Category: General Lending

So, you’ve invested in a piece of real estate. Perhaps you’ve flipped or at least repaired the property, and put a lot of thought and blood sweat and tears into this new venture. After all, real estate investing can be a huge undertaking. However, if you are choosing to manage this property on your own, instead of working with a management company, then your journey is only just beginning. The more you know about some of the difficulties associated with property management, the better prepared you will be to handle this responsibility.

Here are some hard lessons that only property managers know.

1. Not All Tenants Are Great at Managing Their Money.

Chances are you will see this around the holidays, but it can happen all of the time. Rent day comes and goes and your tenant magically doesn’t have enough money to cover the cost of rent. Then, you may see them with a new iPhone or wearing some new expensive designer duds. You need to have a strict policy in place about late rent and covering late rent fees, or your tenants will come up with any excuse such as “I spent too much on Christmas gifts” to send in a late check.

2. The “Friend’s” Dog Excuse.

So, you’ve put in a “no pet” policy, or decided to charge a pet fee. Great idea. However, there are many renters who love trying to get around this and sneak pets into their rental properties. Chances are, they will tell you its just their brother’s dog staying for the weekend or they are temporarily pet-sitting. Many times, this is a bit of a stretch, so be on the lookout for unapproved pets coming in and out of the property.

3. Your Disappearing Social Life.

You may have decided to manage a property all on your own. However, while you may be saving in property management costs, you may be paying a lot extra when it comes to your social life. Be prepared for have tenants needing all types of repairs and help in the property and to call or email you around the clock. Guess when they are likely going to call? Yeah, on your precious weekends.

4. The Hurricane Tenant Who Wants Their Deposit Back.

A security deposit is always a must when renting out a property. However, just because you have a security deposit it doesn’t mean that your rental is completely safe from a destructive tenant. Be prepared for backlash when it comes time for tenants to get that security deposit back. Nearly every property manager can tell you that the most destructive of tenants are going to want their whole security deposit back. So be prepared to handle situations where renters will destroy carpets, damage walls or leave behind giant messes, only to expect their entire deposit returned immediately.

5. The Subletter.

This is a huge issue among many property managers and one you should be prepared for. There are many renters who will act as mini property managers of their own and sublet their apartments to others, without asking their property manager. Make sure you keep an eye out on this one. Subletting may seem innocent enough, but: a. it usually means your tenant is making money of you and b. it means someone you don’t know who you haven’t screened is living in your property.

Managing your own property can be a huge undertaking and it can come with a number of obstacles. However, the more prepared you are to handle these common issues, the better. Make sure you keep these lessons in mind so you can be more prepared to handle this new responsibility.

There are so many things that go into navigating the waters of today’s real estate investing world. It can be difficult and complicated to figure this market out, which is why so many new investors often make a number of mistakes. Sometimes these mistakes can be rather minimal, but other times they can be quite costly. Avoidable, expensive mistakes can really add up and really make an impact on your real estate career.

The more you know about these common and avoidable mistakes, the easier it will be to avoid these issues moving forward. Here are the most common mistakes that new investors make.

1. Not Calculating Cash Flow- Calculating cash flow ahead of time can be a difficult undertaking. Unfortunately, many investors tend to ignore or underestimate the expenses that they will have when investing in real estate. However, taking the time to calculate expenses in detail and over-estimating most expenses can help get the cash flow right. Don’t forget about things like maintenance, repairs, property management fees and vacancy rates when making these estimates.
2. Attempting to Time the Market- This is another mistake that so many new investors make. Everyone thinks that they can predict the market and how they can turn a little investment into a lot of cash—and very few people can actually do this. Even the best economists in the world can’t accurately predict the market. So, even if you’ve lucked out before with the timing of the market, don’t try to repeat this magic. Focus your efforts elsewhere, it will be a better use of your time.
3. Not Building a Team- Real estate investing really is a group effort. No matter how independent you may think you are, you need to have reliable network of individuals to help you along your journey. This means a great realtor, home inspector, contractor, handyman and lender. Know who you can rely on and who you like working with so you can continue to count on these individuals with every investment you make in the future.
4. Budgeting For the Unexpected- You need to have a cushion when budgeting for real estate investments. It can be easy to forget that you need to have a big cushion set aside and easy to be tempted to put it all towards your property. If you were planning on $15,000 worth of repairs and upgrades to your property, put $20,000 aside. You need to have a cushion. It is always better to budget too much than too little.

