Extending vs. Refinancing Your Hard Money Loan

Also referred to as a bridge loan or a fix-and-flip loan, hard money loans are essential for short-term real estate projects. Whether an individual or business is seeking to establish an effective fix-and-flip business, they will need to understand how to deal with their loans as they mature. Most hard money lenders tend to focus on short periods of time per loan, creating issues down the line if the receiver cannot fully repay their loan.

When dealing with a maturing hard money loan, it becomes important to understand your options. Today, we are going to highlight the age-old question: should you extend or refinance a hard money loan?

Pros & Cons: Extending a Hard Money Loan

Extending a hard money loan is often the easiest way to get the ball rolling with your debt. A hard money loan gets quicker approval thanks to the pre-existing relationship between the lender and their client. Additionally, extending a hard money loan is typically done after creating a steady and positive payment history between both parties.

Benefits of Extending a Loan

-Based on Established Relationship
-Quick Approval Process
-Positive Repayment History

Even though extending a hard money loan can be a frictionless approach, there are downsides to this effort. The primary reason fix-and-flip investors may want to avoid extending a loan is that the extension likely won’t be long enough to tackle the entirety of the debt. This creates a problem pertaining to timelines, so it is imperative to have a plan in place before extending your loan.

Negatives of Extending a Loan

-Short Term Extensions 
-Harder to Cover

Pros & Cons: Refinancing a Hard Money Loan

On the other side of the coin, investors may want to consider refinancing the entirety of their hard money loan. Working with groups like Hard Money Lenders AZ, clients can acquire a better interest rate while pursuing more convenient cash-out opportunities. Refinancing a new hard money loan will allow you to also bypass any extension fees that you might have struggled paying. Finally, refinancing a loan may lead you to better terms, particularly if your credit and cash flow has changed.

Benefits of Refinancing a Loan

-Get Better Interest Rates
-Avoid Paying Extension Fees
-Convenient Cash Out Options

Refinancing a loan helps in many situations, but that isn’t always going to be the case. When refinancing a hard money loan, you will have to work with a lender to complete an entirely new underwrite. You will also have to find an entirely new hard money lender, a process that can create some frustration and tension as you navigate the many options available to you.

Negatives of Refinancing a Loan

-Complete New Underwrite
-Find New Hard Money Lender
-Negotiate Completely New Terms

Contact Hard Money Lenders AZ!

When the time comes to refinance your hard money loan, make sure the team at Hard Money Lenders AZ is on the job. As the top-rated Hard Money Lender on Google for the state of Arizona, clients have enjoyed fast funding, proven results, and effective communication through a team of industry-leading specialists.

Contact Hard Money Lenders AZ today to see if you are approved!

How Hard Money Loans Can Help Grow Your House Flipping Business.

House flippers are some of the hardest working and most opportunistic people in the real estate industry. The talent it takes to evaluate a home, find the funds to repair it, and then flip the property for a profit can be staggering to consider. Yet, all the talent in the world won’t overcome a lack of financing.

Today, we want to underscore how hard money loans can help you grow your house-flipping business.

Gain Flexibility While Flipping Houses

If you are looking to become more than a one-property fix-and-flipper, you are going to want to familiarize yourself with hard-money loans. To grow your company and extend your reach into the market, borrowing capital will give you the means to purchase and restore multiple homes. If you work intelligently with a larger loan, you can improve your cash on cash ROI, allowing your money to work for you while you work on the homes that will fund your retirement.

Not only will you gain more flexibility as you flip houses, but your company’s projected growth will exceed that of a cash-only business. The more you put into your company, the more you will get out of it. Pretty nice, right?

Better Leverage Your Finances

If you are serious about growing a house-flipping business, you need to rely on more than just your own strict cash reserves. What does this mean in a practical sense? For someone who moves beyond their own capital reserves, acquiring a loan will allow them to leverage their cash, building bigger projects as the years go by.

As an example, let’s say that you borrow $100,000 to spend in your market. This will allow you to fix and flip three properties, realizing a net return of $50,000. Now you have $150,000 to spend in your market. Repeating this process will allow you to scale your business efforts to the growth within the market that you are experiencing.

