Monthly Archives: January 2021

Tips & Advice For Financing Your Investment Property

Financing your first investment property does not need to be as complicated as far too many inexperienced investors make it out to be. There are not only more ways to finance your first real estate investment than many people realize, but there are also several tips and tricks that can endeavor a lot less arduous. That said, it is those that know the options made available to them that stand to realize the most success in finding and securing financing for their first deal.

How To Finance Your First Investment Property

There are several ways of financing your first investment property with other people’s money, not the least of which include:

  • Traditional Loans
  • Private Money Lenders
  • Hard Money Lenders
  • Seller Financing


Whether you are brand-new to the real estate investing landscape or a seasoned veteran, there is at least one fundamental thing every deal must have in place: money. At the risk of sounding obvious, no deal will be completed in the absence of capital; it is as simple as that. It is worth noting, however, that the money for a respective deal does not have to come from your own pockets. I maintain that financing your first investment property should be done with other people’s money.

Even if you have the cash reserves to buy a house, it’s usually better to use someone else’s money for a deal. That way, you remain liquid and retain a “safety net” in your coffers.

Real Estate Financing Methods

There are several creative real estate financing methods investors can use for acquiring properties, but there are six main strategies that have withstood the test of time:

Conventional Or Traditional Loans: As their names would lead you to believe, traditional loans originate from the most familiar of places: banks and institutionalized lenders. These loans can have some of the lowest interest rates, but the application process can be lengthy. Those applying for traditional loans often need to have a minimum credit score in the 600’s and have a down payment between 5 and 20 percent of the purchase price.

Private Money Lenders: Private money lenders are essentially anyone in your inner circle, or close to it, that isn’t institutionalized and have some extra cash they are willing to invest. That said, just about anyone you know can be a private money lender if they have the funds available.

Cash-out Refinance and Home Equity Loans: If you are purchasing your second property, you may be able to use existing equity to do so. This involves borrowing against the value of your home through a home equity line of credit (HELOC), home equity loan, or cash-out refinance. The biggest benefit to this method is the potential for low-interest rates, though there are some risks.

Hard Money Lenders: Hard money lenders are organized semi-institutional lenders who should be licensed to lend money to investors. They specialize in providing short-term, high-rate loans with fees that allow residential redevelopers to purchase properties fast and painless.

Seller Financing: Seller financing strategies will witness the homeowner you intend to buy from act as the bank, offering to lend you the money on their terms. So instead of making payments to another lender, you would make payments to the seller in the amount you predetermined.

Financing Tips For Buying An Investment Property

1. Lower Rates Are Not Always Better

I want to make it abundantly clear: lower rates are not always better when financing your first investment property. That is not to say you do not want to secure a loan with the lowest interest rate, but rather that there are a lot more things to consider. Take private and hard money lenders, for example; they often have rates that are often four and five times higher than that of a traditional lending institution, but I would argue that they are better sources of capital for investors. Namely, because of their ability to act fast. While the interest rate on a private money loan may be higher than your bank, the speed of implementation they offer investors is invaluable. Whereas a bank can take upwards of several months to process a loan, private and hard money lenders can have the money in your hands in a matter of days. That said, those with access to funds right away stand a better chance at landing a deal. In a market as competitive as today’s, only those that can act fast will be able to realize success. So again: interest rates aren’t everything. I would rather pay more in interest (especially when loans are short-term) to have access to money immediately, as to be able to acquire the deals that are brought before me.

2. Have The Financing Lined Up Before You Look For A Deal

Far too many new investors make the mistake of trying to find a deal before they have the capital to purchase it; for several reasons, that’s a bad idea. For starters, you will not know which homes fit within your budget if you do not have access to capital. How can you possibly know which homes are in your price range if you do not have access to any money yet? There is a good chance you will waste time looking at properties if you aren’t yet approved for a certain amount. It is worth noting, however, that those with the proper funding on hand will know exactly how much they can afford to spend. What is more, you will be able to act a lot faster once a viable candidate reveals itself to you. Again, the speed of implementation is everything as a real estate investor. If you find a deal and have to wait around to get your money, there’s a good chance the competition will beat you to it and close on the property before you can even make an offer. If, however, you already have the money lined up, you will find it a lot easier to make the first offer, which is a huge advantage in this industry.

