Category Archives: loans to flip houses

Arizona House Flipping Loans: Risks and Benefits of Equity Partnerships



When it comes to financing your next flipping project, you may be wondering about the difference between equity “partnerships” and standard Arizona fix and flip loans.

Before you set out on your next flipping project you need to know what the cost of financing will be. The cost of capital basically determines the profitability of your project. Loans imply fixed payments. With loans you calculate the cost of financing by adding up the loan fees and total interest payments, you then subtract this cost from your projected profits. The terms of a standard loan are spelled out in black and white, the only variable in this case is how long it will take for your rehabbed home to sell.

Equity partnerships present more uncertainty.

When it comes to equity partnerships, there is a lot of risk versus standard house flipping loans in Arizona

In equity partnerships a specific amount of money is given for a particular percentage of ownership in the property. In this case, the investor receives a certain percentage of the property’s resale value.

Equity partnerships represent a gamble for both sides, as the return you generate is entirely up in the air until your property resells.

With an equity partner on board, there are entirely no guarantees when it comes to the cost of financing. Don’t expect any investor to come on board with your project if you stipulate a cap on their potential returns. The implication here is that if you sell the property far and above your initial projections, you will have to give up a greater share of profits .

On the other hand, if the property resells below projections, an equity partnership might cost you less money than a standard loan. That is unless your investor stipulated a guaranteed return before they financed your project, if this the case, you might be personally liable to pay back the difference.

As you can see equity partnerships, there are few if any guarantees.

Standard Arizona Fix and Flip Loans are more predictable, but there may be some benefits to an equity partnership

Taking a loan out to finance your next project offers you the potential to keep a greater share of profits. Again the terms of the loan are spelled out well in advance and represent a predictable cost. Unlike equity partnerships, if your project does well your lender is not going to demand more money from you.

So you may be wondering why you might consider an equity partnership in the first place.

When comes to loans, the terms of the deal are fixed after you sign the papers. If your project runs into difficulties and your renovated property continues to linger on the market,  your lender will still expect you to keep making payments.

With an equity investor, there is more flexibility. Your equity partner will likely not expect a return or any payment until the property actually resells.

So if the next house you aim to flip is in a lukewarm market, or if there is any other type of uncertainty, the flexibility of an equity partnership might benefit you. However, if you have more certainty to your property will resell at a profit, taking out a loan might allow you to capture more of the upside from your investment.


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.

© 2016 Level 4 Funding LLC. All Rights Reserved.
Copyright | Privacy Policy | *Terms & Conditions

Using Hard Money for House Flipping Loans


635975440There are many benefits to using hard money when you need house flipping loans. These nontraditional loans offer all of the flexibility and benefits that will make you profitable.

Traditional loans are designed to be used by home buyers who are going to carry the mortgage for 15, 20 or even 30 years. But house flipping loans should never reach even a year if you are running your business correctly. You want to buy quickly, make the repairs and renovations and then get the house resold for a profit as quickly as possible. And asset-based lending or Arizona Hard Money Loans as they are also called can be the perfect loan for flippers.

Arizona Hard Money Loans are very short-term loans. Many are for only a few months and because of their short-term, the rates are higher than a traditional loan. The rates range from a low of about 7% to as high as 15% or more if the lender is unsure of the deal. There are also additional fees that the borrower will pay such as closing costs and lender fees. But the biggest benefit of hard money is that the application process is very fast and simple. Many loans are fully processed in less than two weeks which is far less than the average 90 to 180 days for a traditional mortgage to process.

The process to qualify for Arizona Hard Money Loans is based more on the value of the property that you are buying than it is on your personal creditworthiness. While the lender might check your credit score and require a score of 550 or better, that is far below more traditional lenders standards. The value of the property is also what will determine the amount that the hard money lender is willing to offer you. The loan to value rate is how this is determined. Each lender has a specific percentage of a property’s value that he or she is willing to loan. In most cases that number is between 70% and 80% of the current value of the property.

Collateral on House Flipping Loans

The reason that the LTV is important is that the lender will require that you use the property as collateral for the loan. This protects the lender in the event that you default on the loan. Bu loaning only a percentage of the property value, the lender will always know that the collateral is worth more than the balance you owe on the loan. If you do default, the lender will take possession of the property and sell it to recover his or her investment in the loan.

Hard Money is a Wise Choice

As long as you make wise choices and are aware of the expenses of an Arizona house flipping loans, hard money is a good selection to fund your purchase. But only when you have a clear renovation plan and time frame for completion of the project. The short timeframe of the hard money loan and the higher interest rates leave little margin for error if you want to earn a good profit.

Dennis DahlbeDennis Dahlber Broker Ri CEO Level 4 Funding LLCrg
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.© 2016 Level 4 Funding LLC. All Rights Reserved.
Copyright | Privacy Policy | *Terms & Conditions

The Cost of Loans to flip houses Arizona



Handsome young man looking confidentlyNo one is going to loan money without charging something for it. But understanding all of the costs for loans to flip houses is critical before selecting a lender.

Borrowing money is often the only way to be able to make a large purchase. And the ability to borrow money is something that most consumers are willing and happy to pay when it comes to buying a home. But when you are in the real estate, you need to understand that the loans to flip houses often cost more than a traditional house loan or mortgage. This is because the most popular loans to flip houses Arizona are Arizona Hard Money Loans which are offered by private lenders rather than banks or mortgage companies.

Arizona Hard Money Loans, or asset-based loans, are not funded based on the borrower’s creditworthiness. Instead, they are offered based on the current value of the property being purchased. The property is used as collateral for the loan and the lender wants to be certain that the loan balance is always less than the current market value of the property. To ensure this, the lenders only offer between 70% and 80% of the property value.

But the benefits to these loans are many. First, the loan application process is very simple and fast. Second, the approval process is also very fast. And finally, the private lender can be much more flexible on the terms of the loan as opposed to the rather inflexible terms of a bank loan. But all of these benefits do come at a cost. The most noticeable difference is the increased interest rate on a hard money loan. Hard money interest rates can range from 7% clear up to 25% or more if the project appears to represent a very high risk of failure.

Breaking Down Costs

In addition to the higher interest rates, some lenders will charge a flat fee for an appraisal of the property as well as another fee for processing the loan documentation. There can also be fees such as a funding fee, administrative fee or closing fee. Because the lender is a private person, he or she is free to charge the fees that they choose to and to call them whatever they want. For this reason, it is important to ask for a total cost of the loan in writing and itemized to understand all of the costs involved in loans to flip houses.

Making a Choice

Having all of the feels in writing will allow you to compare the total cost of each loan and decide which is the best option for you. In some cases, you will not choose the cheapest loan but instead the loan which offers the best overall terms to meet your needs. This can include a longer or shorter payment term, a variable payment or even the ability to extend the loan if you need more time to complete the project. But knowing the total loan cost is the critical first step in any house flip project.

Dennis DahlbeDennis Dahlber Broker Ri CEO Level 4 Funding LLCrg
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.© 2016 Level 4 Funding LLC. All Rights Reserved.
Copyright | Privacy Policy | *Terms & Conditions