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May 21, 2020Millennials have struggles prior generations didn’t. However, many are now making their dreams come true with the help of Arizona hard money lenders anyway.
Millennials often get a bad rap for their tendency to stay at home with their parents longer than prior generations have, plus this is the same generation that popularized ridesharing and home-sharing. Necessity is the mother of invention and, undeniably, has caused people in this age group to adapt in ways their parents and grandparents didn’t.
Research from Business Insider indicates that wages are up 67% since 1970, which sounds great until you realize that rent costs have risen nearly 100% in the same time period and tuition at public colleges have jumped more than 200% since 1982. Not surprisingly, the credit bureau Experian now reports millennials have more than $80,000 in debt on average. A staggering amount of this is student loan debts, but credit card debt accounts for a large portion of it too. Credit scores are suffering as well, with the average millennial only managing to obtain a “Fair” FICO score, sitting a significant number of points behind national averages for all age groups. This makes it hard to cover daily living expenses and get loans, which makes it all but impossible to get ahead.
These are some big challenges which have caused younger Americans to delay milestones such as homeownership and starting a family. It has also led to a rise in sharing apps, like Uber and Airbnb. The savviest millennials, however, are eschewing the norms altogether though. They’re working with Arizona hard money lenders in a number of areas to improve their lives today and get a head start on growing their long-term wealth.
Side Hustles Funded by Alternative Lending Give Millennials a Helping Hand
One of the key components for millennials who get ahead in today’s economy is having a side hustle, which can often be financed by hard money lenders. The ideal side hustle can be carried out without quitting one’s day job and involves skills which coincide with skills the individual already has. Current trends include house flipping and home rehabs, running an Airbnb or other vacation home, and starting up grow operations.
A broker can help you even if you’ve got rotten credit!
Banks turn people down when they’ve got bad credit or are getting into certain types of businesses, but Arizona hard money lenders don’t. Instead, they look at the overall business plan, it’s potential profitability, the risk involved, and the skill of the entrepreneur. This makes it easy to get approval even if you haven’t been in business long, are struggling with student loan debt, or have rotten credit. If you’ve got a great idea for a side hustle, but can’t find the funding you need to get it off the ground, speak with a broker who specializes in alternative lending and can match you with a private individual who has the cash to help you get started, knows the industry you’re getting into, and wants to help you succeed.
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NMLS 1057378 | AZMB 0923961 | MLO 105737
22601 N 19th Ave Suite 112 Phoenix AZ 85027
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“I was working with a hard money lender (OF) for the past ten days. 24 hours before my loan was supposed to close they called me and told me they were lowering my loan amount by 15%. I called Mark G at Level 4 Funding and told him the situation. If you want work with someone honest and professional call Level 4 Funding today.” Roger Johanson
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What is Private Hard Money?
It is usually a loan from a private person/individual not a bank for financial institution. Yes, there are people with a boat load of money in the bank and they want to lend it to you. This is legal, and it happens all the time. It’s their money and they will make a deal with you. Its easier and faster because the person making the decision is the person who has the money in their possession. It’s called hard money loan because when the loan is made, the collateral backing up the promise to pay by the borrowers is a hard asset. Typically, a piece of real estate or something of value. It’s a promise to pay, backed up by the borrower’s hard asset. So, its private money from an individual backed up by a hard asset. Which means if the borrowers do not pay, the lender goes and “grabs the hard asset” and the borrower loses the asset (home).
Things to Consider When Obtaining Hard Money Loans
Are you wondering what Arizona hard money loans are and where they fit into your investment strategy? Here are the basics of these types of loans and what they can do for you as an investor.
This type of loan is an asset-based loan. The borrower wishes to secure a loan backed by real property. Private investors and companies are typical issuers of these loans. Unlike banks, Arizona hard money loans can carry higher interest rates. These interest rates are higher than a convention real estate loan because of the higher risk and the duration of the loan which is shorter than conventional real estate loans.
People using Arizona hard money loans are usually looking for funding for projects lasting from a few months to a few years. The criteria for lending and borrower costs are similar to bridge loans. In fact, many hard money lenders specialize in bridge loans. Bridge loans are used for properties that are in transition and may not be able to qualify for traditional financing. An example of a bridge loan is when a home buyer finds a new home they’d like to buy before their old home, which is on the market, sells.
Many hard money lenders will lend 65% to 75% of the current property value. The amount of the loan is determined by the loan to value or LTV. It is figured by the ratio of the loan amount divided by the value of the property. Arizona hard money loans are mainly used for commercial property. These types of loans first started in the 1950s and have been growing in popularity.
Although mostly unregulated by state and federal laws, some restrictions on interest rates by states, commonly known as usury laws, prohibit hard money loans. Two of these states are Tennessee and Arkansas.
Federal Guidelines
Since the 2009 mortgage crisis and the passing of the Dodd-Frank Act, these loan programs have greatly expanded. This is in part due to the strict regulations that were put on banks and lenders after the passing of this act. Truth in Lending and Dodd-Frank set out Federal guidelines for lenders, mortgage originators, and mortgage brokers requiring them to evaluate the borrower’s ability to repay the loan. The ability to repay the loan is on the borrower’s primary residences. If the lender does not conduct the proper due diligence, they are faced with high fines for non-compliance. Hard money lenders mostly lend on commercial loans or business purposes so that they can avoid non-compliance with TILA, HOEPA and Dodd-Frank guidelines.
Before any offer of financing, the lender will want to determine the LTV (loan to value). The basis for the loan is the liquidation value of the collateral.
A BPO (Broker Price Opinion) or an independent appraisal by a licensed appraiser in the state that the property is located in, will value the property. Typical hard money loan interest rates range from 5% to 18%. Despite these rates, investors often turn to them due to quick loan approvals, high flexibility, less documentation than conventional lenders, and offering the ability to put a bid on a property that may go quickly after hitting the market.
Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
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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