Continued growth is integral to capitalizing on hot markets. With Arizona’s real estate industry primed for a huge 2021 and beyond, properly scaling your hard money loans to your anticipated efforts can lead to serious success. Remember not to outkick your coverage and only to chew what you can handle swallowing. There is no point in failing from overworking yourself.

Grow Your Business With Hard Money Lenders AZ

In March 2020, Arizona saw its home-flipping market reach an 8-year-high. As the market continues to grow and improve in the post-COVID landscape, Hard Money Lenders AZ makes itself available to savvy fix-and-flip investors looking to acquire hard money loans.

Hard Money Lenders Arizona is based out of Phoenix where it focuses on providing private funding experience in every aspect of real estate. From refinancing and bridge loans to your next fix-and-flip project, Michael Iuculano and the team can support your business endeavors.

Contact Hard Money Lenders AZ to discuss your project, today!

What You Need to Get Your Hard Money Loan Approved

Acquiring a hard money loan doesn’t have to be the toughest task you’ve tackled this year. In fact, working with the right lender can make the process as simple as can be. Before meeting with your potential lender, there are a few ways that you can maximize your chances of approval.

Understand Your Collateral

One of the easiest ways to make your hard money lending experience a simple process is by having collateral available. Collateral is simply property that you own which can be held against the finances that you are pursuing. Hard money lenders tend to work in a host of different spaces within the real estate field.  Lenders may offer to finance an industrial, commercial, or retail property. Hard money lending with collateral is also a common prospect for people looking to fix and flip homes.

Typically, the toughest hard money loans to acquire approval for are to finance the purchase of land. Land intrinsically does not produce income until it has been modified. Borrowers looking to finance a land purchase will require strong credit, provable cash flow, and a rock-solid exit strategy — with a 50% deposit.

Loan to Value Ratio

Otherwise referred to as ‘LTV Ratio’, your loan to value ratio is one of the most dominating factors that a hard money lender will consider during a request. Borrowers looking for a hard money loan typically struggle with credit or minimal cash flow, making it hard to get a loan without collateral as payment.

A lender that focuses on your loan to value ratio will instead prioritize the loan amount against the value of your property/purchase. A house that costs $100,000 with a loan of $50,000 would have an LTV of 50%. Keeping this number under a certain percentage point will make acquiring your loan more possible. Most lenders tend to cap their percentage position at 70% LTV.

Create a Repayment Plan

While hard money lenders won’t focus as much on your income as a conventional private money loan, they will still want to know how you plan to repay the provided finances. This may include asking about sale dates, ideas for improvements to a property, or what you plan on putting in the active listing agreement.

Take some time to craft your plans for the hard money loan that you are pursuing. Do you plan on repaying your loan through specific home improvement upgrades that result in a higher ROI? These are things that have to be discussed prior to sitting down with your hard money lender.

Call On Your Friends at Hard Money Lenders AZ

Dealing with loans can be tough in even the best of circumstances. For entrepreneurs and investors looking to acquire a hard money loan, contact the team at Hard Money Lenders AZ to discuss your goals and desires!

How to Protect Your Rental Income During (And in the Aftermath Of) the Pandemic

It’s no secret that COVID-19 has affected the bottom line of many hard-working Americans. If you own residential rental properties, you have probably experienced this first-hand if your tenants have struggled to pay rent or if you’ve had a hard time filling vacant units. Fortunately, there are some steps you can take to protect your rental income not just during the pandemic, but as the world begins to slowly return to some semblance of normal.

Offer Payment Plans to Tenants

Many tenants are having a difficult time paying rent, especially if they have been furloughed from their jobs as a result of the pandemic or have had hours cut. If this is the case with any of your tenants, you may be understandably worried about how you will collect your rental income.

This is where it can be wise to begin offering payment plans to tenants who are struggling financially. In doing so, you can ease some of the financial burden on your tenants while ensuring that you receive at least some of the funds to which you are entitled.

Screen New Tenants Thoroughly

One of the biggest mistakes landlords are making right now is rushing to fill vacancies in their rental properties without properly screening their prospective tenants. The problem with this is that you could end up with tenants who don’t have sufficient income or even a reliable job to pay rent. This means that not only will you lose out on rental income, but you may even end up having to go through the drawn-out (and expensive) eviction process. Even though you may be eager to fill vacancies in your rental units during this time, proper screening is actually more important than ever.

