4 reasons you should look at a hard money loan for your real estate purchase, refi, or cash-out

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PHOENIX (Arizona Hard Money Lenders) – Whether you’re looking for a home to stay in for the long term, fixing up and flipping houses, or creating VBROs, Airbnbs, or rentals, there are two ways to buy real estate – with cash and with financing. If you’re in a position to pay cash, you don’t need to worry about jumping through the flaming hoops between you and a mortgage. In fact, it might be time to consider becoming a private investor in others’ purchases. But that’s a story for another time. Today, we’re focusing on people who need financing to buy or refinance residential or commercial property.

Aerial view of a residential neighborhood

Most people believe a mortgage is the best – possibly the only – way to get the money you need to become a property owner. Securing a traditional mortgage can be tricky. It requires a massive amount of paperwork and it’s not a speedy process. It can take weeks or even months for the money to come through. By the time it happens, the property you want might be gone. During that time, your potential lender will look at every aspect of your financial life through a microscope. You could be turned down if you don’t have solid credit and an established work history or if the income you list on your tax returns isn’t up to snuff.

The good news is that doesn’t mean you’re out of luck.

You have options.

“The money is there,” says Michael Iuculano of Hard Money Lenders Arizona. Michael, who was recently featured on “Your Life Arizona,” specializes in hard money loans, which are short-term loans that use real estate as collateral. They are great options for hopeful buyers who fall into one of four categories.

  1. You need the money to close the deal quickly.
  2. You have a credit issue.
  3. You have a cash flow or income issue, or you’re self-employed.
  4. You have solid equity in your home and you need to pull cash out so you pay down debt.

“Those issues are offset by the asset itself,” Michael explained. “It offsets the risk for us and still makes that loan possible for that person.”

Watch Michael Iuculano of Hard Money Lenders Arizona on “Your Life Arizona”

To be clear, hard money loans are not for people who are simply “hoping to qualify” for a loan or planning to finance their entire purchase. While hard money loans are an alternative form of financing for real estate, they are only for buyers in one (or more) of the above situations. One of the biggest things Michael looks at when putting together a loan is the down payment you bring to the table. If you don’t have a down or only a very small one, a hard money loan is not for you.

Hard money loans are based on assets rather than your credit. The property you buy is the collateral. The value of that property is one of the keys to getting a hard money loan. We’ll talk more about that in a minute.

Another difference between a hard money loan and a traditional mortgage is the length. Hard money loans are shorter than conventional mortgages. A hard money or asset-based loan will also be more expensive than a regular mortgage. Full disclosure, you’ll pay more for the money you’re borrowing. “It’s not meant to be a long-term thing; it’s an interim thing,” Michael said.

That’s why hard money loans are often used as bridge loans. They can quickly give you the cash you need to be competitive on a hot property. “If someone is getting a good deal on a property, rarely does the seller say, ‘OK. Take your time,’” Michael explained. In return for the great deal, the seller wants the money sooner rather than later. “Speed ​​is a major thing in our toolbox.” In many cases, Michael can put together a hard money loan in three to five business days. That’s days, not weeks. And in some instances, he can close the same day. Yes, you read that right. He can get your money for you the same day.

“They can purchase the property, and then they’ll turn around and refinance it,” Michael said. “For people doing fix-and-flips, they’ll use our loan to close quickly and then fix it up and sell it.”

In the end, the goal is for your property to generate enough money to cover the cost of the loan and still turn a profit for you.

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Cash-out and refinancing

Hard money loans are not just for buying property.

“We do a lot of cash-out refinances – people who own their homes free and clear, people who need cash for whatever expenses or other deals, investments or opportunities,” Michael said.

“There are many scenarios where people will have a large amount of equity and a large amount of debt, and they can’t get a loan because their credit score is down because of the debt,” he continued. “We’ll give them hard money loans … and they can use that cash to pay down debt, get their credit score up, and then turn around and refinance back into a regular loan.”

Michael says he does loans for cash-outs and refinances as often as he does purchase loans, possibly more.

“There are one-off scenarios,” he said. In one recent example he shared, a person was selling a home to a family member. The buyer could not qualify for a traditional loan but needed to complete the purchase quickly. Michael helped them with a bridge loan so they could close now and refinance later.

Where does the money come from?

“We work with different investors around the Valley and throughout the country who, instead of putting their money in the bank, prefer to lend against physical collateral – hard money secured by real estate,” Michael explained.

