3 Things to Know Before Seeking a Land Loan



There is a lot more to know about Arizona Land Loans than just the traditional information such as interest rates and terms. These three pieces of information are essential for borrowers to know before looking for a loan.

When you are looking at buying a house, you know that you need to talk to banks and other lenders to determine the amount that you can borrow. That information is what will determine the price of the house that you can afford. But when you are buying land, there are a few more things that you need to take into consideration. Knowing these three tips will help you to make a better and more well-informed choice about getting your Land Loan and how to use it.

When you are buying land, it is not the same as buying a lot in a subdivision. A lender is going to require a detailed description of the property in addition to having the boundaries marked by a surveyor. You will also need to research any zoning or land use restrictions and provide that information to the lender. Having utilities on the lot is also a significant benefit. Lenders know the cost and time involved in site improvements and is happier to lend their money on lots that already have water, electricity, sewers, and roads.

How you plan to use the land can also have a significant impact on the loan. Lenders like property with structures that are considered tangible assets or collateral. If there is no structure, but you are planning to build immediately, a lender will traditionally offer terms including a 10% to 20% down payment. If the lot will sit vacant for an extended period of time, the down payment could be as large as 50% of the property’s value. And if the improvements are not going to be substantial, say a barn or storage facility, the interest rate, and down payment will both be larger. This is because the lot itself does not hold much value, and the lender does not want to take possession of empty land in the event that you default on the Land Loan.

Options for Financing

Due to all of the red tape and qualifications of a traditional loan for land, you might want to consider other options. In some cases, the current landowner is willing to offer what is called seller financing. Because this is a loan between two private individuals, the terms are all negotiable. Another option is to seek a local credit union or lender who might offer more favorable terms than a larger national lender. Or, if you own additional property, you might be able to finance the land yourself by using a line of credit on the other property.

Going Private

For greater flexibility on the terms of a Land Loan, consider borrowing from a private or hard money lender. This is a person whose business is lending money. And the best part of this type of loan is that the lender is free to set the terms that work best for both himself and his borrower. Check out all of your options before selecting the type of loan that you will be using when buying a piece of land. Investing a little time could save you a great deal of money and frustration.

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
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.

© 2016 Level 4 Funding LLC. All Rights Reserved.
Copyright | Privacy Policy | *Terms & Conditions

Understanding the Different Types of Land Loans



When you are purchasing land, it is essential to understand the function of all types of Arizona Land Loans that are available. Applying for the wrong kind of loan could be a costly mistake.

Most people are familiar with the process of securing a loan for a new home. But when it comes to getting a loan for a land purchase, the process is a bit different. There are actually three different types of Land Loans, and each one has a different purpose. Understanding the proper way to sue each loan is critical before you begin the loan application process. Applying for the wrong type of loan will not only waste time, but the application fees could also be lost.

Raw land is a piece of property that has absolutely nothing on it. This means no structures and also no utilities such as electricity, sewers, or city water. In addition, there are no roads on the property. If you are planning on buying land that has no improvements, then you are going to need to apply for a raw Land Loan. These Loans are some of the most challenging to get because lenders are concerned about how long it will take to have the land improved and for construction to begin on the property. The longer the land sits without improvements, the higher the risk to the lender. To counter all of this perceived risk, the interest rates are high, and the down payment can be as much as 50% of the value of the land.


Lot Arizona Land Loansare the next tier above a raw Land Loan. These lots have some of all of the infrastructure in place, such as water or electricity. A lot Land Loan is most often used for residential construction in an established area. Lenders see less risk involved in these Loans, and for that reason, the interest rates are far more reasonable. The interest can be from 10% to 20%, and the term for a lot Land Loan can extend up to 20 years.

Construction Loans Cover More Than Land Loans

A construction loan is a more substantial loan that will cover the cost of both the purchase of the land and the construction of the structure. These Loans require a credit score of 700 or more and a very low debt to income ratio. You will also need proof of a reliable income and the appraisal value of the structure that you intend to build. A construction loan often requires 10% to 20% down in addition to approved construction plans. Most lenders will also need some information about the builder to make sure that the firm is licensed and reputable.

