way?

Here’s How to Get Started on Your First Flip

How to Make Money with Owner Occupied Colorado Hard Money Loans

A Great Bet for People Just Starting Out

Get Ready to Grab Your Paint Brush

How to Find and Finance a Rental Property

Getting a Hard Money Colorado Rental Property Loan

Colorado Rental Property Loans in Colorado

How a Bridge Loan Saved This Colorado Family

Is It Possible to Flip Houses in Colorado with Little to No Money?

Finding the Right Fix and Flip Property

Colorado Hard Money Loans for Flipping Properties

What Happens If You Default on a Colorado Hard Money Loan?

Three Scenarios After Defaulting on a Colorado Hard Money Loan

Colorado Hard Money Lenders in Colorado

Do Colorado Hard Money Loans Affect Your Credit?

What if You Default on a Colorado Hard Money Loan?

Where Can You Find Out About Colorado Hard Money Loans?