We’ve all seen what can happen to banks lately. It’s no wonder savvy investors are putting their money into real estate. Even if banks are not struggling, they’re not a good place to grow your money. In most cases, interest rates are a fraction of a percent. If you want to make money, a bank is not the place to do it. Real estate is, which is one of the reasons you’re looking to buy, right?

How do hard money loans work?

“The biggest thing on a purchase is the type of down payment we’re working with,” Michael said. “We like to see it somewhere between 20% and 30%.”

The bottom line is you have to have some money on your own – skins in the game, so to speak.

Hard money is loan-to-value driven. To figure the LTV, you divide the loan amount by the property’s appraised value, then multiply by 100 to get the percentage. Lenders – all lenders – look at that number to determine how risky a loan might be. This is where a healthy down payment comes in. The larger down payment means a smaller total loan, which gives you a lower loan-to-value figure.

Woman in summer hat holding small house model outdoor.

Hard money loans vs. a traditional mortgage

One of the most significant differences between traditional mortgages and hard money loans is how a potential lender looks at your income. Traditional lenders look at income tax forms. Hard money lenders look at bank statements.

“If a potential borrower makes $1 million per year but writes off $950,000, to the bank, that means he makes $50,000 per year,” Michael explained. “I can look at that and say, ‘This person makes money; they’re just expensing more to lower their tax application.’”

Also, traditional lenders look at your credit score. They won’t give you a loan if it’s not at a certain level. Hard money lenders don’t look at creditworthiness.

“Maybe somebody has bad credit or limited credit, but they have a decent enough income and decent enough down payments; we can certainly look at that,”Michael said.

Another hurdle for potential borrowers looking at traditional mortgages is employment history. Maybe you’ve only been at your job for six months or a year. Perhaps you’re self-employed. Either of those situations might be a deal-breaker for a bank. They’re not for the private investors who fund hard money loans.

“Speed, credit, and income are going to be the major reasons someone would use us,” Michael said.

The bottom line on hard money loans

“We’re asset-based and down payment driven,” Michael said. And hard money loans are not just for buying. Michael can work out financing for almost anything you’re looking to do.

Cash-out

Owner-occupied

Non-owner-occupied

Flips

Commercials

Residential

Condos

Land



The only properties Michael and his team don’t work with are mobile and manufactured homes.

They specialize in hard money loans, but they also handle traditional lending and non-QM loans. A non-qualifying mortgage falls in the space between traditional financing and hard money. It gives potential borrowers who don’t fit into the neat boxes conventional mortgage lenders need to check.

Framed building or residential home with basic electrical wiring and hvac complete.
Hard money loans are not just for buying. Michael can work out financing for almost anything you’re looking to do.

Why Hard Money Lenders Arizona?

“This is what we do,” Michael said. “If you check us out, we are the highest rated on Google. [We have] tons of five-star reviews.”

“Michael and his team are amazing. I want to tell you that you cannot find a better broker,” reads one of those five-star reviews. “Michael works tirelessly for his clients. … He is a seasoned professional and got the deal done. He’s simply the best. If you go anywhere else the experience will not be the same because Michael is compassionate.”

“Michael and his team were so great to work with,” another client said. “He was so genuine and easy to communicate with! He helped us navigate our first hard money loan from start to finish. The closing was very fast & efficient – they were able to get it done in 9 days. We couldn’t have asked for a smoother process or better people!!”

There are 183 reviews singing Michael’s praises and recommending him to others. If you’re considering a hard money loan, he’s the man you want to put it together.

“He took on my financial circus and worked beyond what he needed too [sic] get the job done! After many refi attempts and told NO… He made it happen. I am so beyond thankful that he was able to work with me and get my revision done. I look forward to working with him in the future. If you have a need and unconventional circumstances, when one door closes… Michael opens the Door!”

These are just a few of Michael’s success stories. They are dozens more and he’s proud of what he has helped buyers accomplish.

“We are the only option you should consider for hard money lending,” Michael says on HardMoneyLendersArizona.com.

It’s a bold statement but not hype. It’s backed by genuine reviews from people who have been where you are.

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“Our business history and client feedback speaks for itself,” HardMoneyLendersArizona.com says.

“A lot of our business comes from referrals because we prove to be trustworthy, communicative, and all-around reliable in the hard money lending process.”

Hard money loans are not something Michael does every now and then. It’s his primary focus. And judging by the hundreds of loans he and his team have facilitated – more than 460 totaling more than $292 million – he’s undeniably good at it.

Michael Iuculano of Hard Money Lenders Arizona has helped hundreds of people achieve their real estate goals. It’s time to see if he can help you with yours.

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