More Critical Information

In many cases, the lender will offer a pre-approved builder list. This can eliminate a great deal of time during the approval process and much paperwork on your part. This also expedited the draw or payment process throughout the construction loan. These payments are made from the lender to the builder as specific milestones are met. Construction Loans only extend through the end of the build process, which is usually about one year. During the term of the loan, you are only responsible for making the interest payment. Once the construction is completed, the loan is converted into a 15 or 30-year traditional mortgage. Knowing how to use each type of Land Loan correctly is sure to save you both time and money.

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
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.

© 2016 Level 4 Funding LLC. All Rights Reserved.
Copyright | Privacy Policy | *Terms & Conditions

16 January, 2020 20:05

[title: How To Make a Profit with Arizona Land Loans]

Making a profit with Arizona Land Loans seems simple: secure a property and sell it at a higher price, right? Turns out, it’s not so easy and there’s a few tips you can take into account to make your investment successful.

Investing in land is an option many people are choosing to aid in their finances. Whether it is to build on the land themselves a modern, updated home or save the property for the opportunity for sale in the future, land investments can be great options for buyers looking to make money in the real estate market.

However, not all land is equal. Before settling down on a property, you should really take the time to consider the location of your land, nearby developments, and the ability to implement amenities, like a sewer system, water line, and power. Investing in land with potential will give you and your potential buyers more options. This means when you take out Arizona Land Loans, you are getting more for your money, rates, and accumulating interest.

You may choose a great property because of its size and potential for development, however, if it is not located near business or school districts, it is less likely to be purchased by a family looking to buy. You also need to consider some technical requirements. What does the city require of the land should it be developed further? Understanding zoning requirements as well as covenants, conditions and requirements are musts before purchasing a vacant lot.

Why You Should Work with a Private Money Lender

Working with a Private Money lender can be helpful because of the time and focus they can give you. Unlike public money lenders, like banks, they can work with you on a much more individualized level. So, if you are looking to invest in land for the first time, you can feel confident you are not receiving generalized advice or even being viewed in a larger perspective.

If you are a first time borrower or have less than perfect credit, a Private Money lender will be more likely to approve your application for Arizona Land Loansthan a bank would. They can look at your plans, property, and resources, if you are planning on building, and take a risk with you that a public lender wouldn’t.

What You Need to Know about the Market

Qualifying forArizona Land Loans with a Private Money lender is much more feasible than with a public lender, however, it comes at a cost. Private Money lenders have higher interest rates, which are a literal cost that come with the speed of their flexible approval process. Before you agree to the terms with your hard money lender, you need to completely understand the financial aspect of it. Don’t rush into it because the pros seem to outweigh the cons. While this is true for some, take your time to make sure it compliments what you wish to do with your land investment.

Always be prepared. Building on land and reaping an investment is possible, but you need to make sure you are working with a qualified team who follows plans and meets deadlines. Ensure that your team believes in you, and you believe in your team. Consider the money lenders at Level 4 Funding today!



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
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.

© 2016 Level 4 Funding LLC. All Rights Reserved.
Copyright | Privacy Policy | *Terms & Conditions

How to Get an Arizona Land Loan



Getting an Arizona Land Loan is not as simple as securing a mortgage. There are many details you should know before you seek financing for a land purchase.

A Land Loan is used when you are interested in purchasing a lot that does not have a structure on it yet. As with typical home Loans, you can secure these Loans from a bank, savings and loan, or a private lender. Regardless of the type of lender, you will need to have good credit, and the land value must be in line with the purchase price. But unlike the rather simple evaluation to determine the value of a home or building, accessing the value of land can be more challenging.

Most bare land has little value, as compared to what the value would be if it included a structure. This makes an Arizona Land Loan riskier for the lender. Because of the increased risk, or maybe decreased potential for resale is a better term, lenders tend to increase the down payment required for the loan and to charge higher interest rates. The higher down payment is a way for the lender to be sure that there is always equity in the land, and that it can be sold for a high enough price to cover the remaining balance of the loan, should you default.

