Can You Get 90% Hard Money Loans for Distressed Properties?

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Can You Get 90% Hard Money Loans for Distressed Properties?

Foreclosed properties can make fantastic fix-and-flip projects and deliver amazing ROI. However, you’ll have to connect with the right people if you’re looking for Arizona 90% hard money loans to fund them.

Distressed properties run the gamut. These are the little gems being sold mortgagee or lender. More often than not, it’s because the homeowner stopped making payments, though lenders will sometimes sell off a property if they discover the homeowner wasn’t honest on his mortgage application or for other reasons. Technically, homeowners can sell a distressed property too. This could be the case during a short sale, divorce, or relocation.

Obviously, lenders aren’t in the business of holding properties and, when the seller needs to move quickly for personal reasons, they need to unload the property fast too. They’re often willing to let them go at rock-bottom prices to be free of them. However, these homes often have everything from cosmetic damage to plumbing, roofing, and electrical issues. Those are things you’re going to have to deal with if you’re buying it to flip it.

Some flippers relish in the challenge or specifically select properties which only have cosmetic issues, but in either case, funding can be an issue. Banks usually sell off these properties as “cash only” or they don’t qualify for traditional financing due to the disrepair. Ergo, finding Arizona 90% hard money loans, or at least coming as close to it as possible, is essential.

Learn How to Evaluate ARV and LTV

It’s really difficult to find Arizona 90% hard money loans when it comes to LTV, or loan-to-value. This involves appraising the property in its current condition and then dividing the loan amount against it. For example, if your appraiser tells you the home is worth $100,000 and you’re asking a lender for $95,000, your LTV is 95%. It’s probably not going to happen. Chances are, you’ll get offered somewhere between $60,000-70,000, though. And, the good news is, a distressed property may well sell in that range too, so it’s easy to get 90 LTV. On the flip side, ARV is after-repair-value, or what the property will be worth when it’s fixed up and ready to be sold. Let’s go back to our $100,000 home example. That’s a distressed property and it needs a lot of help. Imagine when you fix it up, you’ll be able to sell it for $200,000. The purchase price is still $70,000 and you’re going to sink $50,000 into it, bringing your total financial need to $120,000. In short, you’re ARV is 60% of the loan amount. This also falls in line with what lenders will typically do, as it falls below 70% ARV. Although you’re only getting 60% of the ARV in this example, you’re still hitting the 90-mark and then some on your purchase.

Increase your eligibility for financing by reducing risk.

Despite all this, Arizona 90% hard money loans, when we’re speaking of the property’s current value, only go to well-qualified buyers. So, the best avenue is always to demonstrate that your project is a safe bet for those financing it. You can do this by getting a really great deal on the property to start with or by using other techniques, such as bringing flippers with a solid track record on as partners in your project. An experienced broker can walk you through the options available to you now, help you find the best deal, and let you know if you’re missing things that could get you an even better deal.



Dennis Dahlber Broker Ri CEO Level 4 Funding LLC
Dennis Dahlberg

Broker/RI/CEO/MLO

Level 4 Funding LLC 
Hard Money Lender

Hard Money Loans

Hard Money Loan

Arizona Tel:  (623) 582-4444

Texas Tel:      (512) 516-1177

Dennis@level4funding.com

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.

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