Have you made these real estate mistakes before? Hopefully you can learn these lessons the easy way and avoid them before they turn into an expensive mistake for your future.

Real estate investing can be a complex market. There is so much to learn about this field, whether you are a seasoned vet or brand new to real estate investing. While most insight comes from experience, there are still an important pieces of advice that everyone should know about real estate investing, no matter where they are in their career. While we could literally list hundreds for you, here are 20 of our favorite suggestions about real estate investing.

1. You need a team. Real estate investing is a team effort, you need other professionals on your side.
2. Do your due diligence. The more information that you have, the better. The more information you can get and confirm about an investment, the better. This includes the history of the property, cost of utilities and potential for future income.
3. Get your real estate license. Even if you have another realtor on your time, it is important to get your real estate license. It is a valuable asset and can only help you in this market.
4. No one can fake it till they make it. This is not an industry for that. Don’t make an offer unless you can close on it. It will hurt your reputation.
5. Put everything in writing. Absolutely everything you have from leases to notices need to be in writing and you need to have a copy of it.
6. Master one investing strategy before moving on to the next. Do your best to stay focused. Master one strategy at a time instead of dabbling in several.
7. Put emotions to the side. It can be easy to let emotions take hold when investing in real estate. Put them aside and look only at the facts. Emotions have no place in real estate investing.
8. Pick someone else’s brain first. Take the time to sit down with someone else who invests in real estate to learn about their strategy and to pick their brain. Ask them as many questions as you can to get insight from someone who has done it before.
9. Don’t cut corners with your repairs. You may be focused on pinching pennies and saving every dollar you can, but make sure that you don’t cut corners with your repairs or updates. Shortcuts are only going to end up costing you in the long run.
10. Know the difference between passive and active income. If you have active income, it means you are working for your money. Passive income is about sitting back and letting your investment work for you. Know the difference, it will only help you as you create an investment strategy for your future.

Keep these facts in mind and remember that the more time you spend in the real estate market, the more you will end up learning about investing. In the meantime, keep these valuable pieces of advice in mind as you get started.

While the world of real estate investing may seem rather glamorous from the outside, this industry can be quite complex and at times, difficult to navigate. If you want to make it in the world of real estate investing, it will take a lot of hard work and determination. You will also want to keep several of these key laws in mind that can help you along the way. Here are seven rules that every new investor should know.

1. The Educated Investor Gets the Worm

In the world of real estate investing, nothing is as valuable as knowledge. The more you can educate yourself on your market and on the topic of real estate investing in general, the better. If you are already a good investor, taking the time to really educate yourself can take you to that next level and become a great investor. While talking to others can be a way of getting insight, remember to never blindly follow other people’s advice in this market, you need to put in the work and actually educate yourself and then use that knowledge to take action.

2. Never Chase Appreciation

If there is one thing that the whole country should have learned with the last market crash, it is that speculation is extremely dangerous. Never chase the idea that a property will appreciate. Those who purchase an investment, sit back and assume it is going to increase in value are just setting themselves up for failure. You need to be active in your investments. You need to be involved in the process and have a strategy for renovations and ways to add value, otherwise your portfolio will never grow.

3. Investing Goals Need to Be Quantifiable

It is a common piece of advice, but one that many who are new to real estate investing fail to follow. You need to set real, measurable goals so you can actually see if you are reaching them.

