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Hard Money Loans Phoenix
Phoenix Hard Money Lenders
Delancey Street is a premier, and trusted, Phoenix hard money lender. We help real estate investors who need funding get the financial assistance they need. We have ten’s of millions of dollars, available for funding deals. We handle commercial and residential properties all over the USA, and in particular – Phoenix. Regardless of the amount of money you need – we can help. We realize the difficulties real estate investors face when trying to purchase a property and waiting for funding. Many of our team members are real estate investors themselves, and as a result – not only do we know your challenges – but also we know the importance of fast and transparent lending.
Getting a loan for an investment property via a traditional lender can be a huge pain, especially if you have poor credit history. With a very low credit score, it might take you weeks or even months to be qualified for mortgage. In most cases, having a low credit score stops you from getting approved at all. Due to the more stringent requirements after the mortgage meltdown of 2008 – lenders are more strict now. In the event you don’t have good credit, you probably won’t get approved for a real estate loan.
Phoenix hard money lenders, on the other hand, consider the collateral you’re giving up rather than your financial capability to pay the loan back. Phoenix hard money loans are often meant to help companies with funding or purchase investment properties. If you don’t pay back the money given to you, the real estate lender can seize the collateral and sell it to receive their initial loan.
Hard money loans are great for investors that want to renovate or develop a property prior to flipping it at a higher price. Hard money loans can also be used to purchase commercial properties that would otherwise not qualify for traditional loans. Hard money loans, like any other financial instrument, have their benefits and disadvantages.
Delancey Street isn’t concerned about your credit score. We only care about the collateral and will process your loan fast if your collateral justifies the loan. It is very important to note that hard money lenders aren’t necessarily interested in taking ownership of your property. They only worry about the potential value of your property, and how much money you wish to borrow relative to it’s value (also known as LTV). Most hard money lenders lend 60-70% of your overall property value.
In contrast to traditional loans, hard money loan agreements and terms are flexible. Instead of dealing with a stringent traditional lender, you are dealing with a lender who is here to help you succeed. At Delancey Street, we believe in creative financing – and a large part of that means helping our clients optimize their chances of success. It means working with them, finding the strengths in their project – and leveraging them to get approval for funding.
Get approved for funding, via a hard money loan is a lot easier than a traditional loan. Hard money lenders care about one thing: the value of your collateral. If the collateral offered is worth it, it’s possible to get a hard money loan. Typically, hard money lenders lend up to 60-70% LTV. One of the great things about hard money is that you can get creative when it comes to offering collateral. It’s common for real estate investors to offer multiple assets as collateral, in order to increase the amount of funding they can potentially get. Delancey Street does not look at your credit score, income, or other personal details. The only thing we care about is your business plan, and whether the property in question justifies the requested loan.
It’s possible to apply and receive a hard money loan in 4-6 days. This is valuable, especially for real estate investors who need to lock down a potential sale and can’t wait several months. Most property sellers will refuse to wait for a buyer to get their financing in place. Time is money, and sellers want their money fast. If you take too long, you could lose your next real estate deal without a hard money loan in place.
Unlike traditional loans that offer long terms, hard money loans are a short term financing instrument. Hard money loans typically have a term of 6-24 hours. If you don’t repay the loan by the specific period of time, it’s likely your property will be repossessed and liquidated by hard money lender. Many real estate developers use hard money loans as a stop-gap measure until they secure more permanent financing. Before you take a hard money loan, make sure you know HOW and WHEN you will repay it – otherwise you could risk losing your entire real estate investment.
In contrast to traditional loans, hard money loans can be more expensive. Because they are considered, “high risk,” hard money loans have a higher than average interest rate. Hard money loans close faster than traditional loans, but that speed also comes with a higher interest rate which has to be factored into your calculations. It’s typical for hard money lenders to charge anywhere from 7-12%. Because hard money loans are given for high risk properties, hard money lenders charge more interest.
What a Phoenix hard money lender is looking for
Every Phoenix hard money lender cares about one thing: the success of the project. If you want funding, you have to prove that your project will succeed. That means having a business plan that adequately explains how much funding you need, how the funds will be used, and more importantly – when the funds will be repaid. It’s common for lenders to expect you to have some “skin in the game.” Typically this means they’ll expect you to bring anywhere from 20-40% of the money for any real estate investment. This is to lower their risk, and to incentivize you to finish the project.
What to do next if you’re ready to get funding
Delancey Street can help you if you’re interested in getting funding for your next project. To begin, fill out our loan application, and tell us how we can help you.
If you’re a real estate investor, there’s new financing options to help you purchase and rehabilitate properties. You’ll never have to pass up another great opportunity due to credit, asset, or collateral concerns. Even if you’ve been turned down by banks and other finance companies, we can help. We have the perfect loan program available for nearly any scenario.
What is a Hard Money Loan?
A hard money loan provides you with the benefits of being able to purchase and rehabilitate investment properties. The loans are designed for quick resale and aren’t suitable for primary residences that are owner-occupied. The loans are structured so that you’ll make minimum or interest-only payments during the loan term. The term length is typically between one and five years.