What Is The Average Interest Rate On An Investment Property?

Interest rates are the price we pay to borrow money — no more, no less. However, interest rates do not share a universal constant, and are even sometimes left open to interpretation. That said, it is common for interest rates to fluctuate in conjunction with the state of the economy and marketplace. Subsequently, interest rates will differ between individual loan originators. You see, each source of money has come up with what they believe to be a fair charge for borrowing their money, and investors must either choose to accept it, or look for an alternative.

If you are wondering what the average interest rate on an investment property is, the first thing you need to do is identify the source of where the capital is coming from. For a better idea of the interest rate you would expect to pay for a loan, refer to the following lenders:

Traditional Loans: The average rate on a traditional 30-year fixed loan is now 4.18%, according to Bankrate.

Private Money Lenders: Typically, private money lenders will ask for a high-interest rate: oftentimes between six and 12 percent. That said, I would not let the high rate scare you away. While it’s true, private money lenders’ services come at a higher cost, their ability to fund a deal in a relatively quick period is well worth the cost of admission. What is more, their term durations are not nearly as long as the 30 years bank loans typically coincide with. So, while interest rates are certainly higher, you will not be paying them for nearly as long — oftentimes just a few short months.

Hard Money Lenders: Not unlike their private money counterparts, hard money lenders will require borrowers to pay high-interest rates. It is not uncommon for hard money lenders to ask for 11 to 15 percent. On top of that, they might ask for points (an additional upfront percentage fee based on the actual loan amount). Again, do not let their high rates scare you away, because I can assure you their services are well worth it.

Seller Financing: Sellers financing their sale can ask for their terms, and oftentimes end up on the higher end of the spectrum for the inconvenience. However, it’s entirely possible to find a seller looking for incredibly low-interest rates. Just know this: sellers are often the easiest to negotiate terms with, so give it a shot.


Financing your first investment property can represent an intimidating step at the beginning of your career, but it does not have to be as scary as many make it out to be. If for nothing else, your first real estate investment should be exciting, and something you look forward to.

The best way to get started is to educate yourself on real estate financing. Only once you are familiar with the different real estate financing methods, can you move forward with one. Therein lies the reason we have compiled this information for you; hopefully, it’ll shed some light on an otherwise intimidating topic for new investors. Look into traditional loans, private or hard money lenders, HELOCs, and seller financing. Allow these options to guide your research as you make the best decision on upcoming deals.

Have you been wanting to invest in your first property, but are otherwise unsure of the best way to finance it? Perhaps you have had better luck with a different financing method we left out? Whatever the case may be, please feel free to share your thoughts in the comments below.

How to Find an Arizona Hard Money Lender Near Me Arizona

Arizona Hard money lenders are loan companies who help you make the most out of your money. Here’s a step-by-step guide to choosing your hard money lender.

Your first question might be, what is an Arizona Hard Money Lender? Let’s start there. Hard money lenders are, in so many words, banks that help you make more money using your own assets. Do you have a property that you can use as collateral? Do you need money quickly? Traditional loans can take weeks or months to be approved and funded, but Arizona Hard Money Lenders know that you need money now so you can make more cash. They understand that your livelihood depends on timeliness and loan approval that won’t hinge on your credit score.

So what are the things you should be looking for in anArizona Hard Money Lender? We’ve broken it down into 5 easy to follow steps to help you make that decision.

Step 1: Do your research

The best thing you can do is get to know the Arizona Hard Money Lendersin your area. There are plenty of Arizona Hard Money Lenders in Phoenix, but how do you know which one is right for you? Borrowing large sums of money can be daunting and you don’t want to begin that financial relationship with just anyone. Look up reviews and real stories from people who have used a Phoenix Arizona Hard Money Lender. See what they have to say and then see it for yourself, which leads us to the next step.

Step 2: Interview the Arizona Hard Money Lender

Nobody says that you must make your decision on your lender without actually speaking with them. In fact, you should do so. Whether it’s your first or fifth time borrowing, you need to feel comfortable with who is backing your investment. You also do not need to stay with the same lender if you’ve had a bad experience. This relationship should feel secure and comfortable so that you know you’re in good hands.