4. Cash Flow is Key

In the world of real estate investments, you need to have cash flow. Don’t buy properties with a breakeven point. You need to have positive cash flow. It not only means a better return on your investment, but it will help you build net worth and give you what you need to invest in more properties in the future.

5. Diversify, Diversify, Diversify

You need to diversify your portfolio. Even if you have found success with one type of investment, the more diverse you are the better. This means having a handful of properties across different locations and markets. Just because you found an area you were successful in, once you have 3-5 properties in that area, it is time to move on.

6. Professional Property Management is Always a Smart Bet

Unless your actual job is to be a property manager, you should never manage your own investment properties. Paying a professional management company can seem like an added expense, but it is one that is always worth it. It requires a great deal of time and expertise in order to be a great property manager, and ultimately, your time is your most valuable asset.

Keep these real estate investing laws in mind if you are considering entering this market as they can help you along the way during your journey.

Fixing and flipping homes can be a great way to put some extra money in the bank. However, as any real estate investor will tell you, the key to making flips work is selling the property fast. This is especially true when dealing with convenient hard money loans that are designed to be short-term. The quicker you sell a flipped home, the less interest, overhead and monthly payments you will need to make, and the faster you will be able to take your profits from that flip and invest them in another property.

Time is always of the essence when it comes to selling fix-and-flips, so here area few tips to help make sure that your property sells fast.

1. Know Your Potential Buyer And ALWAYS Keep Their Interest At Heart
Before you ever start flipping your home, you need to know who your potential buyer is. Have a clear idea of who the target market in your neighborhood is and what type of person will likely be buying your home. Is it a single individual? An established family? Someone looking for their starter home? Then, every decision you make from the layout to the finishes needs to be made with that particular buyer in mind. It doesn’t matter if it isn’t what you would want, it only matters what the potential buyer is and what they are going to want or expect from this property.

2. Choose An Experienced Real Estate Agent as A Partner
The right agent can be an essential component in you selling your flipped home fast. Make sure that you find an agent that not only has proven experience, but one that knows the specific area that you are selling in as well. They will not only be able to help you market the home to the buyers that frequent the area but they will also be able to help you determine which rehab upgrades are going to attract the right type of buyer in the community that you are selling in.

3. Choose the Right Price
This is one of the areas that many new fix-and-flip investors struggle with. Coming up with the right price point can be extremely difficult. After all, once you put all of the work into flipping a house, you are going to want the best return-on-investment possible. However, no matter how much money you think you should make for your work, you need to instead make sure that you are choosing a price that is competitive with your neighborhood. Otherwise, your property is at risk for becoming a stale listing and won’t sell. Plus, remember, the faster a home sells, the more profit you are likely going to receive.

4. Staging, Staging, Staging
Staging does cost money, but it is one last final expense that can really help your home sell fast. The right staging not only highlights the best features of your newly renovated home, but it can help buyers envision what it is going to be like living there.

Keep these tips in mind when you get ready to sell your next fix-and-flip and remember that the faster you can sell your property, the faster you can start seeing those profits.

Flipping shows have recently been all of the rage in the world of reality TV—and it is easy to see why. These programs are exciting, they usually include a bit of drama and in the end you get to find out whether the stars run away with tens of thousands of dollars—or if they end up taking a loss.

While these flipping shows have helped boost the flipping market, real investors know that there are a lot of smoke and mirrors involved in these shows and they can leave potential flippers with some very big misconceptions about the industry. Sure, reality shows make the entire flipping process seem simple and as though you just need a little cash and some good intentions to start making a ton of money. However, that isn’t always the case.

Here are a few hard truths to understand about the flipping process, and how it is portrayed on television, before you think about entering into this industry.

