How to Qualify for your First Fix-and-Flip Loan

When You Should Use Arizona Hard Money Loans
May 4, 2019
Mastering Arizona Hard Money Loans
May 4, 2019

How to Qualify for your First Fix-and-Flip Loan

Obtaining a Arizona fix-and-flip loan for your real estate project can be challenging. Texas Hard Money Lenders are one of the main financers in this segment of real estate investing.

There are several steps required when getting into the fix-and-flip segment of real estate investing. The first step is finding the right property—making sure that it is in a neighborhood and the market is such that you’ll be able to sell it for a profit after considering the cost of renovation and then paying for the property and taxes until its sold. Once you’ve got your property picked out, you’ll begin your search for funding. This is often the most challenging step and one that keeps many “almost” investors from obtaining their first property and breaking into this lucrative business.

Private or Texas Hard Money Lenders lend based on the hard asset or collateral of the property. These individuals or groups usually specialize in various segments of real estate development including single homes, multi-units, and industrial spaces. There are thousands that have turned to Arizona fix-and-flip loans and have chosen to invest in this real estate segment exclusively. Those that understand this segment, often lend on 90 percent of the purchase and repair costs of the properties. Banks, on the other hand, usually do not lend on rehabilitation costs. Unlike traditional lenders, many take on a role as a mentor, providing suggestions and lending their knowledge gained from experience to their borrowers.

Texas Hard Money Lenders become even more appealing if you are looking to eventually obtain multiple properties for rehabbing at one time. Banks will usually limit real estate fix-and-flippers to so many properties while Arizona private lenders do not set these types of limits. These types of loans are generally short-term in nature, no more than a year, with interest-only payments until the property is sold at which time the full amount of the loan is due.

Know Your LTV and ARV

Before applying for your loan, be sure to be ready with a business plan that includes an accurate estimate for renovation costs. This includes the scope of work and your loan-to value (LTV) as well as your after-repair-value (ARV). Let’s say the property your eyeing is going for $100,000. Lenders often offer 90 Percent on the LTV, or $90,000 loan amount. This means that you will need to come up with a down payment of $10,000. Some lenders will loan on the ARV amount. If you think your property will be worth $150,000 after repairs, the offered ARV loan amount will be around 70 percent or $105,000.

Have you heard of the 70 percent rule? This common term among fix-and-flippers means that an investor should pay 70 percent of the ARV (After Repair Value) of a property minus the repairs needed.

At Level 4 Funding, we work with hundreds of Texas Hard Money Lenders, many who specialize in the Arizona fix-and-flip loans and know the rules and recommendations associated with the field and understood by those who have succeeded. It’s always good to have someone in your court with a solid background in your chosen real estate investment model. Call us for a no-obligation quote. We’ve obtained hundreds of Arizona fix-and-flip loans for first-time investors.

Dennis Dahlber Broker Ri CEO Level 4 Funding LLC
Dennis Dahlberg


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.

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