Arizona Hard Money Loans: A Step By Step Look

While most individuals go through a traditional bank loan process in order to buy a home, those who purchase homes for investment purchases often turn to other alternatives to fund their ventures. This is because banks often have stricter policies regarding the amount of money you make and how much they’re willing to lend you. When you purchase homes for the purpose of renovating and reselling them, this can make buying the properties you need difficult, if not impossible. This is why many real estate investors are turning to hard money loans in Arizona to fund their purchases. These loans are obtained from private individuals or organizations, making them somewhat easier to obtain and providing more flexible terms and faster turnaround times. Because these loans use the property as collateral, there is little risk to the lender or the investor, making them an excellent choice for real estate development investors. How does this process work?

Determine Your Goals

First and foremost, you need to determine your goals as a real estate investor. Are you looking to do this on the side for a little extra spending cash? Do you want to make this your full-time job? How many homes do you intend to purchase and resell and in what timeframe? Establishing your goals and writing them up as a business proposal are critical in getting the funding you need. The property may serve as collateral, creating less risk for the lender, but that doesn’t mean they don’t want to know what you intend to do with the money they are providing. The more detailed your goals and plans are, the more likely they will believe in your project as much as you do. It’s typically best to have a property in mind, providing the location of the property, your estimated budget for the project and how much you’re aiming to resell the home for. If you’ve done other projects in the past, before and after pictures can be useful as well. All this information is invaluable in giving the lender peace of mind.

Locate Lenders

Once you have your plan in place, you can start actively pursuing hard money lenders in your area. If you know others who are involved in these types of projects, ask them for referrals. Local real estate clubs and other similar organizations can also be valuable resources to find hard money lenders in your area. When you find lenders to consider, chances are they will want to do some research of their own before even considering your proposal. This means they may look into your background a bit, although they won’t be as concerned about your finances and credit as more traditional lenders. They will also want to research the property you’re considering, so they can get a good idea whether it’s likely to return on the investment as you hope. After all, the property is what secures the loan and ensures they get their money back as promised.

Fill Out an Application

Although the process is different from traditional bank lending, you will still need to fill out an application if you want to apply for a hard money loan. This application allows the prospective lender to look at your credit report, as well as any other necessary financial information to help them make a sound decision regarding whether to loan you the money. While these factors certainly aren’t the most important in these situations, they do still need to be taken into some consideration. In essence, you will work with your hard money lender as a partner in the project, which is what makes this type of lending so different from your traditional loans. The lender should be interested in your goals and what you plan to do. If they aren’t, they likely aren’t in this business for the right reasons and you may be better off looking elsewhere. Once they approve your application, the loan goes through the underwriting process, which is similar to that which is used for traditional loans.

The Underwriter

In simple terms, the underwriter is the individual who assesses the level of risk to help lenders decide if providing the funds is the right option for them. After all, the loan is no good to them if the individual taking it out won’t be able to repay it. They will approve the loan based on the value of the property, your credit and your capacity to pay the loan back. Property value is the most important factor in the calculation of hard money loans.

Closing

The final step in the process of obtaining a hard money loan is the closing. This is the time when you and the lender will sign all documents related to the terms, including payment terms, amount of the loan and more. An escrow agent should be used to ensure everything is in order and ready to go. Once all the paperwork is signed, you’re ready to begin renovating the property so you can turn it around as quickly as possible.

Advantages of Arizona Fix and Flip Loans

Real estate investors with varying levels of expertise or poor credit often look to Arizona Fix and Flip loans for financing. Acquiring an Arizona Fix and Flip loan offers several advantages over other conventional loans. While the structure of Arizona Fix and Flip loans may vary, many real estate investors choose them because you can count on fewer federal regulations and an easier overall application and approval process. In addition, these loans allow you to receive a 40% to 50% return on investment with little cash down and no other upfront fees.

The approval process for Arizona Fix and Flip loans are generally less restrictive than loans from banks. This helps reduce the chances of missing out on a great investment and ensures you can start your project right away. These loans are ideal for investors who understand the market, the renovation process, and the details of the loan agreement. Here are a few things to consider ensuring your investment is a successful flip and not a flop.

