I’m sure you have heard the term, but what exactly is a hard money lender? What do they do and why do they matter?
There are times that you need cash and you need it quickly. We have all been there. If you are fortunate enough you may have a family member throw you some dinero. But, the majority of us aren’t that lucky. There are also situations in which you may not have the qualifications for a bank loan or any type of loan at all. So, if you need cash yesterday, what do you do today?
Let’s say you want to purchase a house in a short time period. When it comes to real estate speed of execution is key. The faster the deal happens, the more likely you will end up with that property. However, if you are borrowing from any type of lender they will require some sort of security on the loan. For example, the bank will require your credit score and income just to start the process. Trust me, if you get pre-approved there will be a ton more paperwork you will be sending the bank.
Arizona hard money lenders grant asset-based loans. This means they care much more about the actual property that you are using as an asset than they do you and your credit. Hard money lenders can also loan money for operational expenses for your business. You can use a hard money loan for everything from fix and flips to a start up marijuana dispensary.
Using a hard money loan for real estate purposes is the most popular type of hard money loan. These loans are used for improvements. Let’s say you buy a house for $50,000. Once you have put $7,000 in on repairs you are able to sell it for $75,000. These are called fix and flips and this is where a hard money lender becomes ultra-important.
Hard money lenders will base the loan amount on what the value of the property will be after repairs. This is called the after repair value (ARV). For example that $50,000 house will be appraised at $75,000 ARV. Most lenders approve 70% ARV, which is $52,500. Already you will have more than the listing price. Bonus! Private money lenders will also approve repairs. The $7,000 you need to rehab the property can be financed, as well. However, you will not receive these funds all at once. After an appraiser has given a quote the lender will approve what is called a draw. These draws are typically disbursed per project.
Arizona hard money lenders make it very feasible to start making money in the real estate game with zero money down. It is not too good to be true. It is the real deal!
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.