Step 3: Ask the right questions

Do you know what to ask the Arizona Hard Money Lenderwhen you get them on the phone? Here are some things you will want to understand about the lender:

  • Approval rates – What is the likelihood you will be approved for a hard money loan?
  • Speed – How quickly do most loans get paid out?
  • Flexibility – What are the repayment schedules like?

All of these will need to line up with your financial goals in order to make this relationship a successful one between lender and recipient.

Think about the first time you purchased a car or a home. Did you rush into your decision or did you take some time to think about what you wanted and how you wanted to get it? Every loan you receive should go through the same vetting process no matter how many times you have used an Arizona Hard Money Lender. Phoenix gives you a wide array of choices, but that does not mean every lender will be the right fit for you.

Level 4 Funding is dedicated to helping you reach that comfort level and then helping you reach your financial goals through hard money loans. We are here to answer any and all of your questions, so you feel confident using us as your lender for your Phoenix investments.

Arizona Hard Money Lending For Real Estate

Understanding the basics of hard money lending represents the first step of breaking down real estate financing. Hard money loans are, after all, a real estate investor’s best friend; they are the quickest path to securing a deal. Nonetheless, hard money lending can get complicated quickly, so you need to realize what you are getting into before making any decisions for yourself.

When exploring real estate hard money lending, you need to comprehend several questions: What are the pros and cons of such a strategy? When should you use private financing for real estate? Where can you find hard money lenders for real estate? The more you know about hard money, for that matter, the better. This guide should serve to lay a solid foundation for everything you need to know about one of today’s greatest sources of capital.

What Is Hard Money Lending?

Many investors looking for alternative financing that does not involve their local bank may have heard the term “hard money.” They may have even asked themselves a simple follow up question: what is hard money lending?

Hard money lending is a short-term loan obtained from private investors or individuals, at terms that may be stricter than a traditional loan. Though the terms of this creative financing option may be stricter, this form of private financing for real estate generally has more lenient criteria.

Hard Money Lending FAQs

The Big-Picture Of Hard Money Lending

  • Hard money lending is another way an investor can finance their real estate projects outside of the traditional mortgage means. This is a short-term loan secured from private investors or individuals instead of other traditional institutions like banks or credit unions.
  • Hard money lending is often used by investors who aim to improve or renovate a property and sell it. Given that you can usually get a loan in a matter of days (as opposed to weeks from banks), this is a fine choice for house flippers and real estate developers. This is also an option for investors who only need to do quick fixes to raise a property’s value, then secure another loan based on the new value to pay off the hard money lender.

Hard Money Lending Vs. Other Lending Types

The main difference between hard money lending and other types of loans is that this type of financing does not focus on your credit history or income as collateral. Instead, lenders will see the property’s value as the determining factor, emphasizing its after-repair value (ARV). ARV is the worth of the property once your renovations are done.

Other differences include:

  • Hard money lenders do not invest in primary residences. Owner-occupied residential properties are subject to many rules and regulations, thereby increasing the risk for lenders.
  • Hard money lenders do not sell loans to Freddie Mac or Fannie Mae. Often, lenders use their own money or raise it from a pool of investors. The amount they loan is based on their property specialization (if there are any) and the risks they are comfortable taking.
  • Hard money loans are short term. You will not have the luxury of 15 to 30 years to repay your loans. Hard money loans are typically needing to be repaid anywhere between 6 to 18 months.
  • Hard money lenders have their own lending criteria. A private lender, for example, could be your friend, family, or business associate. As such, they may not have any preset criteria before lending you money, giving you more flexibility in negotiating terms. Hard money lenders, on the other hand, come with a specific set of upfront points, interest rates, and defined durations.

The Pros and Cons Of Hard Money Loans

I maintain that hard money loans represent one of the single most advantageous funding opportunities for investors to take advantage of. Few sources of capital, if any, can compete on the same level as hard money and offer the same competitive edge. It is hard money loans, after all, that many investors must thank for acquiring their deals in the first place. That said, hard money is not without its own caveats. Despite its superior benefits, there are downsides to hard money that warrant the consideration of every investor.

Let us look at the pros and cons of hard money so you can weigh the pros and cons yourself.


