Whether you label yourself as an investor, entrepreneur, house flipper, or businessman, the reality is that most people just getting into investment opportunities or making money through real estate are getting into it alone. As such, it probably doesn’t matter to you, personally, what happened with the consumer market years ago, so long as you can make a profit on real estate today. However, it does impact how Texas Hard Money Lenders and other financial institutions behave now, and that means it impacts you when you apply for a loan.
It would be challenging to find someone who wasn’t impacted by the recession or at least didn’t know someone who was. The reasons for this are well cited, with all sources pointing to changes in the housing market in 2007. Prior to this, houses were selling like hotcakes and anyone could get approved. Sub-prime mortgages reigned. That is, until they didn’t. Ultimately, banks fell apart and the job market tanked. Everyday people lost their homes and more. It took years to recover and it’s certainly nothing the world wants to see again.
The government stepped in with a slew of new regulations to prevent recurrence. For the most part, these changes impact the consumer market, not commercial loans. Therein lies the issue. How do you prove that you’re borrowing for business purposes unless you’re registered as a business?
Obviously, you, as a business, probably can’t afford to jump through government hoops or slow funding. You know what you’re getting into and have a business plan for your real estate investment, which means it’s important to ensure you’re not subject to the general consumer guidelines. When it comes to the Truth in Lending Act (TILA), for example, your loan is exempt from the extra red tape if the funds are being used for business or commercial purposes. That should be a win by itself, but there are harsh penalties for Texas Hard Money Lenders and other entities that may unintentionally breach protocol. Ergo, many go by the second method to exempt loans; extending them only to “non-natural persons,” which is legalese for “businesses.” Ergo, you may not qualify unless you’re established as an LLC, partnership, or corporation.
Again, not all Texas Hard Money Lenders require you to have an LLC. Some are simply satisfied knowing you’re using the funds for business. However, having an LLC has its perks—namely limiting your personal liability in the event something goes wrong. Maybe someone slips on your sidewalk or something similar occurs and you wind up in court. The LLC protects you—the person—from business-related damages. The amount to file varies by state and it can be anywhere from $50-500, but it’s little more than $100 on average. In other words, filing is cheap, and there are many benefits to it.
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.