What is a Arizona Speculative Home Loan and how can it help you?

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What is a Arizona Speculative Home Loan and how can it help you?

Simply put, this kind of loan is what industry defines as a loan or financing on a speculative property that has not been sold yet. These type loans are only a small percentage of the construction loan market. You may wonder how can I qualify for this type of loan, being mainly familiar with more conventional ones in the market.

Your project needs to have a strong potential to come through—this type financing requires a good bit of ‘walking around’ on the part of the borrower. Do the following things in order to give yourself a better chance of receiving the funding you need.

–Find a lot which is defined as ‘improved’, meaning it already has sewers installed, curbs poured and set, water lines in place and available power lines hanging. This will raise your chances of getting a buyer, and possibly reduce the amount of money actually needed for the project. Raw property will not have all of these advantages and sometimes not any of them.

–Location: property that is near urban population centers increases your chances of finding a buyer for the project you have in mind. For example, a popular restaurant setting up near a large business district has a much better chance of being bought since it would draw clients who don’t want to drive long distance to shop and eat and work if they don’t have to.

What else can you to increase your chances of getting a spec loan?

Since you are may be new to this, it is advisable to stay with projects that can be completed quickly in order to minimize the lender’s risk factor. These loans are generally short-term setups with low payments; once the project is completed however, the remaining principle comes due immediately. Occasionally a mortgage will need to be taken out on the property to finish off the remainder of the balance at the end of term.

Using possible equity in land is another option that can help you out. Some lenders will even require a borrower to do this before lending any money on a property. By using the property as a down payment, it sets the loan up as secured, again reducing the lender’s chances of losing money and increasing your chances of getting the funding.

Partners can be brought in on an arrangement like this, particularly if they have a better credit history, lower debt-to-income ratio and can aid with the down payment. The downside is that this cuts into your profits.

It is always good to look into all your options for a loan, including the conventional brokers and large banks that can carry these loans. Non-traditional lenders are often the answer since they emphasize collateral and your ability to pay more than high credit scores, straight line income and a glitch-free past.

Is a Arizona Speculative Home Loan your best bet? Investigate these type loans thoroughly before going ahead, then make an appointment with lenders. Arm yourself with documentation that shows your financial history, all the information about the property that you can collect and a budget with draw schedules to show.



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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