There are three different types of Arizona Land Loans, which include raw Arizona Land Loans, lot Land Loans, and construction Loans. Each of these Loans has a different purpose and different qualification requirements. You will also find that different lenders can have slightly customized requirements for their Land Loans. As with most Loans, you will need to demonstrate excellent credit, an acceptable debt to income ratio, and a consistent income that will allow you to cover the payment on the loan.

Land Loan Terms To Know

Because of the increased risk of Loans on land only, interest rates can vary from about 4% up to around 6%, depending on the specific type of loan. In addition, the length of the loan will have some impact on the interest rate. The lowest interest rate is traditionally offered on a 10-year fixed-rate loan. The interest rate increases slightly as the term extends to include a 15-year, 20-year, and 30-year fixed rate. You will also notice that rates on a construction loan are higher than a raw loan and that lot rates are the most affordable interest rate.

Selecting A Lot That Lenders Find Attractive

There are certain lot features that lenders will look at when evaluating your loan request. The boundaries of the lot are essential information to the lender. Having the lot surveyed accurately is a bonus to most lenders. In addition, a lot that already has utilities will be more attractive to a lender as the lot holds more potential than just bare land. All lenders will also want to know about any zoning restrictions on the property. Having this information included in your loan request will be helpful to the lender during his or her evaluation process. And that is sure to increase your chances of getting your loan request approved.

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
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.

© 2016 Level 4 Funding LLC. All Rights Reserved.
Copyright | Privacy Policy | *Terms & Conditions

Need an Arizona Construction Loan to Build Your Dreams?

An Arizona Construction Loan’ isdesigned just for development. Read on and let’s find out if they are what you need.

An Arizona Construction Loan, commonly called a ‘self build’ loan, is actually two different loans; the first part will cover your project’s upfront costs. You will pay interest-only payments while your apartment building, string of houses, office complex, etc. is being built. Following this period, the principle will have come due set up in monthly payments on what is termed a permanent loan. The quicker you can finish the construction itself; the less interest has to be paid i.e. the cost of your loan will be smaller.

And speaking of interest, these loans’ rates of interest can go up and down like the temperature, depending on the market interest rates. Normally the amount is the Prime rate with one or two percent tacked on.

A private lender, while unlike traditional lenders in a number of ways, is still going to want to see your books and plan of operation. Once you have chosen your lender, have everything you need in order to avoid delays, get the end result you desire (the money you need) and prove you’re a professional who isn’t wasting the lender’s valuable time.

You will need to account for the following things in order to present the entire cost picture:
1. hard costs: materials and labor needed.
2. land costs: purchasing land and property, occasionally termed ‘soft costs’.
3. soft costs: architect’s designs, taxes, insurance, appraisal(s), permits, etc.
4. contingency fund: reserve funding that is used for interest payments
Generally for an Arizona Construction Loan, private or hard sources of funding are easier to obtain than traditional or government sources. Why is this true?

Banks and other conventional lenders will run your employment history, credit record and how much you already owe (debt-to-income ratio) through a fine screen and check every detail. A past foreclosure, late payments on a loan, even self employment with a good record–all these can stop a conventional application from going through. The time element figures in also since banks and other similar lenders can take 30 days or more to fund your loan once application is made.

Hard money looks at collateral value and your ability to repay a loan more so than traditional lending institutions. This secures the lender’s money since if you cannot repay, the collateral can be sold to cover their losses. Other securities for the lender are a down payment, which is often required, and higher rates of interest.

Often these lenders do case-by-case evaluations and determine the loan amount based on each individual application.

Time is of the essence in the majority of cases and most private lenders make decisions in a very short time.

Sometimes approval and funding can be completed in as short a time as two days, with no credit check or tax information required.

If you think an Arizona Construction Loan is for you, start building your portfolio first, then find a lender who can aid you in creating something more substantial than paper and pictures.


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
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.

© 2016 Level 4 Funding LLC. All Rights Reserved.
Copyright | Privacy Policy | *Terms & Conditions

Private vs. Hard Money – What is the Difference?

Learn the difference between private money and hard money so you can make an informed borrowing decision.