Research the Community

You will need to have a plan before the application process begins. First, you will need to find property that you are interested in. After pinpointing a property of interest, you will need to spend time doing your own research so that you are familiar with the neighborhood. When analyzing a neighborhood, it is wise to consider the school system or reputable alternative school options available. In addition, keep in mind the importance of reliable public transportation. Finding property that fits your budget in an area close to metropolitan areas with commuting options is a great asset, as well.

Calculate Potential Worth of the Property

To help determine how much the property is worth or potentially worth, consider doing a comparison of recent homes that are currently for sale or have recently sold in the area. You want to invest in property that gives you great returns after making necessary renovations. Knowing the retail value of surrounding homes and the cost of necessary renovations can help determine if the property is worth an investment. Banks are generally not interested in the potential value and often steer away from property in need of renovations. Arizona Fix and Flip loans are designed with a future mindset and are interested in what the property’s future value could be.

Assess How Long the Project Will Take

Depending on the size and scale of the project, flipping a house can often be a short or lengthy process. This makes a loan with flexible terms an important element in house flipping. Whether it is a complete fixer upper or a few minor repairs, fix and flip projects often come with a few surprises or setbacks. Arizona Fix and Flip loans, often structured with longer repayment periods, provide investors with a cushion for delays or unexpected repairs.

With flexible terms, fast and easy approval, quick funding, and low interest rates, Arizona Fix and Flip loans let investors take advantage of a great real estate market while making the fix and flip process both easy and hassle-free.

How to Make Money in Phoenix Apartments

Are you considering using a fix and flip loan for an apartment? If so, it’s essential that you develop a strategy first to ensure you are able to pay this loan off as soon as you can. Here, you can learn more about finding and utilizing the right deals, along with what you need to know to correctly value an apartment, while utilizing the various income increasing strategies to help you maximize the overall value of the apartment property that you purchase so that you are able to easily earn a profit and pay of your loan’s balance.

Before taking out a loan to flip an apartment successfully, it’s important to find the right property.

The process of finding the right apartment properties to flip is somewhat challenging. The majority of apartment buildings are being sold off-market. After all, landlords don’t want to alert their tenants to any potential changes in the ownership of the building, and as a result, they avoid posting a listing of the property for sale. Therefore, to find these apartment properties that are for sale, you should contact local real estate brokers. These individuals can let you know what properties are available.

Once you find the possible property that you can flip, you need to make sure you consider the following:

  • Is the property in extremely dilapidated condition? Is there a need for physical improvements right away? If you are able, make the improvements needed, and then you can immediately increase the value of the property and resell it to earn a profit.
  • Think about any outside factors that may increase the value of the property in the near future. For example, are there any new public amenities such as schools or hospitals ready to be constructed nearby? If yes, then you may not have to spend too much of your own money to see the value of the property appreciate.

The primary difference in flipping an apartment versus a typical, single-family home is the valuation. Most residential properties are going to be valued on comparable sales, which limits the possible returns earned from the residential flips. With a commercial property, such as apartments, the income generated by the property will determine the value. As a result, the possible returns from an apartment renovation may be quite large, based on how much you can raise from the property.

When it is time for you to value an apartment building, the value is typically set based on the current market cap rate and then divided by the revenue generated each year from the property. If you have an apartment that is earning $120,000 in income each year, and the current cap rate is approximately five percent, then the outcome is going to be $2.4 million dollars. While the nuances of this particular valuation process aren’t covered here, it gives you a general idea.

Before you take out any loan, it is important to know how you are going to pay it off. It’s also important that you can earn a profit by resulting in the property’s value to appreciate as fast as it can. When you are dealing with apartments, what is the fastest way for you to increase the value of your property? Raise the rent.

Raising rents that are exceptionally low is a great way to start and one of the most affordable and fastest ways for you to increase the value of your apartment, which is going to help you quickly repay the loan.

