Rental properties can be a great way to make extra cash, but how should you go about it? And what options are right for you? Read more below to find out!
You may begin by seeking out a loan from a traditional lender. Going to your local bank or credit union may seem like a great option. However, they have strict requirements when it comes to being approved for a loan. They are looking for great credit scores and debt to income ratios. Depending on your financial history, this may disqualify you. If it does, you may be turned to hard money lenders.
Arizona Hard Money Lenders are untraditional lenders. They consist of private companies and investors who focus on the collateral of your project. In doing this, they do not weigh your financial history as heavily. If you have rotten credit and need a loan fast, you may be tempted to turn to your local hard money lender for your rental property loans.
Choosing to work with a hard money lender on your rental property would be a mistake. While they can be great solutions when you need money fast, they work on short terms. Their repayment periods are meant to be paid back fast. They literally lend themselves to people looking to renovate fixer uppers because their goal is to flip the property and sell it as soon as possible. The money made from that sale can then go into repayment and the high interest rates of hard money lenders. Rental properties, however, gain profit over time. You want to work with a lender and obtain a loan agreement that literally agrees to the time period of your rental project.
Loans for Renting Property
So, what type of Arizona Rental Property Loans should you seek? Long term loans. These will generally come from traditional lenders that require down payments, cash reserves and mortgages. In order to qualify you would need to be able to afford a 20 percent down payment, a cash reserve of 6 months, and no more than 4 mortgages. There are other options if this doesn’t suit your individual situation. Federal Housing Administration FHA , Veteran’s Administration VA and equity line of credit are all other options to consider. Additionally, this day and age has made it extremely common to see funding via the internet. Not only that, but you could always consider personal connections you have, like family, friends and acquaintances who would like to invest in you project.
Moving Forward with Arizona Rental Property Loans
With the rising popularity of HGTV, inspiration comes daily—and sometimes the urge to create and find new sources of funding is all we need to evaluate our finances and see what it takes to invest in the housing market. No matter how excited you are, always be prepared to take a step back and thoroughly analyze what options are right for you. What is right for you may not work for someone else, and every situation has different needs that need to be considered.
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.