Category Archives: arizona hard money loans

How to Develop an Exit Strategy When Obtaining a Hard Money Loan

An exit strategy is, in essence, your plan for paying off your hard money loan. It is a plan that you will want to develop before you sit down with a lender.

Exit strategies are crucial for obtaining a hard money loan. Many of these lenders offer interest-only payments as you develop or renovate your project. They obtain the big payoff upon completion when you have succeeded in your “exit strategy” and can repay them in full. For those of you in the fix & flip model, your exit strategy is fairly easy to define. You rehab and then sell the property.

Selling the property, then, is your exit strategy. Because timelines can change in the world of construction and rehab as well as finding qualified buyers, it will be important that you look for a hard money lender that does not charge a prepayment penalty. You’ll also want to come to the table with improvement plans that include costs and potential market value as well as comps and average time on the market.

If your real estate segment falls into the buy-and-hold model, selling will, obviously, not be an appropriate exit strategy. A strategy that does work is refinancing. Many traditional lenders that offer lower interest rates with longer terms will not loan on properties in poor conditions. Once you have the property renovated and a suitable tenant, your chances of obtaining a traditional loan are greatly elevated. It could be that you needed a loan quickly to jump on a property that just hit the market. Many investors obtain funding from their hard money lender in order to accomplish a quick buy and then refinance at a later date.

The Sale of Assets

The sale of other assets such as real estate or accessing additional funds such as money from IRAs, the stock market, or business interests is another exit strategy. You may wonder why, in this case, the borrower wouldn’t just dip into their additional assets and bypass the loan process all together. For many investors, time is a crucial component in their investment strategies and waiting while other assets sell may cause them to miss a prime property or opportunity. In essence, you are obtaining a bridge hard money loan. These types of short-term loans simply “buy some time” and act as a “bridge” from either one loan to the next or one property to the next.

Don’t feel like you have to stick with one exit strategy. Blended strategies can often be the best solution depending on the situation.

And just what is a blended strategy? This type of exit strategy utilizes a combination of all of the above to create a strategy that works the best for your particular situation. For instance, if you cannot obtain the full loan amount upon completion of the project, you can sell an asset and reduce the LTV so that a traditional lender will consider financing. Whatever your exit strategy, be sure to check with Level 4 Funding before obtaining your hard money loan. We have years of experience and can help you develop an exit strategy that works well for your project.

Dennis Dahlberg
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177 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 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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Traditional Bank Loan or Arizona Hard Money Loan

You probably have observed currently that conventional financial institution loans are getting increasingly more troublesome to get relating to your actual property wants, you then aren’t alone. Actually, based mostly on paperwork alone, you’re quite a lot of time wasted. It is perhaps price your time to look into Arizona hard money loans for the true property investor.
This may appear complicated. Most individuals don’t even know that you may get a loan with out a financial institution, however with Arizona hard money loans, you completely can. And the quantity of paperwork you don’t should do will completely stun you. Banks made an enormous mess on the market, giving loans to individuals who should not have them and now they’re actually cracking down and making it actually troublesome to get a loan in case your credit score is not in tip-top form and that’s the place Arizona hard money loans are available.
Not will it’s important to bounce when the financial institution says bounce, as an alternative you’ll be able to have the money you want proper once you want it. Think about the kinds of Arizona hard money loans that you may get. You will have Private money lender Arizona or you’ve hard money lender Arizona. Each may also help you make the fee it’s essential to get the property that you really want. Whether or not you want to repair up a property or you want to put some money down earlier than another person buys the property, Arizona hard money may also help you get the money that you just want. You received’t even should show your credit score rating. 
Your private money lender Arizona or hard money lender Arizona would not thoughts what it’s. Your credit score rating has nothing to do with the property you need the money for. Take the time to consider getting Arizona hard money on your subsequent funding.

Dennis Dahlberg

Degree four Funding LLC
Tel:  (623) 582-4444 | Fax: (888) 279-6917
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112
Phoenix AZ 85027

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