Millennials Are Moving to Phoenix – Here’s Why:

Phoenix, Arizona is certainly a city in the U.S. that can identify with the variance in how different age groups are experiencing the world. The city is no longer just a place for retirees and college kids. Millennials are discovering that the state’s remarkable capital city has much to offer and is full of exciting opportunities. And when you combine the city’s low cost of living with its unceasing beauty and pleasant temperatures, it should come as no surprise that millennials are relocating to Phoenix.

One area of particular interest that has gained national spotlight is Valley of the Sun, which is the Phoenix’s booming metropolitan region. The area has witnessed phenomenal growth, with much of the growth attributed to the arrival of so many millennials.

Among millennials, Phoenix is now considered to be one of the top spots to live. Let’s take a glimpse at why so many millennials are packing up and heading west and discovering what a remarkable booming city Phoenix really is.

Affordable Living

Cities that boast coastlines and huge millennial populations seem to gain the attention of the media. In reality, though, the majority of these cities are becoming extremely expensive for many millennials. Not only are millennials discovering they can pursue their dreams after college in Phoenix, but they can do so while still staying within their means.

Many millennials are hoping to find housing cost that is somewhat comparable to what they have adjusted to while attending college. When compared with other cities that offer comparable lifestyles, housing prices in Phoenix are considerably lower. Adding to this, when gas and food prices are compared to those living in coastal regions, prices are noticeably lower, making the prospect of owning a home more imaginable and the city even more appealing.

Economic Growth

The city’s rapid economic growth stems from its support of entrepreneurs along with its commitment to embrace change. This is demonstrated in the city’s tax policies, which have become essential to rewarding achievement and work ethic. The friendly city embraces its people and openly welcomes strangers to network and plant roots. Phoenix is considered to be a hotbed for economic development; the city continues to offer new activities and embraces social diversity, which is reflected in its majority foreign population.

The Great Outdoors

Phoenix and the surrounding areas offer an abundance of opportunities for millennials to experience the great outdoors. Its captivating landscape offers nature lovers a chance to participate in activities, such as exploring nature trails and mountain biking. There are lakes and rivers nearby as well, which is of particular interest to those who love swimming, skiing, or high-speed water sports. Affordable living and an ideal climate that supports both healthy living and socializing, Phoenix is a place where millennials can afford to enjoy life at its finest.

Millennials are finding both success and a satisfying lifestyle in Phoenix, Arizona. The city’s sense of community, low cost of living, and welcoming environment make it one of the top spots in the U.S. for millennials to relocate.

Complying with Arizona HOA Rules on an Investment Property

Those who are members of an HOA often pay close attention to following the rules, especially if they are currently living in the home. However, if you invest in property that is under the governance of an HOA, it can be more difficult to keep up with the regulations and make sure your tenants are keeping up with the rules so you don’t get in trouble. After all, it’s the homeowner who is responsible for making sure the HOA regulations are followed precisely. In addition, it’s important to make sure you understand what’s required if you intend to make any changes to the property.

Keep a Record of the Rules

When you first purchase a property, you should get a copy of the HOA rules to read through so you understand what’s expected of you. It’s important to always keep a copy of this list on hand so you can reference it and determine if there is an issue that needs to be addressed with your property. This is especially important if you purchase the property with the intent to flip it and resell it. In this situation, it’s important to know whether you are allowed to park a dumpster at the property for your demolition needs and what types of changes you can make, as well as whether approval is needed before you proceed. If you do intend to rent out the property, be sure you supply your tenants with a copy of the HOA terms, so they are more likely to follow them.

Understand the Fees

Every HOA operates differently so you’ll need to carefully read the terms to ensure you understand how often the fees should be paid and how much they are. Some homeowner’s associations charge the fees once per year, making it easy to pay them and forget about it until the bill comes the following year. However, others may charge on a quarterly or even monthly basis. If you intend to flip and sell the property, you may end up not having to pay much in terms of the HOA, but if you will be renting out the property, this is an obligation you’ll have to meet, whether you require your tenants to pay it or you pay it yourself. It’s important to determine how you will handle this aspect before you make the purchase and begin the process of investing in property.

