Can You Use Arizona Hard Money Loans for Repair Projects?

 
If you’re a professional real estate investor, then you already know that securing Arizona hard money loans is one option for financing your real estate investments. However, what happens if you need financing for repair and improvement projects? Can you use Arizona hard money loans for these types of projects?

Here’s the short answer: it depends.  Here’s what you need to know…

Hard money loans (Arizona) are usually used to purchase investment properties.  When you request hard money in Arizona, your loan application is generally only approved if you meet the following two criteria:

1. You’re a professional real estate investor. In other words, hard money in Arizona isn’t available to private citizens to purchase a personal-use property.

2. You intend to use the hard money in Arizona to invest in real estate such as distressed properties.  This usually includes single family homes, small multi-family homes, condominiums and town homes. And that means that usually can’t use hard money in Arizona for improvement projects.

However, there is one exception…

Hard money lenders in Arizona may allow you to use part of the loan for improvements. If you’re intending to use hard money in Arizona to purchase a distressed property, then you may be able to use some of the funds to improve the property. This is at the Arizona hard money lender’s discretion. 

Here are three things to know before you request a repair draw as part of your hard money loan in Arizona:

1. You must inform the Arizona hard money lenders of your intentions. The terms of the repair or improvement draw will be listed in your hard money loan contract.

2. The total amount of all funds deployed must not exceed the LTV (loan to value ratio).  Arizona hard money lenders usually provide funding based on a 60% LTV, which means they’ll deploy funds equal to 60% of the total value of the property.  If you’re getting a repair draw, then this draw plus the loan amount must not exceed the Arizona hard money lender’s loan-to-value ratio.

3. You must show Arizona hard money lenders proof that you’ve completed the work.  Most Arizona hard money lenders will want to see the receipts for the work. They’ll also want to inspect the property to be sure that the repairs and improvements are satisfactory.

If you’re looking to purchase a distressed property and you’d like to include a repair or improvement draw as part of your hard money loans in Arizona, then here’s where to start: www.activefundinggroup.com. This is the largest hard money lender in Arizona, so you can be assured of getting great service as well as getting your fund deployed in a timely manner. For more tips on getting hard money loans, you can visit http://www.activefundinggroup.com/AZ/hard-money-loans.html