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3 Things to Know When Taking Out Commercial Private Loans in Arizona
Trust Deed Investing Information | News and Information
come from individuals rather than banks. It’s important to learn the benefits and pitfalls to know if this type of lending is right for you.
1. You’ll probably be looking for a hard money lender. Although can come from virtually any non-institutional source, such as friends, family, acquaintances, and professional connections, chances are these people aren’t breaking down your door to hand you cash. Hard money lending is different in that these investors are actively seeking deals to fund, though you’ll probably have to connect with a broker to find the right one for your needs.
2. Most specialize in real estate. Although you can borrow from an individual under a variety of circumstances, most who work in the commercial sector serve the real estate industry. In these cases, the property being purchased backs the deal. However, businesses can use their buildings and property to secure funding for other ventures too.
3. You’ll need to have some of your own cash to get the deal off the ground. Lenders focus on loan-to-value, shortened to LTV. To get the LTV, you’ll take the amount you want to borrow and divide it by the value of the property. For example, if you have a commercial building you want to leverage or are purchasing a home to flip, its value is $100,000, and you want to borrow $80,000, your LTV is 80%. This is actually a good place to be, but some won’t go higher than 60 LTV and others will provide well-qualified borrowers with solid plans 90 LTV. Either way, you’ll have to have some of your own cash to get started.
Your Eligibility Does Not Rest on a Credit Score
One of the great things about leveraging is that your credit doesn’t always matter. While each potential lender has his or her own requirements, and some do care about credit, you’ll see less of this in the hard money sector. That’s because the value of the property backs your loan. With traditional lending options, the person giving you cash is betting on you and looks at your history to see if you’re the type of person who’s likely to make good on a loan. Obviously, individuals care about this too, but they use different logic. If you’ve got a good deal that’s going to make you money and you’ve put some of your own cash into it, you’re going to stick with it. In the even that you don’t, they’re still protected because the property has value.
If you can prove you’ve got a successful plan, you’re likely to get funded.When it comes to , a lot of the approval process has to do with examining the plans you’ve made and ensuring the numbers add up and offer a solid profit margin. Particularly when you work on the hard money side, you’ll also need to ensure you can pay off the balance when it comes due. They’re short-term options, so most pay them off by selling the property or refinancing at the end of the term. Lastly, you’ll want to work with a broker who can help ensure you’re matched with the right individual and best possible terms. That way, you’ll keep more money in your business and will have a smoother process overall.
![Dennis Dahlber Broker Ri CEO Level 4 Funding LLC](https://level4funding.com/wp-content/uploads/2016/06/dennis.jpg)
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
[email protected]
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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