Securing financing with a hard money lending loan offers you a number of benefits, including:

  1. Speed: The Dodd-Frank Act is financial reform legislation enacted in the past decade. It came with new regulations on mortgage lending, which means a lot of time (often, months) is needed for an investor to close a loan. On the other hand, hard money lending is fast, as you can secure a loan in days or weeks (depending on negotiations). Time is essential, especially for large development projects, and hard money lending can help speed that process along.
  2. Flexibility: Terms can be negotiated with hard money lending loans since you are dealing directly with individual investors. Banks are not as flexible.
  3. Collateral: With hard money financing, the property itself is your collateral for the loan. Some lenders even accept other assets, like your retirement account or residential property under your name, as a basis for starting a loan.
  4. No “Red Tape”: Getting a loan for an investment property with a traditional mortgage is difficult, if not impossible. Traditional borrowers need to worry about credit score, LTV ratios, debt-to-income, and several other indicators they need to meet criteria for. However, hard money lenders function as asset-based lenders who are more concerned with the property than the borrower’s credentials.
  5. Convenience: There is something to be said for the convenience of being able to close with cash. Having to supply a lender with bank statements, income documentation, tax returns, and leases can become overbearing and consume your focus and energy. Hard money, on the other hand, cuts out the middleman and a lot of the headaches.
  6. Volume: Hard money lenders allow investors to leverage other people’s money. That means investors could potentially fund more than one deal at a time. Traditional loans will do no such thing. If you want to fund multiple deals at a time, you should really consider a hard money loan.
  7. Competitive Edge: Hard money allows investors to beat out the competition, or at least those using a traditional loan. If for nothing else, sellers prefer the two things hard money offers: cash and a timely transaction.


There are, however, certain disadvantages to using hard money for real estate investments:

  • Cost: The convenience that comes with hard money lending may be its primary benefit; however, it is also its main drawback. Given that hard money lenders are at higher risk than borrowers, many may demand up to 10 percentage points higher than traditional loans. Interest rates range from 10 to 15 percent. Expect other fees to be also at a relatively increased rate, including origination fees and closing costs.
  • Short Repayment Schedule: A shorter repayment period is the price to pay for being able to get a property listed on the market ASAP. This can be anywhere between 6 to 18 months. Make sure that you can sell the property and profit in the soonest time possible.

Dennis  Dahlberg
Broker/RI/CEO/MLO NMLS 1057378 | AZMB 0923961 | MLO 1057378
9133 W Plum Road | Peoria | AZ | 85383

www.level4funding.comArizona Tel:  (623) 582-4444

When To Use Hard Money For Real Estate

Though hard money lenders will often issue loans for almost any type of property, certain types of property investments were absolutely made for hard money. Rehab projects, construction loans, and land loans were made to be financed through hard money.

This doesn’t mean that other types of investments should not be financed through hard money. If you, the buyer of a property, have credit issues, or you need to act quickly on a deal before it disappears, the speed and convenience afforded by a hard money loan can be worth its weight in gold.

Finding Hard Money Lenders For Real Estate Investing

Many new investors fret over how they will find hard money lenders to get moving on the financing of their project. But here are a couple of simple ways to approach this:

  • REIA or MeetUp Meetings: Often hard money lenders will speak at local real estate events. If not, ask fellow members to see if they know any trustworthy lenders.
  • Real Estate Agent or Traditional Lender: Ask that realtor, or mortgage broker, in your real estate network if they know a hard money lender you could do business with.
  • Google “Hard Money Lender”: Just be careful, there are some unscrupulous individuals out there. Be sure to ask for references and talk to fellow investors to get their opinion.

How Does Hard Money Lending Work?

Given that these are private individuals, every hard money lender is different. As stated above, these lenders come with their own requirements, which include the process they need to close the transaction.

To give you a general idea, this is the usual course hard money lending takes:

