The world of private lending is not as similar to traditional lending as many borrowers are discovering. Knowing what Arizona Hard Money Lenders are looking for in a borrower can be very helpful in securing a loan.
First, it is important to understand that although Arizona Hard Money Lenders are regulated in some ways, they are relatively free to conduct their business as they see fit. This means that each lender can determine his or her own criteria for approving a loan as well as the amount that will be offered to a potential borrower. But borrowers should also know that there are some general standards that cover the expectations of most Arizona Hard Money Lenders.
As you might already know, hard money is a form of asset-based lending, which means that the value of the property being used as collateral is far more important than the creditworthiness of the borrower. However, no lender is going to completely ignore the credit history of a borrower. Borrowers need to be honest with potential lenders and admit to past credit issues while demonstrating an ability to make the payments on the loan that is being requested. This can be showing a steady income stream such as regular employment or revenue from a business.
All lenders are also going to want to see a detailed business plan for the project. This plan should include the current condition of the property, a list of renovations and repairs to be made, the cost of all work to be done and a schedule to complete the work. This framework will demonstrate to the lender that the borrower understands the process and has a solid plan to get the project completed in order to pay off the hard money loan. A final piece of the plan that is critical to many lenders is a contingency plan. This is a description of how you will continue to make the payments if the property does not sell on your expected timeline. Borrowers really don’t want to take possession of the property in a default, they want to get paid and move on to another borrower.
The property being purchased is the real key to getting a hard money loan. The lender will want to know the current value and condition of the property as well as an estimate for the property after the improvements are completed. In addition, many Arizona Hard Money Lenders will do a little research on how desirable the property is. This is in the event that the lender needs to foreclose on the property and sell it to recover his or her investment.
Lenders are looking for borrowers who have both a solid plan for getting a project completed on budget and on time as well as the experience to actually get the job done. In addition, it is important for the borrower to have the means to make the loan payments even beyond the expected completion date of the project. Knowing what lenders are looking for will allow you to prepare your loan request in a professional manner and have the greatest potential for success.
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.
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