Make Sure the Home Meets Codes

In many situations, the codes set forth in the HOA guidelines vary from the safety codes put in place by the government when it comes to building a home. This is why it’s critical to read through the HOA documents so you know what you are capable of doing to change the home. In fact, it’s important to remember just because you purchased a home that falls under an HOA doesn’t mean it is currently fully compliant with the regulations. Sometimes homeowners make changes that aren’t approved by the HOA, but they haven’t been uncovered at the time. If the HOA determines the house is outside their regulations while you are in possession of the home, you are the one who will get in trouble, not the previous owner. Therefore, in addition to making sure any future changes you intend to make are in compliance, you should go through the home with a checklist to ensure everything is up to the proper standard, making note of any changes you must make to achieve that goal.

Purchasing an investment property that is covered under an HOA has plenty of advantages, but it can also be difficult to make sure it remains under compliance, especially if you plan to make changes or you will be renting out the property. Be sure you read through your copy of the HOA terms carefully and ask any questions before you buy the property, so you don’t face any surprises later down the road.

Making Rental Property Income in Arizona

Virtually everyone dreams of earning passive income. After all, what’s not to love? Being able to sleep in and know that money is consistently coming into your bank account is something that sounds like a complete dream come true – right?

However, making money with a rental income in Phoenix is much more difficult than it may seem and being someone’s landlord is a very time-consuming and laborious task. If you really want to make a living and make a true passive income using a rental property in the Phoenix area, then don’t stop reading.

Locating the Right Properties

Selecting the proper properties is something that can be extremely tricky. A great house is going to offer a superb neighborhood, great amenities close by for the tenants, a good location, easy upgrades, and a quality job market. Also, a great house will have superior curb appeal, as well as good street lights and well-maintained sidewalks. It’s possible to find a good location for a rental property by having an eye on the real estate market in the area and get to know the other rentals in the area and learn about current vacancies.

Good locations need to have plenty of amenities, such as gyms, coffee shops, restaurants and more. If you want to earn a good rental income in Phoenix, then it is a good idea to choose a home that has amazing features, or properties that can be upgraded with ease.

Upgrade Decisions

The rental income that you earn in Phoenix will vary quite a bit based on the features that are in place for your property’s tenants. If you have been able to find a property that can check all the boxes and that makes a great rental opportunity, then understanding which upgrades you need to do will help you earn the most cash.

Some areas where you should consider an upgrade to make the most rental income possible include:

  • The installation of a deck
  • New windows
  • Garage door replacement
  • Kitchen upgrades

There are also smaller updates that can be made such as updating the finishes, applying a brand-new coat of paint, and even installing a new countertop and rugs. Each of these fixes are going to help the entire property seem more modern and even more appealing to a more diverse group of potential tenants. Installing a new garage door is an extremely affordable upgrade. Be sure to keep this in mind when it comes to your rental property.

Budgeting for the Rental Income You Potentially Earn in Phoenix

Being able to budget for a rental property in the city of Phoenix is actually something that is pretty easy. You can even opt to keep track of the budget you have for repairs for the rental property on your phone. There are several budgeting apps available to help you with this.

If you want to make the most of your rental property then you need to know what you should charge your tenants, as well. You can utilize information provided by the real estate market, along with nearby rentals to figure out what you need to charge. By using properties that are comparable to yours you should be able to get a great price point.

In addition to all the factors found here, you also have to find the right tenants. This will ensure that rent is paid on time and that the property is taken care of so that you can continue earning a passive income on the property you own. This is crucial if you really want to earn as much as possible on the rental property that you have opted to purchase.

To learn more about making a passive income with rental property in Arizona, contact Barrett Financial Group today at 480-999-6183. Our expert team will answer all your questions and make your dreams come true with a hard money loan in Arizona to secure the perfect rental property.