In prior blog posts I’ve discussed the real estate jargon that all investors should be familiar with so you can talk the talk and walk the walk.

There are two more terms that though they may seem interchangeable, they aren’t exactly the same.

Private money and hard money are two different ways to borrow money and I’m going to outline the differences below.

Hard Money

When you meet a hard money lender, it’ll be clear that lending is their bread and butter. It’s their business! That means they are ready to see your proposal and make a quick decision based on its merit. There are qualifications you’ll have to meet, but they are far less strict than those imposed by traditional banks. That means you don’t have to have a fantastic credit score.

Hard money loans are funded just as quickly as the decision is made! You can begin your fix and flip venture in some cases in as short as a week. Don’t miss a good deal when it’s in front of you!

Private Hard Money

Private money loans can come from anyone who has the money to lend. It can be a family member, a friend, or a company. It is a relationship-based lending scenario that can take time to develop because they aren’t a tried and true lender, they just have the means to do so if they so choose.

They may also ask for some stake in the real estate venture because they are taking on a personal risk. Private money loans can also take longer to fund, causing you to lose out on deals.

That’s why we recommend using an Arizona hard money lenderfor your real estate business, whether you’re fixing and flipping or need a short-term loan for your buy and hold property. Contact Level 4 Funding today to discuss your next venture!



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
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.

© 2016 Level 4 Funding LLC. All Rights Reserved.
Copyright | Privacy Policy | *Terms & Conditions

What In The World Is A Fix and Flip Loan?

“What in the world is a fix and flip loan?” my friend Joan asked me as she cleared the table for our regular Saturday night dinner a few weeks back. “Someone came in today and asked if we would set them up with one and I had to admit I didn’t know exactly what they were.”

“It’s a real estate loan, but it comes from private lenders,” I replied. “Remember that house on Delancy Street that I pointed out? Well, this type loan could get me that house.”
Joan shook her head. “I can’t see why you’d want it—it looks like no one has been there for a number of years. It’ll be difficult to get money for that—remember I work for Sun Valley Corporation? They’re so tight you’re lucky to get money on a new place.”

“That’s what fix and flip loans are all about—fixing up a house with the funding and selling it to get money to pay off the loan—that’s the flip, by the way. The idea is to sell it at a profit, of course.”

“Well, yes, of course—you can enlarge the account you already have at SVC and make me happy.” She grinned. “Tell me more—it sounds interesting.”

“Okay. These type loans are short-termers—they are the types that banks don’t go for since there’s no money to be made from the interest. The borrower, if his application is approved, has a year to purchase, repair and sell the property in order to repay the funding. A really good point of these loans is that closing doesn’t take six months—an experienced lender who knows the ropes can close in two weeks.”

“They don’t pick through your credit history with a needle and if there has been a problem or two in the past—you remember that foreclosure I had? It’s not going to stop the entire process or immediately kill the application’s chances. Your credit score doesn’t have to be 850 either.”

“No one’s credit score is 850.” Joan said, laughing. “Go on.”

“Better still, they expect the property to need renovations—they do appraisals before and afterward. Now Arizona Fix and flip loans aren’t perfect nor are they for everyone. The lender is a business professional like everyone else—they need to be confidant that you can get the property in shape and market it into a profitable sale in order for them to get their money back. Liens are attached—I’m probably going to have to use that lot my father left me in case something goes wrong. I don’t want to use my house.”

“And you think you can do it? Have you looked inside the Delancy St. place and seen that it’s fixable?”

“I’ve only looked through the windows and walked around outside, but I called yesterday and made an appointment with the realtor to go have a detailed look. If I’m certain I can fix it up and sell it, I have a list of
several private loan companies to make appointments with.”

“Sounds like you’ve been looking pretty deeply into this,” came the remark.

“You can’t go any other way in this type of thing—all the little fine points count. I want to fix this house up and get it sold—the more experience I have, the less I have to pay in interest on future loans. I don’t want to lose Dad’s property either. A fix and flip loan may sound peculiar, but once I’m through checking into it, I’ll know if it’s for me or not.”


