It’s hard enough getting a stranger to pay for your morning coffee, and with a 100 LTV loan your basically asking a stranger to buy your next investment property.
How on earth are you going to do that?
It all comes down to how you broach the subject with a potential lender. The first point that unless these it’s being offered up front, don’t stumble into a lender’s office, asking for 100 LTV financing.
If you do that you could raise some red flags in your lender’s mind.
• You’re not committed- Money talks. If you ask a lender to cover the full cost of your next investment property you’re basically saying to them:“I don’t really believe in my project enough to spend my own money on it.” So, your lender might ask themselves, “what’s to keep this person from skipping town if something goes wrong, leaving me to foreclose on their unfinished building site?”
• You don’t have money-By asking for 100 percent financing your lender could easily assume that you don’t have any money of your own. So, your lender might ask them, “If they don’t have any savings, how on earth will they keep up with payments if something goes wrong?”
• You lack experience- 100 LTV financing is so rare, that asking for it up front might make your lender think you’ve never closed a hard money deal before. So, your lender might ask themselves “If they’ve never done a hard money deal before, do they know what they’re talking about?”
To close these types of deals, you need to answer these questions before your lender asks them, either to themselves or to you directly.
• Prove your commitment- You could start the conversation by saying something like: “On this next deal, rehab’s going to be pretty extensive, so I’d rather use my money on rehab,” or something along these lines. The point is you need to thoughtfully explain the reasons why you’d like your lender to pay for the full cost of purchasing your property and assure them that you do intend to invest some of your own money in your project. Giving them such assurances will prove that you’re committed to your project.
• Prove you have money- Then you could take out some documents, things like savings statements, tax returns, anything to prove your financially solvent. Point to these documents and say, “as you can see here I do have resources, so if something goes wrong I can carry the loan.” Prove to your lender that you’re not asking for free money, just because you have no money of your own.
• Prove you have experience- Continue the conversation by saying, “I know I’m asking a lot of you, but I’ve done a lot of similar projects in the past. Here’s how much money I’ve made on those deals,“ talking up your track record proves to a potential lender that you know what you’re talking about and that you can bring your project across the finish line.
The above isn’t a word for word script. But if you carefully bring up the prospect of 100 percent financing, prove your commitment, financial solvency, and experience you’ll be well on your way to closing that coveted 100 LTV hard money deal.
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis Dahlberg Broker/RI/CEO
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
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 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.