Tactics to use a hard money loan for commercial real estate investment

A hard money loan ( or asset-based loan) can act as a bridge to traditional financing and can help you get your next project off the ground.

This type of loan is typically a non-bank loan secured by the value of a”hard” asset. With a conventional loan, a borrowers credit score is usually the main factor that a lender considers. In contrast, asset-based lenders are more concerned with the value of the underlying property.

This type of lending is ideal to finance speculative projects an ordinary bank would consider too risky. Forgoing extensive credit checks allows these lenders to close loans sometimes within a matter of days.

Asset-based lenders can charge loan fees up to three times higher than a traditional lender. Borrowers will usually need more money up front to fully finance a project because this type of lender rarely underwrites the full cost of a project.

An asset based loan may be expensive initially, but their speed and ease in getting approved makes them a great resource to get a project off the ground.

Hard money loans can be the help you need to get your project started and act as a bridge to conventional financing

An asset-based loan can help you get your next investment project off the ground. Say there is a condominium with a purchase price of 400,000 dollars and an estimated repair cost of 50,000. A comparable property recently sold for 650, but the condo you want to purchase sits half empty.

A traditional lender would note the low occupancy and would in most cases avoid financing your project. With an asset-based lender, you could probably qualify for a loan of 60 percent of the projects total cost. You would still need 180,000 dollars of your own money, but with the initial hard money loan, you can get your project started.

Once you have made the repairs and the building reaches full occupancy, in most cases you could now qualify for a regular mortgage. You could then refinance to a mortgage for 75 percent of the property value of 650. Refinancing would then allow you to pay off the hard money loan and in this case leave you with 217,500 left over.

In the end, a hard money loan gives you options down the road and the funds you need to get your project off the ground. After your project is finished, you could sell the property, pay off the initial loan and still achieve a profit. After you refinance you can improve the property, raise rents, lease the property long term or sell the property for a profit.

If you are an Arizona based real estate investor consider Level 4 funding as your go-to

hard

money lender

If you are finding it to qualify for financing an asset based loan is a great way to get your real investment project started. Consider Level 4 Funding if you are an Arizona based real estate investor. Level 4 Funding offers short-term loans with a comparatively low APR of 9.6 to 12.5 percent.

Depending on your project you may qualify for a loan of up to 85 percent of the total project cost (or LTV). The LTV Level 4 offers can help you avoid the high up-front costs usually associated with asset-based loans.

Level 4 Funding can close your loan in as little as 1 to 3 days, which allows you take advantage of immediate opportunities. Level 4’s loans have flexible terms, with a minimum term of less than a month, which means you can the off at your convenience.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
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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 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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