Looking for a Phoenix hard money lender?
We are experts in providing hard money loans to Phoenix area real estate investors.
Whether you are just starting out as a real estate investor or you are a seasoned investor, we can help you get the financing you need to succeed as a real estate investor.
Our team is dedicated to helping our clients achieve their investment goals, and we are committed to providing the best possible service.
To help you even more, here are some answers to questions we get asked all the time about hard money loans.
Why use a hard money loan?
There are many reasons to use a hard money loan from a private money lender, but some of the most common are:
👉 You need fast access to capital to jump on great real estate deals for investment properties.
👉 You don't have time for a traditional loan process from mortgage brokers.
👉 The property you want to buy is not eligible for a conventional loan from a mortgage broker or bank.
👉 You need more money than you can get without additional collateral traditional lenders require.
What is a hard money loan?
A hard money loan, commonly now known as "private money loans", is a type of real estate financing in which the property being purchased secures the debt and the money is obtained from a private individual or company.
It is called “hard” money because it used to be a little harder to get than traditional loans from conventional lenders like mortgage brokers, banks, or credit unions.
Private money loans have been used for centuries to make real estate deals happen when traditional financing was not available, was too slow, or maybe the person had a bad track record from a past real estate venture, past real estate investments, or real estate deal.
There are many situations where hard money loans might be the only option for getting a real estate deal done (or at least the best option).
Hard money loans can be used as bridge loans for investors who don't want to fix and flip, but want to keep the home as a rental property.
Here are some of those real estate investing situations where using a hard money lender is your best option:
👉 You need money fast to jump on a good real estate deal.
Private money lenders can make loan decisions quickly, and fund loans just as fast.
LM2 has fast funding & will get you approved in less than 1 hour and fund your loan right away.
👉 For many house flippers, the property might not be eligible for conventional financing as most banks don't do fix and flip loans.
If you are buying a fixer-upper or other type of distressed investments properties, traditional bank financing won't work because they require properties to be in "good" condition.
Distressed property purchases are out of their loan guidelines.
👉 You need more money than you can get from a regular mortgage lender.
Private lenders are typically willing to loan up to 90% of the value of a property, while banks may only loan 80%.
👉 The interest rates on hard money loans are usually much lower than credit card interest rates or payday loans.
Credit card rates are typically 14% or more and payday loans are high at 20% or more!
👉 You need to leverage your equity in other properties.
If you have a lot of equity in your home, you may be able to use it as collateral for a hard money loan.
That way, you can get the cash you need for your real estate transaction without having to sell off investments or property.
Note: a Hard Money loan is not a loan to consolidate debt from personal things.
Are Arizona hard money lenders mean people?
No, not all Arizona hard money lenders are mean people. LOL
The LM2 Investment Group is an investor owned and operated company that has been in business for over 12 years.
We know what it takes to make it as real estate investors.
We have helped 100's of real estate investors achieve their investment goals.
Our team is here to help you get the financing you need to succeed.
We are the friendliest Arizona hard money lenders you'll ever meet and are committed to providing the best possible service, and helping you achieve your real estate investment goals for many years to come.
Our hard money loans in Phoenix Arizona help real estate investors get the financing they need to buy distressed properties, fix them up and sell them or rent them out for a profit.
Meet Mike & Mike of LM2
Questions to ask all Arizona Hard Money Lenders
Now that you've learned more about hard money loans let's take a look at some questions you should ask your hard money lender before getting a loan from them.
When inquiring about a hard money loan for real estate, it is important to be knowledgeable and ask questions.
That way you can avoid getting into an uncomfortable situation with the lender who may not deliver on their end, or add junk fees at the last minute just because they could!
Here is a list of 10 crucial questions which every real estate investor should ask when dealing directly with a hard money lender:
#1. How much experience do you have in hard money lending?
Experience matters when it comes to lending.
But what does “experience” mean?
The amount of time that the best Arizona hard money lenders have spent in providing hard money loans will determine how well they know their way around these particular types of loans and be able to assist with your real estate investing business's needs without any hiccups or obstacles along the path ahead!
The more experience a hard money lender has, the better equipped they are for handling your request and ensuring that you get approved to purchase your investment property quickly with minimal hassle from start-to-finish!
Also, the best Arizona hard money lenders can give you referrals for subcontractors to help you get your Fix and Flip investment property looking good to make maximum profit.
2. Do you have your mortgage license ID?
Phoenix hard money lenders must have an MLO license to offer hard money loans & financial advice in Arizona.
They should display their MLO ID number on their website and in any advertising material they produce.
You may also search Arizona state mortgage agency databases which will show additional information about the hard money lender including any disciplinary actions taken against them before employing them as your hard money lender.
Mike & Mike with the LM2 Investment Group are both licensed under the Arizona Department of Financial Institutions.
Mike Corgiat: MB# 0913237; Mike Swerlyk: MLO# 0910947.
You can find our licensing information on the ADFI website at: https://elicense.az.gov/ARDC_LicenseSearch
3. Are you a direct hard money lender or will you broker this loan to another hard money lender?
Arizona hard money lenders are the most aggressive of all credit options, with an edge that makes them perfect for those looking to get real estate properties purchased quickly with a hard money loan.