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
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.

© 2016 Level 4 Funding LLC. All Rights Reserved.
Copyright | Privacy Policy | *Terms & Conditions

The Best Deals to Use Commercial Hard Money Lenders



Not every loan is perfect for every type of deal. But some specific deals are ideal for using Commercial Hard Money Lenders.



Commercial Hard Money Lender is not the best choice for the average consumer who is looking to purchase a home. In most cases, these borrowers have a decent to good credit, a reliable and verifiable income. They are planning to keep the house for many years. It only makes sense for these purchasers to use a traditional loan from a bank or mortgage company. And to save a little money with the lower fees and interest rate, but for more nontraditional deals, an alternative option like Commercial Hard Money Lenders is a great match.


Arizona Land Loanand Loans for construction can be complicated to secure from a bank or mortgage company. The land does not work well as collateral because it has no structure or other improvements. Traditional lenders are going to shy away from Arizona Land Loansbecause it can be tough to recover their investment if the borrower defaults on the loan. Arizona Construction Loan present even more challenges because anything can happen when you are building a structure. There can be unexpected cost overruns, time delays for materials or adverse weather, or unforeseen issues with the site or construction process. All of these issues cost time and money. And they can also create financial problems for the borrower who could be forced to default on the loan. These types of Loans represent a higher level of risk that traditional lenders will not take, but a hard money lender will often fund these high-risk deals.

Time-sensitive deals can also be a challenge if you are using a traditional lender. The process of applying for a conventional loan often takes weeks. And then you are forced to wait weeks or even months to find out if the application is approved. This waiting game does not work when you are competing with other buyers on a Fix and Flip project or a property deal that is very desirable. While you are waiting for the bank’s approval, someone else is making the purchase with a loan secured from hard money lenders.

No Credit, No Problem

If you have no credit or have some challenges in your credit history, then you are not going to get a traditional mortgage. But hard money lenders are more interested in the values of the property than they are in your personal credit history. Hard money is also called asset-based lending because the loam request approval is based on the value of the property. Commercial Hard Money Lender will offer about 75 to 80% of the value of the property so that there is instant equity in the property. This process creates the security the lender needs in case you default on the loan, and he or she needs to sell the property to recover the original investment.

Use It Wisely

Just like any other financial investment or deal, hard money is a great choice when it is used correctly. For projects that are time-sensitive or are very unique, hard money is the way to go. And if you have credit issues, then hard money offers you an alternative to banks who will not approve your request. So for all of these deals, hard money is the right choice and a good investment.

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
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.

© 2016 Level 4 Funding LLC. All Rights Reserved.
Copyright | Privacy Policy | *Terms & Conditions

How To Find Private Money Lenders Near Me

Many
real estate investors know that buying an
investment property
is different than purchasing a primary residence. Among
the differences is that many homeowners will turn to a conventional mortgage,
while real estate investors often look for alternative forms of financing. That
is why as a real estate investor it is crucial to understand how to fund deals
using resources like private
money lenders
.
In
the real estate industry, a private lender will be a much-valued asset to your
investor toolbox. But what exactly can they do for you as an investor, and how
exactly do they work? Further, how do you approach
private lenders
about a given deal? Read the following to learn how to work
with and find private lenders, so you can help ensure you secure financing for
your next deal with ease.

What Is A Private Money Lender?

A
private lender is someone who uses their capital to finance investments, such
as real estate, and profits from interest paid on the loan. Private lenders
are not affiliated with a bank or other financial institution, and instead
interact directly with the borrower. There are private lending companies that
investors can seek out.
Private
lenders are an asset to investors because they often have different approval
requirements and a faster pace than traditional financing processes. While the
qualifications and interest rates will vary based on the situation, the process
of working with private lenders
will be like other loans.  
2 Ways You Can Use
Private Lender Loans
Private
money lenders can provide a number of benefits for real estate investors, and
the best part is: they can help with almost any aspect of a real estate
investing business. The right financing will vary on a deal by deal basis, but
it is still important to understand each of the options available (and how to
use them). Here are two ways investors
can make use of private money today
:
  1. Refinancing A Property
  2. Buying A New Property