Hard money loans are based on the value of the home, the improvements that need to be made, and the ultimate resale value of the property. This is determined by obtaining a recent or new appraisal that determines the value of the home and comparable sales in the area. A home inspection provides borrowers with better insight to any issues that the home might have. Structural damage, cracked foundations, and more can throw a wrench into any project. With a home inspection, you’ll be able to accurately assess the amount of work that needs to be done and a reasonable cost.
Since hard money loans are short in duration and are property focused, credit, income, and asset concerns are greatly reduced. This makes hard money loans a great option for investors with multiple projects that may have a complex financial situation.
How Do Hard Money Loans Compare to Bank and Traditional Mortgage Loans?
Traditional bank loans have their advantages. They offer a reasonable interest rate for those who intend to occupy a property or hold onto it as an investment. For those who “fix and flip” properties, this is an impractical solution. The loans take an excessive amount of processing and time for approval. Credit, income, assets, and the collateral provided are greatly scrutinized. It can take weeks or even months for these loans to be approved and funded. They’re also not intended for investors that don’t intend to keep and maintain the properties over an extended period. Hard money loans alleviate these concerns by only having to comply with local and federal guidelines. While hard money loans are subjected to regulatory compliance guidelines, the requirements that the government imposes are far less.
What is Required to Apply for a Hard Money Loan?
In order to apply for a hard money loan, you should review the property selected to ensure it’s a winning investment. You’ll want to check any recent appraisals, tax bills, and anything else that helps to establish the property’s current value. As previously mentioned, amounts of repairs should be documented through estimates, material costs, and any other costs involved with completing the project. Other financial documents from your business should also be for inspection. Providing as much information as possible upfront helps to move the process along.
How Do I Apply for a Hard Money Loan?
Applying for your hard money is easy. Our online application can be completed in less than five minutes. If you prefer, you can also reach out to us by telephone. We’ll review your request and get in touch with you to review the entire process and issue a pre-approval. Simply stay in touch with us and submit the documents requested in a timely manner. With days, you’ll be fully approved and have the funds needed to start your new project. See why so many investors count on us as their hard money loan lender of choice. Get in touch with us and we’ll help you, today!
When you need a loan to construct a house but you cannot access the traditional mortgage, a hard money loan becomes the best option. This is a lending arrangement whereby a lender uses one of your properties as collateral for the loan. The asset will have to be valued to ensure that it can cover for the costs of the loan for which you are applying. To get started with these kinds of loans, you need to know if you qualify for hard money loans.
Qualifying for a hard money loan
Just like any other type, you will have to check your credit score. Borrowers with a good score are likely to get fast approval because they have demonstrated a good repayment history. Other factors are expected to play out too. For instance, some lenders will not dwell too much on the credit score. In addition to that, having a lot of income does not guarantee you an automatic loan. Usually, the process takes a long time and can be invasive depending on who you are borrowing from. The bottom line is that every lender has their approach, and they will focus more on the value of the collateral than other personal attributes.
Who can borrow the loans?
As stated in the definition, these loans are not for everyone that has property. However, you may use it if you are a new entrant in the business of selling houses because they will provide the capital for the construction of your first house. If you can own the property for a short window, you can remodel it and sell at a profit before paying back the loan. Many large real estate companies started with a simple hard money loan. However, it does not mean that the loan is a reserve for beginners. Even the established companies find themselves in a difficult spot and so, they have to borrow money to finance further constructions.
How hard money loans work
Before applying for hard money loans, you should know that they work for the short term. Ideally, the loans should be paid within 6-24 months. The reason these loans are short-term is that no real estate investor will want to pay it for a long time considering that the interest rates are higher than what you will get with traditional loans. The closing speed is fast too, and this is the reason most investors opt for these loans. For instance, you can apply for it while bidding on a property, and you will have in a matter of days to finance the bid. With these loans, investors have the flexibility to enter into deals and purchase the additional property even when they do not have much upfront capital. The result is that there will be a higher return on their investments.
Difference between hard money loans and traditional loans
You can differentiate hard money loans from traditional options by looking at various aspects starting with speed. Since these lenders are less concerned about your financial position, the will have less work to do during the approval process, and therefore, they will do it fast. As long as there are no red flags on the property and the borrower is well prepared, the loan will be approved. Apart from speed, you can look at the flexible repayment schedules. Unlike traditional lenders, there is a lot of flexibility to be enjoyed in this arrangement. You can also differentiate them based on approval whereby while hard money loans are based on the property; traditional options look at many other factors.
In a nutshell, getting hard money loans ensures that you overcome all the financial obstacles blocking you from getting that house. For faster approval, you should prepare all the documents about the property that you want to use as collateral and make sure that it has no legal disputes. You should also provide accurate personal information. You can always be sure of getting the best terms if you find a good lender. Even when there are several lenders both online and locally, you have to ensure that they have favorable conditions to help you get the best returns on your investment. It is all about going for the best deals.