Direct hard-money lenders will process your loan and fund it themselves from their internal resources so you don't have any worries about where this is going or what's happening behind closed doors when dealing directly with them!
The LM2 Investment Group is a direct Phoenix hard money lender.
We work with our borrowers and will give Arizona real estate investors the best terms and rates available.
We have a wide variety of hard money loan products that can fit most real estate investors' needs.
4. Do you have references from previous real estate investors?
It's important that you find a reliable and experienced hard money lender.
They must have previous clients who were satisfied with their service & had good things say about them.
The best way to find this information out?
If there aren't any customer reviews or testimonials on Google or third-party websites like Yelp - then chances are something may be wrong.
At the LM2 Investment Group, we have a live feed right below and on our home page showing our latest Google reviews which have grown to over 100!
5. What is your interest rate and do you charge points on your hard money loans?
When you are researching hard money lenders, the cost of your hard money loan is important.
There are so many hard money lenders these days that interest rates have dropped way down from $18% to as low as 12%.
Most hard money lenders charge a 1% origination fee or 1 point.
Beware of any Arizona hard money lender who offers a low-interest rate like 10% or 8% for investment property loans.
They will charge you hidden fees as we discuss in #6 below that go over 12% loan interest.
On top of the loan cost, attention must also be paid towards experience/reliability as these things matter too!
The LM2 Investment Group charges a low 12% interest rate with a 1% (1 point) origination fee.
6. Are there any other origination or upfront fees that will be charged for originating the hard money loan?
Be aware that some hard money lenders in the Phoenix Metro area will quote interest rates and points in their hard money loan programs, but then conveniently wait until after you sign a loan agreement to inform you about other documents or processing fees.
Ask for all upfront fees so there can be no confusion as to what each fee entails and factor them into your total cost.
Finally, ask them about any late fees or penalty fees in case your loan goes past due.
7. Are your hard money loan amounts based on "loan to value" (LTV) or "after repair value" (ARV)?
When it comes to hard money loans, there is not a one-size-fits-all type of loan program for every real estate investor.
The Loan to Value Ratio, or LTV for short can be defined as the amount that a hard money lender will allow you based on your current property value before repairs.
The After Repair Value ratio or ARV for short is defined as what the property will be worth after it is done being repaired.
The real estate market will have a big effect on ARV as a trashed out house might have an initial cost of say $200k, but ARV will go way up to $400k to align with area home values.
The LM2 Investment Group will loan up to 90% LTV.
8. How long will it take to fund my hard money loan?
Most Phoenix area hard money lenders take about 3 - 5 days to fund your hard money loan.
Reliable direct hard money lenders can fund in 1 to 3 days.
We are bragging a little here since we consider the LM2 Investment Group as the best hard money lender in Arizona because we will get your hard money loan approved in less than 1 hour and fund your deal on the same day.
This will give you a huge advantage when you are out making offers on fix and flip or buy and hold type properties.
9. Is there a loan prepayment penalty?
As an investor, you should always check to see if your hard money lender has a prepayment penalty before signing your contract.
It's not uncommon for a Phoenix-area private money lender to charge you 1% or more if you pay off the hard money loan faster than expected.
At the LM2 Investment Group, we are your biggest fans and encourage you to pay off your hard money loan as fast as possible so you make the most money from your investment property and move on to the next deal.
10. How long of a hard money loan term is available?
Hard money loans are a great option for investors who need funds quickly and want to win more real estate deals.
These short-term lending solutions can be had with terms as brief at 1 month or up to 2 years and longer.
For buy & hold rental properties, they are perfect bridge loans for landing the deal quickly and then refinancing into traditional financing with a bank or broker with a low-interest rate.
At LM2 Investments we offer hard money loan terms for fix and flip deals of 1 month to 12 months, and investor longer-term loans up to 2 years.
However, we are flexible and can work with you to get the term that works best for your needs.
11. Do you have hard money loans for commercial properties?
This is a bonus question to make you aware that some Arizona hard money lenders may provide commercial hard money loans for commercial properties in certain circumstances.
Again using hard money bridge loans as a bridge to a traditional mortgage on a commercial property is a great way to buy commercial real estate that needs repairs.
We hope this article covering hard money loans in Arizona has helped you better understand real estate investing using hard money loans as the perfect financing solution for many real estate investors here in Phoenix and all of Arizona for that matter.
Hard money loans are paid monthly as interest-only payments for the life of the loan.
The best hard money lenders who provide the best hard money loans are those that work with you as a team, rather than just some lender who loans you money.
Having been in the hard money loan business for over 12 years, Mike & Mike of LM2 want to be your partner and help you succeed as a real estate investor in Arizona.
Not only are we fast and reliable as lenders, but we care about you and your business and will bend over backward to help you succeed.
Contact us anytime and we'll help you land your next deal fast.
We look forward to working with you!
Mike & Mike of the LM2 Investment Group