Refinancing A Property

Let
us say you purchase a rental property with a traditional mortgage but want to
negotiate a better interest rate or shorter repayment timeline. Private money
lenders represent the opportunity to refinance, and therefore potentially
reduce the costs associated with funding a deal. Private money is particularly
attractive because in some cases investors can even incentivize potential
lenders with profit shares (rather than loan repayments). For example, when
refinancing a passive income property
investors
could leverage their monthly cash flow to make a deal more
attractive. Private money lenders can represent a much more flexible
refinancing agreement when compared to traditional financing.

Buying A New Property

Private
money loans can be used to help real estate investors purchase new properties,
including residential, commercial, and multifamily real estate. The key to
securing these loans is to run the numbers and craft the right pitch.
Experienced investors may find it helpful to highlight past deals, while first
time investors should instead focus on the potential profitability. Most
investors will agree that it is great to build a relationship with as many
potential private lenders as possible, that way they are ready to meet when a
deal comes along. After all, one of the biggest perks of using private money to
fund a new deal is the quick timeline. Private money can enable investors to
acquire new deals at much faster rates than other lenders.


How To Find Private Lenders For Real Estate

  1. Learn the ins and outs of private real estate loans.
  2. Build a network of potential
    private lenders.
  3. Prepare a strong portfolio to
    present.
  4. Identify the right lender for
    the project.
  5. Wow lenders with your pitch.
When
you are first getting started in real estate, you may look at your colleagues
and wonder how to find private investors for real estate deals. More often than
not, investors are using private real
estate lenders to fund properties
. There are many private lenders out
there, but the most challenging aspect can be to find one that is willing to
fund your deal. However, with the right mindset and preparation, you will be
sure to find private real estate lenders who will want to help you.

Understand The Anatomy Of Private Real Estate Loans

Financing
terms, especially when you are first starting out, can be quite confusing. Are
private lenders the same as hard money lenders? If not, what are the
differences.
Basically,
private lenders refer to individuals not affiliated with a financial institution,
who lend funds to promising investors. Either from a private investor or
someone within your social circle who is decided to invest in your venture.
Hard
money lives in a middle ground between the two. Hard money lenders are usually affiliated
with a more traditional financial institution but have less strict standards.
(This comes at a price: generally higher interest rates.) Though hard money is
technically private money, as an investor you will generally want to
distinguish between the two.
In
addition, it is important to know exactly what kind of information a private
lender will be looking for. In many cases, private
real estate lenders
will have experience investing directly in properties
themselves. Therefore, they will know exactly which numbers and areas to look
at when considering a certain deal. While it is important to build a positive
relationship with a potential lender, be prepared to answer questions about the
facts and figures of a given deal. Here are a few questions to prepare for when
looking for private real estate loans:
  • Will they get their money back?
  • What is the incentive to
    invest?
  • What are the risks involved?
  • How will you secure my
    investment?
  • Is your plan well-researched,
    and it is achievable?

Build A Network

Unlike
securing a loan from a bank—or a hard money lender—working with private lenders
is all about building relationships. This starts with developing a solid
investor network.
It
is a good idea to begin building your network on two fronts. First, get to know
professionals in your industry, such as real estate agents, fellow investors,
title companies, attorneys, and private investors. Many private lenders will
come through referrals within your own real estate network.
Second,
it is a good idea to build your contact list from people outside of the real
estate industry. This includes friends, family, colleagues, and anyone who is
not currently an investor but might be looking for new opportunities. Many
aspiring investors may just be waiting a good opportunity to come around before
getting started. Alternately, some of your friends and colleagues may have
valuable connections outside of your existing network.
Always
approach potential connections with respect and keep these networking tips in mind. Remember, it
will take time to create positive relationships with fellow professionals, but
it will open a lot of doors in your career. Building a strong investment
network is crucial to finding private lenders to work with.