How To Get Into Arizona House Flipping

House flipping can be a very lucrative and rewarding business if you have the know-how and are willing to put in time and effort. This corner of the market has exploded over the past decade (largely thanks to reality TV shows on house flipping), as more and more people have gotten into buying older homes for cheap with the intention of renovating and selling them for profit. Arizona in particular is a great place to get into house flipping, as the real estate market in general is strong but still has plenty of older, decrepit properties being listed for cheap.

The good news is that just about anyone can flip a house, even if they don’t have prior experience. All it takes is dedication, a little creativity and of course, some investment up front. In fact, many people who start with just one house end up doing it again and again because their experience was so rewarding (financially and, very often, personally). We’re here to help you with the financial investment that flipping houses often requires, but in the meantime here are some tips you can use to get into flipping houses and turn your venture into a success.

Keep Doors Open

There are a lot of ways to find great opportunities right here in Arizona for house-flip projects. If you want to explore a lot of low-price options in a short period of time, it is a good idea to enlist the help of a realtor. Otherwise, you can find a great deal on your own if you’re willing to put in the legwork. Using websites like Zillow is one way to find cheap listings in the area of your choice, and it is also possible to get one through a foreclosure auction. If you do find a house online, just be wary of sending money online or being asked for a check without seeing the property in person and without a realtor involved. Always do your research, which of course brings us to the next tip…

Do Your Research

Whatever you do, don’t jump to buy the first cheap house for sale without knowing exactly what you’re getting into. After all, some people make the mistake of buying a cheap house, investing a lot in renovations, then pricing it way too high for the neighborhood it’s in. Likewise, some people don’t go as far as they should with the renovations, and the house still ends up looking a bit run-down in comparison to its neighbors. No matter how the house turns out, it just won’t sell (or at least not for as much as you want it to) if it no longer fits in with the surrounding area.

Don’t Neglect the Exterior

All of your hard work on the inside of the house won’t matter much if you can’t even get prospective buyers in the door! After all, many people tend to drive by houses for sale before they decide to take a tour up close, and there’s no easier way to turn someone off from this idea than to have an unappealing curbside view. The outside of the house should therefore be inviting, and any lawn should be well-kept. If there are any trees or hedges, they should be trimmed and far from unruly. This of course includes cleaning up and properly disposing of any remaining construction / renovation tools.

Another great way of making sure the outside complements all the great features the inside has to offer is to add pops of color. All too often forgotten, for example, is the mailbox (if applicable). Installing a cute, unique mailbox is always a great idea, but at the very least you should give it a fresh coat of paint. Other ways of adding touches of inviting color include a brightly colored door (as long as it does not clash with the rest of the exterior colors) and / or window shutters.

Don’t Over-Do It

When you’re looking to flip a house, you should first look at what the property does currently have to offer. After all, why spend a lot of time and money on large-scale renovations when you don’t actually need to? Sometimes a house just needs to be updated rather than fully renovated, saving you a lot of unnecessary time and money in the process.

Slow and Steady Wins the Race

It’s healthy to set timelines and goals for yourself, but it’s never good to rush things. Be realistic with the amount of time you’re going to need to flip the home. It’s important to not rush through the project, as then you risk having to list the house for far lower than you planned. Take the time to actually execute the renovation properly and ensure that the value of the property increases as it should.

Don’t Be Afraid to Ask For Help

We all need a little help sometimes. If the house needs some extensive renovations that require more than a coat of paint or other basic modifications, it’s a good idea to consider going with a professional contractor or at least enlisting the help of someone with more experience. When it comes to actually putting the house up for sale, you may also want to sell through a realtor or consider hiring a professional stager to ensure the house is in show-ready condition. Arizona has a booming real estate market, and so the good news is that you can hire the professional help you need without spending a fortune.

And of course, if you need any assistance on the financial front, Barrett Financial Group is here for you. Please feel free to reach out to us to learn more about how we can help you achieve your house flipping dreams.

