Arizona private money lenders generally charge less fees than banks, but they aren’t nonexistent. So what do you do if you can’t pay them? Let’s take a look.
Beth wants to try her hand at flipping a property. She’s crunched the numbers 10 times, researched properties in the area, looked at potential growth and has a rudimentary budget in place. She’s even watched every flipping show on television. Unfortunately, her recent divorce means her finances aren’t as healthy as they once were. She decides to go to a Arizona private money lender to better understand her options.
The house Beth has her eye on is $100,000, and that includes closing costs like title insurance, transfer tax and closing fees. Sadly, there are other fees that aren’t part of the closing costs and have to be paid upfront.
On top of these typical fees, she’s also got a bird dog fee of $800. A bird dog fee goes to a “bird dog” — a person who finds motivated sellers or properties that are undervalued. In addition, there’s an insurance bill for $650 and a Self-Directed IRA fee of $300. The lender bears no responsibility for these fees; they’re all up to the borrower to pay to get the deal to go through.
That’s the end of the fees, but Beth also wants to rehab this delipidated property, which is going to take at least $20,000.
Here’s the good news: Beth can borrow the money for the fees and the rehab. By rolling those fees and rehab costs into the loan, she’ll borrow a total of $121,750. She can borrow the $101,750 at once to close the deal and then take “draws” throughout the rehab. Draws are given out a little bit at a time as the rehab goes on. Beth will need to show that repairs are needed and offer budgets and, ultimately, proof that they were completed.
When the project is completed, Beth sells the property for $150,000, making nearly $30,000 without spending much at all.
While private money is simpler than bank loans, they still come with their own set of complications. That’s why it’s important to have a Arizona private money lender who can explain everything to you, from the requisite fees to the ins and outs of repayment. Being armed with this information will make the process much smoother.
Level 4 Funding LLC
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: 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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