Prepare Your Materials

Put
together the materials that you would be sharing with private lenders during
your pitch.  This includes a company overview, which covers your
education, goals, past deals and experience, and what makes you the right
investor for their funds.
Along
with this information, you will want to prepare a presentation or video that
outlines previous properties you have worked with. This should outline the
success of the past deals, including pictures, numbers and relevant
information. You do not need to include every single property you have
completed, and instead should select the properties that show your best work.
Remember you want to make a good impression and highlight your strengths.
One
more thing to add to your to-do list, which may not be as tangible as a company
overview or introductory video, is to have a clear understanding of the private
investor process. Look into the documents you will need to present to an investor,
such as a promissory note and insurance. Also write out important information
like how long the process will take, when they can expect to see the loan paid
in full and what happens if there are multiple investors. Going in with this
information will ensure you are prepared for any questions that come your way
during the pitch.

Select Your Private Lender

Finding
private lenders might be tough at first, but it is important to keep in mind
that the relationship is a two-way street. Although you will spend time
pitching to potential investors and trying to impress them, you will want to make
sure that the lender you ultimately choose will serve your needs, and not just
the other way around.
First,
make sure to ask them about their proposed loan term and interest rate, and
what the loan will be based on. This will help you find out how long you will
have to pay the loan back, and how quickly it will accrue interest. Further,
you will want to know if they prefer to make their loans based on the
property’s current value, or after-repair value. Be sure to inquire about
potential fees they charge, whether they are upfront or in the form of
penalties. Finally, find out the schedule at which the lender will disperse
their funds to you.
Based
on this information, you will be able to identify which private loan will
present the least amount of risk to you.
Make The Pitch
Finalizing
a deal with a private lender is about far more than explaining the numbers and
going over the property. You need to put your potential partner at ease and
make sure you are both on the same page.
To
establish this rapport, go into your initial pitch meeting focused squarely on
educating them about the process. Keep building that relationship
piece-by-piece. Resist the temptation to go for the quick sale, or fast deal,
it will not work — and it may leave you in worse shape than when you started.
Instead
focus on answering questions, especially those referring to profit splits and
timelines. This is what most private investors are worried. And the more you
can put them at ease by thinking of things from their point of view, the more
likely you are to secure private financing.