Direct Tenants to Resources

With so many Americans struggling financially as a direct result of the pandemic, the government has made many assistance programs available. Some of these even include rental assistance. Take some time to research these options for your tenants and point them in the direction of these resources when appropriate. From the Housing Choice Voucher Program to unemployment assistance, there are plenty of resources available to those struggling.

Fill Vacant Units Remotely

Even though more people are getting vaccinated, many people are still hesitant to go out in public. This may make it difficult to fill vacancies in your rental units unless you’re offering virtual tours, digital lease signing, and other means of finding and approving new tenants remotely. Make sure you’re posting detailed listings of your vacant units online and accepting lease applications digitally as well. When tenants are approved, you can even collect rent and security deposits online to make things more convenient for everybody.

By taking the right measures, you can protect your rental income even in the midst of the COVID-19 pandemic. For more financial assistance as a real estate investor, reach out to our team of Arizona hard money lenders today by calling (480) 470-8594. We offer a number of loan programs and other options to help fund your next real estate investment quickly, easily, and remotely!

image of 2021 calendar

Fix & Flip Investments in 2021: An Industry Assessment

As the world continues to normalize in the wake of the global COVID-19 crisis, fix and flip investors have their eyes on the global rebounding housing market. After a year of suppressed sales and diminished showings, what can these property flipping investors to expect as 2021 becomes more fully realized?

Let’s take an assessment of the fix and flip industry in 2021 by highlighting what savvy professionals should expect in the coming year.

Pro: Rising Real Estate Demands

In response to last year’s COVID-19 crisis, the Federal Reserve would make global headlines by announcing an eye-popping adjustment to the interest rate. Borrowing rates have bottomed out in a way that we might never see again, thus leading to affordable rates that we could only dream about several years ago.

Simple adjustments to your mortgage by even a quarter of a percentage point can translate to thousands of saved dollars over the duration of your mortgage. As long as the Federal Reserve holds strong to its commitment to reducing interest rates, investors in fix-and-flip properties are going to find constant activity within the industry.

There is some hope throughout the country that the nation will rebound with a Roaring ’20s style economic revival, led in part by affordable mortgage rates and a buying populace ready to live again. While much of this is conjecture, there is hope that real estate demands will meet realty as property buyers hit the market yet again.

Con: Limited Inventory of Properties

As COVID-19 settled into America, housing markets around the nation went dormant. Many homeowners who were looking to unload their property would opt instead to take their homes off the market, thus reducing potential exposure to the coronavirus. This is an issue that was only exacerbated by compounded stay-at-home orders and extended lockdowns.

Fix-and-flip investors are going to need a larger inventory of properties to choose from to enact their winning investment strategies. A limited selection of housing options can severely limit the upside of a fix-and-flip investor.

A limited amount of properties can cause a fix-and-flip investor to go against their strategy for the sake of making a purchase. Be wary of feeling compelled to rush. Focus on making good purchases instead and allow the market to catch up.

Pro: Potential Foreclosures in the Future

One individual’s loss is another person’s gain. As homeowners struggle to keep up with expenses incurred during the pandemic, bankers and lenders are going to get serious about recouping their expenses. This could lead to a swathe of foreclosures spreading across the market, leading to potential jackpot gains for savvy and alert investors.

While it is hard to look forward in anticipation of a foreclosure, fix-and-flip investors are going to have many opportunities in the coming year. Dates and times for these foreclosures will vary based upon the market, especially as you shift from one state to the next, so pay attention as the foreclosure market begins to heat up.

About Hard Money Lenders Arizona

While the housing market is going to continue marching toward recovery, fix-and-flip investors will have encouraging positive signs to hang their hats on in the coming months. Flipping investors in Arizona looking to make a leap into their next investment can turn to Hard Money Lenders AZ for help.

Hard Money Lenders Arizona is a private team of funders based out of Phoenix and experienced in every aspect of real estate lending. With decades of experience and unbeatable customer service on their side, help from the team at Hard Money Lenders Arizona is just a click away!

