A bit of research pointed out that these loans are good for investors who have some money, but are not comfortable putting up everything to purchase a piece of property. You fit that description—you do not want to ask your father for money since he just spent a bundle on your college work and tapping into your trust fund is not a good idea – it needs some growth anyway.
Further reading advised when considering loans in this area, pay attention to all the details, fine print and adjunct clauses in order to know exactly what you are taking on, both pro and con.
An investment property loan via Arizona hard money does have its positive side, the first one being timing. Conventional lenders can take as much as six months to close a regular loan—private lenders, on the other hand, generally can get approval and closure within a few weeks at most. You may be young, but you know the value of time, especially when it comes to an attractive property that’s on the market.
Collateral normally is attached to the property, but this isn’t always true. The borrower can use personal assets ranging from residential property to a retirement fund.
Terms can be designed just for you—you can have a custom-made loan, in other words. With a bit of diplomatic negotiation, you may be able to have the repayment period adjusted in order to lower payments or even have certain fees that are normally attached removed or at least end up paying a lesser amount.
This sounds pretty good, you thought to yourself, and being a bit of a cynic, looked for the downside, knowing there had to be some drawbacks.
Investment property loans made through private firms, it seemed, all came with higher-than normal fees and interest rates/points. This, according to one of your father’s salespeople, was protection money. “They are taking a big risk on some of their clients,” he pointed out. “With the higher rates, plus collateral, the lender is guaranteeing that they don’t lose everything they have dispersed in case a borrower can’t repay a loan, no matter the reason.”
Repayment periods are on the average about 12 months in length, with the borrower paying mostly interest every month and the principal due at the end of the term. Keep the timing in mind, one article said, because if you cannot pay the balance at the end of the repayment period, either your loan will be re-financed or your collateral will be seized. Both of these options are costly.
A private lender may be just the thing for your investment property loan, but be certain you have researched the area carefully before making the decision to take on one of these loans. Keep on top of the situation for the entire time and work with your lender—you may need them in the future for yet another project.
Level 4 Funding LLC
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About: 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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