Pro Tips For Securing A Private Lender

Private
real estate lenders are not nearly as hard as many new investors make them out
to be. In fact, a great deal of private lending companies is always looking for
investors to lend their money to. The trick, however, is proving that you can
manage their money well. For more of an idea of how to find private money
lenders and convince them you are the right choice, try following these steps:
  • Understand Negotiation Tactics: In securing private money lenders, investors will
    need to learn how to speak their language. That said, there are two
    particular strategies to consider: the hard sell and the soft sell. The
    former, the hard sell, is a more professional approach that will have
    investors develop a convincing elevator pitch. The idea is to sell the
    private money lender on the idea of funding an attractive deal. In this situation,
    it’s important to remember private lenders are just as eager to work with
    investors as investors are to work with them; both parties stand to make
    money on a successful deal. Therefore, investors will want to approach
    lenders with all the necessary information and prove to the lender that
    the numbers are correct. Doing so should convince lenders that they are
    making the right decision. The soft sell, on the other hand, is typically
    reserved for friends and family, and will typically involve an indirect
    approach. More specifically, the soft sell will catch the interest of
    investors by casually slipping an opportunity into a conversation. Either
    way, investors need to know who they are talking to before they begin
    negotiations.
  • Find Lenders Online: Proceed to find lenders using every method
    possible, not the least of which will include online searches. There are several
    online sources designed to connect private money lenders with potential
    investors, all of which may be found with a simple, localized Google
    search. One of the best online searches’ investors may initiate, however,
    is one that looks for local real estate investor meetups. Look for a local
    REI group and find out when they meet next. Attending a local REI meeting
    will connect investors with several industry professionals, many of whom
    may be private money lenders themselves.
  • Cold Call: Investors should try every outlet at their
    disposal, and cold calls are no exception. Simply obtain a list of lenders
    online and begin to call each name. When doing so, be as upfront as
    possible and lay everything out on the table. Proceed to tell them
    everything they will want to hear about the deal and be prepared to answer
    a lot of questions. That said, the initial phone call is more of an
    introduction. Instead of working the deal out on the phone, schedule a
    meeting to go over things in more detail at a later date.
  • Launch A Marketing Campaign: Not unlike looking for a deal, investors should
    market for private money lenders. There are several marketing campaigns to
    consider, but investors shouldn’t limit themselves to just one; try them
    all. A direct mail marketing campaign, for example, will have investors
    soliciting potential lenders through a highly targeted mailing campaign.
    Another idea is to place a sign on any property that is currently being
    worked on. Place a sign in the yard that suggests you are looking for a
    private money lender to fund the next deal, and to inquire within.
Private Money Lenders
FAQ
Working with private
lenders
is not a complex
process, though it can be mysterious for investors who are unfamiliar with alternative
financing methods. As you begin to ask how to find private lenders, make sure
you do not have any lingering confusion about the process. Read through the
following frequently asked questions to make sure when you do find a private
lender to work with, you know what to expect:
How Do Private Lenders
Work?
Private
lenders work by investing their capital into real estate deals in exchange for
interest paid on the loan. They will work with investors to establish the terms
of the loan, which will be paid back according to the term. Private lenders are
often investors in their own right and turn to private lending as a way to
expand their portfolios.
Are Private Lenders
Regulated?
Private
lenders are regulated by state and federal lending laws. Depending on where
they are located, there is often a limit to the number of loans they can
provide without a license. So, while private lenders are not regulated as
strictly as bankers, there are rules they must follow as well. For more
information on the regulations in your state, be sure to research online.
Do Private Money
Lenders Check Credit Scores?
Unlike
their hard money counterparts, private money lenders are not known for checking
borrowers’ credit scores. That is not to say all private money lenders don’t
check credit scores prior to lending, but rather that the decision to loan is
based primarily on the asset at hand. Otherwise known as asset-based lending,
private money lenders will typically base the majority of their decision to
lend on the quality of the subject property. The more likely the property is to
sell for a profit, the more likely a private money lender will be to lend funds
to an investor. Of course, the asset at hand is merely part of the
decision-making process. Many private money lenders will want to know who they
are lending to, which could result in some questions, not the least of which
may include a credit score check. That said, not all private money lenders will
look at a borrower’s credit score. Only those who are more diligent will
typically consider the credit score when lending.
Best Private Lending
Companies
Private
lending companies will offer the same benefits of working directly with a
private lender, though the application and approval structure may look
different. There are many personal loan companies and peer to peer lending
platforms that investors can consider. Here are some of the best private
lending companies out there:
  • LightStream: This outlet offers loans for auto, home
    improvement and just about anything else, at low rates for anyone who may
    demonstrate a propensity for good credit.
  • Upstart: Upstart is an online lending marketplace that
    specializes in personal loans using non-traditional variables to determine
    creditworthiness.
  • LendingClub: LendingClub is a peer-to-peer lending company,
    headquartered in 
    San Francisco, California.
  • Citizens Bank: Citizens Bank offers personal and business
    banking, student loans, home equity products, credit cards, and more.
  • Best Egg: Best Egg is a fast and efficient lending platform
    investor may tap to secure relatively low interest rates.
How Much Do Private
Lenders Charge?
Private
lenders charge different interest amounts ranging from four to 12 percent. The
amount they charge will be dependent on several factors including your
investment history, the numbers of the deal at hand, the proposed term length
and more. However, the good news is that oftentimes the interest rates will be
negotiable. Remember as you practice your pitch that not only are you trying to
secure financing, but also the best loan terms possible.
Summary
Your
goal when working with private money lenders should not be to
simply land a deal and move on. Instead, you should seek out someone you can
present deals to on a long-term basis. If you focus on building a strong
relationship, you can secure financing for both your current and future
investments.
Always
remain professional when building a network, a strong portfolio and a great
pitch can go a long way in landing a deal. By making strong connections and
maintaining positive relationships with each lender you work with, you can help
ensure you always have options when it comes time to finance a deal.
Is a lack of funds keeping you from investing in real estate? Do
not let it!