In the Rehab Process? Here’s How to Stay On Track and Under Budget!

Taking on a fix-and-flip project can be a great way to make a profit in residential real estate. With a smart investment and the right planning, you stand to make a significant profit by flipping a property and selling it. Before you get started with any rehab project, though, there are some things you need to know about staying on-track and sticking with your budget.

Plan Your Rehab Accordingly

Start by planning your fix-and-flip project during the right time of year. In general, the easiest times to sell residential real estate are during the spring and summer. With this in mind, it may make the most sense to tackle your renovations during the fall and winter months.

Set Aside a Contingency Fund

No matter how carefully you plan and budget for your rehab project, there are almost always going to be surprise repairs and other unexpected expenses that arise. The last thing you need is to end up going over your budget as a result. By setting aside a contingency fund that makes up between 15% and 20% of your total renovation budget, you can avoid running out of cash.

Account For “Hidden” Costs

There are a lot of obvious expenses you’ll undertake during any fix-and-flip project. Hiring contractors and buying building supplies are a couple of those given costs. However, there are plenty of less obvious expenses you may end up facing that you won’t want to overlook.

Specifically, be sure to budget for costs related to permits, property taxes, ongoing HOA dues, and closing costs/Realtor commissions once you sell the property. These can quickly add up and affect your bottom line if you don’t plan accordingly.

Don’t Overlook the Location

Location is one of the most important factors prospective buyers look at when buying a home. With this in mind, you’ll want to do plenty of research on the location of a potential property before you buy. While you may spend more money up-front investing in a property that’s located in the middle of a busy city, you’re also likely to get a larger return on your investment than a property in the suburbs.

Always Have a “Plan B”

Any experienced real estate investor will encourage you to have an exit plan in place for any project. While it may not be fun to think about, it’s important to plan for a “worst-case scenario.” For example, what will you do if your flipped property doesn’t sell within a few months of being on the market? Perhaps it will be necessary to rent out the property to begin bringing in income and try selling again when the market is looking more promising.

Borrow Responsibly

No matter what your plan is for fixing and flipping a property, borrowing from a reputable lender that you can trust is vital. Looking for a hard money loan for an Arizona real estate property? Hard Money Lenders AZ has you covered! Contact us today at (480) 470-8594 to find out more about our borrowing options, especially as they pertain to our excellent rehab and fix-and-flip loans.

image of fix and flip for sale

How to Market Your Fix & Flip to Sell Fast!

You’ve got your fix and flipped all fixed — so what about the flip? With a fix and flip, you want to sell as fast as possible. But that’s the rub, isn’t it? How do you sell fast? You can’t control the market. But you can control a lot of elements of your listing.

1. Price your fix and flip properly.

The worst thing that can kill a fix and flip is pricing it too high. Look at the comparable properties and think about your financial situation. If you’re going to be losing a lot of money holding onto the property for an extra couple of months, it may be better to discount the property now and sell it right away. A lot of fast-talking isn’t going to make up for the fact that you’ve priced yourself out of the market. And even a smooth operator isn’t going to be able to defeat most bank appraisals. Price correctly and fight less.

Of course, there’s always the chance someone will fall in love with a property priced over the market; but that’s a gamble. It’s best used when a property has something very unique about it.

2. Use your media wisely.

Video walkthroughs are practically expected now. Spend the time to get a professional photographer and videographer. Have them do video walkthroughs or even 3D walkthroughs. Stage the property nicely. Many people look online before buying a home. A lot of them aren’t even using a real estate agent; they just want to contact you directly after seeing the home. Don’t bother trying to obscure things about the property, such as making it look bigger with a fish-eye lens; that’s a waste of your time and theirs. You want the property to shine, not be misrepresented.

3. Invest in content marketing.

A blog and social media account is a great way to start reaching out to people. People who are looking to purchase a home in a year might follow you today, but that can secure a sale in a year. The more people you have exposure to, the more likely you already have a buyer watching. And content marketing pays for itself over time; though it may take some time and money to build it up now, it’s going to start bringing you in more people as you scale.