  • Find a hard lender near you. Do not let the rejection of a bank loan drive you to desperation. Research and make sure the lender can be trusted. Do they have a legitimate website? Are they in good standing with their own investors? Do they have pending lawsuits over bad loans?
  • Arrange a meeting with the lender. This is also the time when you can inquire whether they specialize in a kind of investment property or if they have worked with projects previously that mirror yours. Assess the time frame specified for the loan and see if this is something you can work with.
  • Prepare a contract. Make sure that you are offering a good deal with a sound financial plan.
  • Inform the lender of your contract price. Most lenders are willing to fund 60 to 70 percent of the property’s ARV. The remaining 30 to 40 percent is up to you. You will increase your chances of getting approved if you already have this at hand.
  • Get the property appraised. The lender will either send a list of their trusted appraisers or have their own.
  • Prepare additional documents needed. Some lenders may require that you present other documentation, like W-2s, bank statements, pay stubs, etc.
  • Wait for the lender’s approval. If it is a deal that the lender finds satisfactory, then they will inform you of the amount and terms for payment.
  • Consult with a lawyer. Make sure that you are legally protected, especially after getting the lender’s counter offer.
  • Close the loan. This will be done typically at a title company or a lawyer’s office. The lender will then put the money into escrow at the title company. The title company would make sure all paperwork is completed, and that checks are issued to all parties involved. Additional costs may include any closing fees and property insurances.

More often than not, lenders grant money to properties that will not be in the market for long, that have good selling potential. Make sure your team budgets ample time to complete renovations. There’s no sense in coming up with unrealistic projections. This cannot only set you back financially but possibly burn a possible future relationship with your hard money lender.


Using hard money lending for real estate acquisitions has become commonplace in the housing sector. If for nothing else, a hard money loan gives investors an edge over those using traditional financing methods. Not only should hard money borrowers be able to secure capital faster, but sellers will also favor their offers because they are made with cash. That said, if you are looking to fund a deal, you may not want to ignore hard money; it could be the one thing that gets you what you need.

Have you ever bought an investment property with hard money? What was your experience like? Feel free to let us know how things went in the comments below.

Dennis  Dahlberg
Broker/RI/CEO/MLO NMLS 1057378 | AZMB 0923961 | MLO 1057378
9133 W Plum Road | Peoria | AZ | 85383

How to Buy and Sell Mortgage Notes

How to Buy Mortgage Notes A step-by-step walkthrough of how to buy notes. Real estate notes are the most popular notes for investing. This guide to buying mortgage notes is a comprehensive resource designed to help investors navigate the note-buying process.

We refresh the guide regularly as we field questions from our subscribers, interview experts, and evolve with the world of real estate note investing. Bookmark this page and check back often to stay up to date.

What are Mortgage Notes?

Definition of a Mortgage Note A mortgage note is a borrower’s written promise to maintain lender repayment terms. Also known as a promissory note or real estate notes, mortgage notes are legal documents, though lenders do not usually file them as public records.

The Different Types of Mortgage Notes

mortgage promissory note is categorized by loan type, loan provider, lien position, performance, and asset class. Knowing the differences helps when it’s time to buy loan notes.



When a tangible asset, like a property or a vehicle, is tied to a lien, it is called a secured loan. A lender typically offers better interest rates and increased spending limits on secured loans since they have legal rights to sell the asset if the borrower defaults on the note.


When a lender issues a loan without a tangible asset and bases approval on a borrower’s credit history alone, it is called an unsecured or signature loan. Unsecured loan interest rates are higher, and credit score requirements are more rigid than asset-backed secured loans.


Private Loans

Loans issued by private organizations or individuals are called private loans or private money. A private money loan does not always follow traditional lending guidelines and offers borrowers flexibility in some cases. Investors may find private lenders with notes to sell, though the buying opportunities are usually limited to one per private seller.

Institutional Loans

Loans issued by credit unions, banks, and other organizations in the loan-writing business are called institutional loans. Institutional lenders follow strict guidelines with minimal flexibility but issue a lot of loans. Note investors working with institutional lenders benefit from recurring note availability, as opposed to the one-time private seller scenario.


Lien position, aka lien priority or lien seniority, is the order in which the debt is paid in the case of default.

Debtors place liens (legal claims) on the property to secure re-payment. Lien positions are established by order of recorded filing date. Usually, the mortgage lender holds the first priority, and other liens tied to the property hold junior positions.

Typically, investors focus their investing either on “first position” or else on junior liens commonly referred to as “seconds.”

What Happens to Lien Positions During Foreclosure

If a foreclosure happens, the more senior the lien (first position), the more likely you are to be paid off and recover your investment because liens are paid off in order.

The trade-off in note investing is that while you pay much less for junior liens (often pennies on the dollar), you do not enjoy the same security as senior lien investors or investors in the first lien position.


