An investor has scouted out a great property, but its got mold issues as a result of flood damage, but our investor has a plan. The properties listed at 300 and he’s got a firm estimate it will take 50 K or so to repair the severe water damage, A few repairs and he is confident that he can rent out all five units, at 1500 dollars a month in no time, which will bring in 7,500 K a month. Income which is more than enough to cover the monthly cost of a conventional mortgage.
So he’ll go to the bank right?
Our investor eagerly enters the bank office, proposal in hand. The terms are simple 50 K is all it will take to get this most promising rental property up to code. Based on this amount and the terms offered by the bank, he’s confident that can make the 1,900 monthly mortgage payments.
The once bright smile of the loan officer dissolves as he reviews images of the waterlogged property, “so I see some work needs to be done, how are you going to carry your loan?”
“I have the savings don’t worry, I’ve got more than 25 thousand, it should be enough to pay for the loan while the place is being fixed up,” the loan officer interrupts him, “well what about the lead up time afterward how are you going to pay your loan until you find renters?”
“I’ve done my research, there’s hardly a vacant unit in the neighborhood,” the loan officer grimaces, he cannot argue with the facts. Still, he slides the application across the desk, “I’m sure things will turn out great, but we’ve got FHA guidelines to consider, rules are rules, I can’t help you.”
It seems our investors left out in the cold or is he?
Our distraught investor hears about hard money from a friend “these guys are all about equity if a property has enough potential it doesn’t matter how bad it is,”
Sure enough, our investor is eligible for hard money, but the interest seems steep 14 percent. His lender explains he can refinance after he’s finished work to a cheaper loan. So he goes ahead, and things go according to plan. Work on the apartments only takes about three months, and it doesn’t take to long for all the apartment units to fill up.
The bank’s loan officer is well pleased because the apartments are now earning 7.500 a month with is more than enough to cover the mortgage payments and then some. Minus the expense of his new mortgage and basic property maintenance, our investor is now pulling in about 5 K in extra income every month.
None of this would have possible without hard money.
If there is a rental investment up for grabs, but the property isn’t up to the bank’s standards hard money gives you the capital you need, to take advantage of opportunities that might not be possible if you don’t look beyond bank financing.
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.