4. Build your following.

The more followers you have, the more exposure you have. A lot of people ignore followers because it’s not likely that they’re going to build a house. But build a following of real estate agents and professionals, and you’ll be in direct contact with people who are looking to buy properties. You can network with real estate professionals in your area and find out more about what their clients are looking for. And that’s only going to help you in future, because it also means that your renovations are going to be more applicable to the desires of the market. The more you can connect with people and interact with them, the more ammunition you’ll have.

What about showings? The truth is that open houses and scheduled showings really don’t matter as much as they once did. Often, people already kind of know what property they want (from all their research online) before they even take a look at it. So, don’t rely on the traditional methods to help you sell your fix and flip. You’ll need to be using the new media and reaching out to a broader audience if you want to sell.

Unprofitable Flips Happen! But How Do You Come Back?

Fix and flip opportunities have become more popular, allowing individuals to spend less on real estate investments, fix the issues with the home and then sell it for a profit. However, flipping houses isn’t always as easy as it may seem, especially if you’re a fan of the house flipping reality shows. While it can be an excellent way to make money on real estate investments if you have the right experience, it’s also easy to lose money on the process, especially if the home ends up requiring more work than you initially calculated or it takes longer than expected. The good news is there are ways you can recover from an unprofitable flipping experience. The following tips will help you make better decisions the next time around.

Watch the Market

The real estate market is constantly changing, and it’s best to keep a close eye on these changes to ensure you make the wisest investments. Talking with local realtors about demand, pricing and other factors can help you better gauge the best options for your next flip. Also, pay attention to the time of year. Winter is a lower time for sales in general.

Avoid Overpaying

It’s easy to make a mistake and pay too much for a property, dooming your success from the start. For real estate investors who flip property, evaluate the after repair value of the home and work your way backwards. Deduct the amount you expect to pay on repairs and renovations to give you an idea of the highest amount you should pay for the home. Checking the MLS for comparable homes in your market area can help you get a clear picture of how much you can expect to sell the home for when you’re done fixing it up. Don’t hesitate to get multiple quotes.

Expect the Unexpected

It’s rare to complete a home renovation without a few unexpected surprises along the way. When you plan for these surprises, you will reduce those expenses that can make your flip unprofitable. In addition, only fix what’s necessary to turn a profit on the property. Repair anything that’s broken, update anything outdated and choose one or two elements to splurge on to make the property more attractive to buyers. Don’t focus on making the house perfect. Instead, do just enough to make the home appealing while turning a profit.

Work with a Reliable Contractor

One of the biggest problems house flippers experience is delays in the project due to the contractors they hire. Only work with reputable contractors who have a good track record for staying on schedule. Get referrals from trusted sources and others who work in the industry. If a contractor isn’t meeting your expectations, make a change early in the project, rather than giving multiple chances, only to find yourself scrambling to meet your deadlines.

Stage the Property

When you’re ready to sell, staging the property can be the best way to sell the home for a fair price as quickly as possible. While home buyers like to be able to visualize their own furniture in a space, that can be challenging if you’re showing off an empty property. The good news is you only need minimal furnishings to provide the desired effect. Even though staging isn’t necessarily a cheap option, it’s a necessary step to help potential buyers focus on what the home can provide them.

When you learn to accurately value a property and minimize your costs without sacrificing quality workmanship, you will soon find these real estate investments more profitable.

What House Flipping Mistakes Are Costing You Money?

According to a study compiled by ATTOM DATA SOLUTIONS, the house flipping report released in 2020 showed the highest rise in the industry since the second quarter of 2006. As more and more entrepreneurial-minded investors turn to house flipping to pave their way toward financial freedom, it becomes increasingly important to avoid some of the most common house flipping mistakes.

We’ve compiled four key house flipping mistakes that fix-and-flip enthusiasts around the country are commonly falling prey to. With knowledge comes power as well as a larger Return-on-Investment!

Understand Your Budget + Renovation Requirements

First and foremost, house flippers need to approach each project with the right mindset by understanding their budget as well as the renovation requirements in front of them. A common mishap that newcomers and veterans alike will experience, underestimating your renovation budget can lead to a loss on your property and a blow to your morale.

Work with a budget-repair worksheet to properly track the necessary renovations for the flip to become successful. Consider hiring a professional home inspector to look over the property for the most accurate information.