Real estate asset classes categorize property types with similar attributes. Note investors can buy a broad range of notes across asset classes, including:

  • Commercial
  • Multifamily
  • Residential
  • Construction

When you are starting out in mortgage note investing, the safest play is to invest in asset classes with which you are already familiar.


Note investors, in addition to understanding lien position and asset classes, need to evaluate loan performance. Loans may be classified as non-performing, under-performing, performing, and re-performing.

Non-performing note: A note that is 90 days or more past due.

Under-performing note: Borrower has a history of being periodically late with payments.

Performing note A note being repaid on time and according to terms. Investing in performing notes is sometimes referred to as “clipping coupons” because the investor typically enjoys modest returns paid back at regular intervals.

 Re-performing note: Borrower had missed payments, perhaps even went non-performing, but is now back on track. Sometimes these loans have been modified either by extended amortization, principal reduction, or interest rate reductions. One strategy note investors employ is to buy non-performing notes and get them re-performing and then selling the re-performing notes after seasoning (a period of on-time payments).

The biggest discounts for note investors usually come from non-performing notes, which are attractive to note investors for the steep discounts and multiple exit strategies. Performing notes are the most secure and offer the note investor reliable monthly payments backed (collateralized) by real property.

Dennis  Dahlberg Level 4 Funding LLC
Broker/RI/CEO/MLO NMLS 1057378 | AZMB 0923961 | MLO 1057378
9133 W Plum Road | Peoria | AZ | 85383

Why Invest in Mortgage Notes?

What are the advantages of buying mortgage Notes? Why Invest in Mortgage Notes?

Purchasing mortgage notes can be an excellent investment for someone looking for passive income secured by real estate. As with any investment, you should fully understand what you are buying before you dive in.

Regular Monthly Income

When you buy a note, you become the bank. Buy a performing note, and you can expect payment on time by a credit-worthy borrower. You are getting some of your money out plus a little bit of interest, and it is all secured by that real estate, making it an attractive way to invest in performing notes.

Capital Stack Security

The various levels of financial sources funding a property build the capital stack. Equity is at the top, homeowner association (HOA) and maintenance fees are at the bottom, and first and second mortgages rank in priority between them.

When real estate prices correct and come down, the equity gets cut out first. Mortgage holders maintain their position within the asset, but mortgage note investors are not impacted in this scenario. Note investors will not enjoy potential appreciation benefits, but the note investment remains secure.

Property Investment: $100,000
Money Down: $20,000
Mortgage Balance: $80,000
Property Value After Market Correction: $70,000

What Happened? 
The property owner lost $20,000 and is now deeper in debt by $10,000, called a deficiency. The lender has not lost anything but retains foreclosure rights on the property. However, to recoup the deficiency, a lender may wait until the market works in its favor.

Other factors to consider when evaluating whether buying a specific mortgage note is a good investment include:

The Seller – Sadly, there has been a scourge of hucksters and fly-by-nights who have sold a variety of bad assets with false promises. Make sure you are dealing with a trustworthy seller.

The Property – Since the property is the collateral for the note you are buying, you must have a reasonable understanding of the property’s value and the prospects of future value.

The Borrower – Although as a note investor, you have remedies for non-paying borrowers if your investment is concentrated in a single asset, you need to have reasonable assurance that the borrower is unlikely to damage or destroy your collateral.

The Market – Since the market, including the foreclosure laws and timelines for the municipality, may impact the value of the collateral or the costs to recoup your investment in the event of non-payment, you should be comfortable with and understand the market where your collateral sits. 

With properly aligned goals, education, and expectations, buying mortgage notes can be a great investment.

How Do Mortgage Notes Make Money?

Making money on a real estate note investment depends on the type of notes you buy and the acquisition strategy.


If you buy a performing real estate note, you receive payments according to the payment schedule, term, and interest rate. You accept those payments while enjoying the security of having your payments backed by the real estate.


There are other ways to make money with real estate notes. Note investors buying non-performing notes employ a variety of advanced strategies, including:

Loan to Own – Some investors will buy a non-performing note to exercise the power to foreclose and take possession of the real estate.

Loan Modifications – Private investors often have more flexibility than institutional lenders in the options they can offer delinquent borrowers. Some investors buy a non-performing note at a discount to provide more favorable repayment terms to the borrower. The note is then re-established as performing, and the investor enjoys regular payments.