 

How Arizona Fix and Flip Loans Work

Popular shows like Flip or Flop and Fixer Upper are viewed by millions of people each day. After just a few episodes, it is evident that in the pursuit to make a profit, “flippers” do not always know what is lurking behind the walls and in the crawl spaces of the properties they buy. In order to mitigate these types of risks, it is best to devise a business plan. This plan should always ensure that enough money is being borrowed to cover the costs of any necessary renovations.

In order to invest in a fix and flip that is worth your time and money, you must first determine if it can be bought below market value. To increase the value of the property, you would then perform a rehab that consists of making improvements and repairs. Once the updates and repairs have been made, the goal would be to sell the property at a profit.

With the market full of great opportunities for fix and flip projects in Arizona, many investors look to an Arizona FIX AND FLIP LOAN. The loan does not follow customary financing and the funds received are secured by the value of the property. The loan is financed using the foreclosure of the property as collateral.

A fix and flip starts with finding the property you want to invest in. From there, you start devising a plan on how you will finance the purchase and rehab costs. This will include financing for the purchase price of the property, the holding cost, the cost needed to rehab the property, and any closing cost. Due to not meeting FHA guidelines, Fix and Flip loans do not qualify for traditional financing, and rarely do banks take part in such loans.

Unfortunately, with the level of risk involved and the speedy turn around time, you should expect to pay higher interest rates on Fix and Flip loans.

Numerous options are available to acquire an Arizona FIX AND FLIP loan, but most property investors know that the easiest and most straightforward route is to find a hard money lender. Arizona hard money lenders are individuals or private investors that know your success means translates into their success as well. With lower qualifications and a quick approval and funding process, many people have found success through a hard money lender.

The good thing about an Arizona fix and flip investment is that you don’t have to have an excellent credit score or even a down payment. With a good business plan, a carefully-planned strategy, determination, and good work ethics, you can take advantage of the great fix and flip market in Arizona. Contact Barrett Financial Group now to learn more about Fix and Flip hard loans.

5 Myths about Phoenix Hard Money Lenders

Sometimes, a traditional bank cannot meet all of your financial needs. Perhaps your credit isn’t in the best shape, or you already have a loan through your regular bank. No matter the reason behind a bank not being the best choice for accessing the funds you are in need of, a hard lender can often be a better option. And even though you may hesitate at first to borrow from a hard lender, you should be aware that not all of the bad things you’ve heard about these lenders are true. Let’s take a quick look at five myths related to hard lenders and why you shouldn’t fall for them.

Myth #1: Hard lenders only provide money for commercial properties

Sure, a commercial property can access funds through a hard lender, but this isn’t the only way in which the money can be used. In fact, there are many hard lenders that will provide single families with access to a loan so they can purchase a residential home. In fact, even if you have recently gone through a foreclosure yet have equity you can access through other assets, a hard lender may be very suitable for purchasing another home.

Myth #2: There are no reputable hard lenders

A reputable hard lender can be found just about anywhere, you just have to do your research. Sure, there are lots of hard lenders out there that aren’t reputable, but if you search in the right places, reputable lenders are easy to come by. One of the best places to start your search is through a trustworthy real estate agency in your area.

Myth #3: Hard lenders always have high interest rates

You may not be able to secure a loan through a hard lender with an interest rate as low as what a traditional bank can give you one for, but you can still avoid sky high interest rates. In fact, many hard lenders have loans with an interest rate of only about six to seven percent higher than what you can get a loan for at a bank. When searching for the best rate, make sure to shop for a hard lender in an area with lots of hard lending competition; this helps keep rates low.

Myth #4: Hard lenders give you access to what the collateral is worth

As you shop for a loan through a hard lender, remember that these loans are considered risky. Because of this, whatever collateral you are using, you will likely be able to access up to about 65 to 75 percent of its worth.

Myth #5: All hard lenders are shady

This simply isn’t true. Hard lenders want to collect the money that they lend out, and they want to provide affordable loans to good people. If you have the financial responsibility to meet the terms of your loan, you shouldn’t have any problem with the hard lender you access funds through.