Common Ways to Blow a Budget: A Leaky Foundation, Termite Infestation, Asbestos.

Avoid Overpaying For a Property You ‘Like’

House flipping professionals need to quickly learn to divorce their feelings from their work. Buying homes can become addictive, and it is easy to create an attachment to them. However, these attachments can hurt our bottom line by influencing our willingness to overpay for a property that we enjoy.

Aspiring house flipping professionals will learn early on to avoid letting emotions cloud their judgement. Stick to raw numbers offered by appraisers and home inspectors. There are always new opportunities on the horizon so long as we are smart with our investments.

Lackluster Property Location

So you’ve found a gorgeous home with pristine wooden floors, an extra bathroom, and a sprawling backyard. The only problem? It’s in the middle of an area that is seeing depreciating home prices. The wrong location can quickly derail a property investment. Before signing on the dotted line regarding a property purchase, make sure to take the surrounding areas into account.

Talk with a realtor or search up comparable sales in the area to see how much a property is being flipped for.  Look at how long houses sit on the market, how close the nearest grocery store is, and the proximity that a home is in relation to a school. Every little thing matters.

Avoid ‘Over Improving’ a House Flip

Finally, house flipping pros need to learn early on that they can’t over-improve every property they invest in. Over-improving properties can include adding amenities, upgrades, and materials that don’t mesh with the value of the home.

Instead of focusing on flourishes of wealth, make sure your rehab has all the necessities upgraded to compliance with modern standards. An improved AC system will sell your home faster than a granite countertop.

Budget For Success With a Loan From Hard Money Lenders, AZ

When it comes time to find the hard money loan for your next house flipping project, make sure to turn to a team that you can trust to get the job done right. Hard Money Lenders AZ is the top-rated Arizona hard money lender on Google and the #1 destination for Arizona-based fix-and-flip housing projects.

Contact Hanson Capital at your convenience on their 24/7 line to get funded, today!

image of house under renovation

Flipping Homes in Smaller Towns vs. Larger Markets

A successful home flip generally starts with finding the property with the best potential in the best location. However, a home with an excellent location doesn’t always have to be in a bustling downtown area or a major city. In fact, there can be many benefits to flipping a home in a smaller town rather than in a larger market.

By having a better understanding of these benefits and some other special considerations, you can ultimately make the smartest choice for your next flip.

Greater Affordability

When you’re shopping for fix-and-flip properties in busy markets (such as in major cities), there’s always going to be a lot of competition. This is because in general, the supply of big-city flipping properties is a lot smaller than the demand. Unfortunately, this greater competition also drives up prices. And even if you have the budget to compete with other investors, you could still end up falling short.

Flip properties in smaller towns, on the other hand, tend to be more affordably priced and have significantly less competition. As a result, you can stretch your investment budget even further.

Fewer Zoning Restrictions

Compared to properties in larger cities, homes in small towns also tend to have fewer (and less strict) zoning restrictions. This can make fixing up and renovating a property much easier on you and your contractors. You may have fewer hoops to jump through and more freedom to do what you want with the property, which may make it easier to sell.

Properties in big cities, on the other hand, are often under strict zoning and permitting restrictions that can really hinder your creativity.

Low Crime Rates

While it’s true that many buyers want to live in the city, the reality is that an increasing number of today’s home buyers actually prefer the quieter suburbs. This can be due to any number of reasons, but statistically lower crime rates in smaller towns are probably among the most compelling.

Other Considerations

If you’re thinking about buying a property to flip in a smaller community, there are some things to keep in mind. For starters, be prepared for the possibility that the home may sit on the market for a bit longer than it would in a major city (and plan accordingly for this).

To make your property as marketable as possible, shop for homes that are located near amenities such as dining, shopping, schools, and parks. These kinds of properties will generally have a greater demand than homes that are farther out in more rural areas.

Looking for a Hard Money Loan?

Once you’ve found the right property for your next flip, make sure you have a hard money lender you can trust for a seamless purchase and closing. At Hard Money Lenders Arizona, we specialize in helping investors like you fund your real estate flip projects. Contact us today to learn more about our services and what our hard-working team can do for you!