Selling Partials – The note investor sells payment portions to a third party for a margin above what was originally paid.

Selling Re-Performers – The note investor buys the non-performing note at a discount off the unpaid principal balance (UPB). Next, the investor works with the borrower to get the loan re-performing, and finally, the investor sells the now re-performing note to another investor at a markup.

Flipping or Brokering Notes – The highest value task in the note investing business is finding the note. You can profit from flipping notes, even if you don’t have money of your own, by finding real estate notes for investors who have the capital.

Foreclosure – It is true. I had a client who bought a commercial property note for a pretty steep discount. Since the original lender, a community bank, had already begun the foreclosure proceedings, my investor client assumed the role of the foreclosing lender and hired us to market the asset for a foreclosure sale. The result was a profit of well over $300,000 in a matter of weeks, having sold the property at the foreclosure sale to a third party. My client never got in the chain of title and only owned the paper for about six weeks from start to finish.

I am sure we will hear from seasoned investors about additional ways to make money with real estate notes. If that is you, let us know in the comments below.

What is the Risk of Investing in Mortgage Notes?

Real estate note investing, when done right, should be LESS RISKY than real estate investing. Just as investing in bonds is considered safer than equities or stocks, the same is true for investing in real estate notes vs. investing in real estate.

As a note investor, you are trading the upside potential of appreciation in exchange for limiting the downside risk. This is not to say that there is “no risk.”

The amount of risk in a note investment depends on the loan underwriting, the Loan to Value (LTV), the position (senior, junior) of the debt, the good faith of the borrower to some degree, the locale’s regulatory environment, and the quality of the documents, assignments, and allonges.

There is, of course, always risk in any investment, and as an investor, it is up to you to evaluate the risk for any investment you make.

Dennis  Dahlberg Level 4 Funding LLC
Broker/RI/CEO/MLO NMLS 1057378 | AZMB 0923961 | MLO 1057378
9133 W Plum Road | Peoria | AZ | 85383

Should I Use a Private Money Lender? Your Questions Answered

Big banks are the go-to for large loans, but is that the right way to go? Arizona Private Money Lenders  offer you accessibility, flexibility, and quick access to money.

If you asked 10 of your closest friends who they would go through to secure a residential loan or car loan, you would most likely the names of some of the biggest banks in the nation and in the world. For most people their first home loan or first car loan were serviced by a big bank and people tend to be creatures of habit. If you do not know much about Arizona Private Money Lenders you may be hesitant to seek out a loan from one.

Below we will give you some facts about Arizona Private Money Lenders  Phoenix borrowers trust and return to time and time again for their loan needs.

We bypass the big bank red tape

Is your credit perfect? Have you paid every car payment in the last 12 months on time? If so, that is fantastic! But that isn’t reality for everyone. What do you do when your credit is less than perfect, and you are ready to make an investment in a new home for fix and flip or rental? It can take months or years to perfect your credit score and in the meantime, you may be losing out on investment opportunities. Arizona Private Money Lenders are more concerned with what you have versus what you don’t. If you have stable income, already own an investment property, or can show another form of collateral, chances are your loan will be funded and QUICKLY!

We know you do not want to wait on your money

If you see the perfect home listed and know it could be your next fix and flip opportunity, you don’t want to lose out to another bidder. You need the cash NOW. We understand that and service our loans accordingly. As a Phoenix private money lenderwe can get you the funds quickly so you can act on your investment opportunities with haste. Don’t let opportunities pass you by as you wait days or weeks for your loan approval. Come to us with your personal property that proves to us you are a savvy investor at heart and we will help you make your investment dreams come true.

Short-term loans are our business

Our borrowers have quick turnarounds on their loans and that is what makes us the perfect lender for real estate investors. Not only do we approve and pay out quickly, but we offer the flexibility of turning your loan around quickly once you have fix and flipped your property. Repayment schedules do not have to be cookie cutter like the big banks require. We see you as an individual who needs an individualistic loan based on your needs.

If you’re ready to turn your assets into cash flow, then private money lending could be the way to go. If you want to learn more about our Phoenix private money lender company give us a call and let’s discuss how we can help you reach your monetary goals using short-term private money loans.