• The Numbers Don’t Always Add Up- One of the biggest draws of these shows is how much money the flippers can, and often do, make. However, with a closer look at these programs you will notice how the math rarely adds up. Rehab costs are greatly undervalued, and many times things like commissions, closing costs and other feeds aren’t taken into account.
• They Make it Look Fast- If you think you’re going to find a house, flip a house and sell a house in a matter of weeks, because they make it seem that way on television—think again. Real estate is a notoriously time-consuming venture. It actually takes a lot more time than people realize to find and buy the right house for a flip. It needs to be priced right, have the right potential, and be in an area where it will sell. Don’t be fooled into thinking you can get rich quick from house flipping.
• There Are Always Buyers- If you’ve ever tried to sell any type of house before, you know that there aren’t always lines of buyers just waiting to snatch up even a great property. Those packed open houses they show at the end of the program typically aren’t just filled with buyers.
• Investors Aren’t Typically Involved in the Manual Labor- If you’ve ever seen a reality show star wearing designer clothes in perfect makeup “demoing” the walls of a property on a show, you may think that the process looks easy. Or even that you could save on some renovation costs by picking up a hammer or two yourself. However, in real life, the investors writing the checks typically aren’t doing physical work. They need to find new deals, handle paperwork, run their business and coordinate contracts.
• Not All Real Estate Investors Are Rich- Sure HGTV stars make it seem like flipping is the key to making it big—especially when you get to see them retreat back to their ultra-chic Southern California homes. However, many home flippers do not make a lot of money and are not rich. Many do it on the side. Even stars who have now made it big struggled for years in making money off the flipping process. Just look at Tarek and Christina El Moussa from the show Flip or Flop, they openly talked about having to split $5 sandwiches to eat, having to sell their cars, and moved to an apartment with a roommate to pay their bills when they first started.

Flipping is a complicated business and if you want to be a successful real estate investor, it is important to look at real life investors to understand how the industry works, and leave the reality shows for pure entertainment value.

If you want to start investing in real estate, it can be a great way to build an exciting new career for yourself and earn some serious income while you’re at it. While many people know there are benefits of investing in real estate, many people do not know how to get started in the real estate investment market. After all, it can be quite intimidating.
So, how do you start real estate investing if you don’t have much experience or much money?

The following tips can help you on your way to exploring the world of real estate investing.

1. Home Equity Loans- If your home currently has equity in it—or if it is worth more than what you owe on it, you can actually get a line of credit based off of your home. A home equity loan or a home equity line of credit allows you to access the money that you have in your home without selling that home. This is money that you can use as a down payment or for funds towards your first real estate investment.

2. Consider House Hacking- House hacking is a great first way to get into real estate investing and is a strategy that helps many people break into this business. With house hacking, you buy a small multi-unit building such as a duplex, triplet or fourplex. You live in one and you can rent the others our for a form of income.

You can often get these properties with a FHA loan, which is very easy to get and requires very little down, just 3.5%. It can help you ease into being a landlord—it is typically easier as you will be living next door to your tenant, and you can eventually turn it into a rental property that can provide you with passive income.

3. Look Into Hard Money Loans- Hard money loans are another great option if you don’t have the existing money or the experience to get the cash you need. For example, if you were flipping a home and needed the money for renovation, you could turn to a hard money lender for assistance. There are rates and fees but it is often one of the easier ways to get the initial cash you need to break into the real estate investing world.

4. Explore Seller Financing Options- Many people don’t understand seller financing, but it is a great strategy that has helped many people. Basically, the seller sells you a piece of property, but instead of you going to get a loan, and getting cash, you just pay the seller money every month until the home is paid off.

The seller is providing the loan themselves, and you are making payments based on whatever terms you have set up together. It isn’t always a possibility, but it is one that may be worth exploring.

Keep these tips in mind if you are looking for a way you can start your venture into real estate investing without any real experience or money.

Home remodeling has never been so popular. With more and more homeowners realizing that they can actually transform their homes into their dream properties, instead of packing up and moving, home renovations continue to be on the rise. While reality TV has shown us all the power of a good home renovation, the biggest questions many homeowners have is: how do I afford this.

Sure, having enough cash on had is the easiest way to pay for a home renovation, but there are other solutions. Here are a few of the different ways you can finance those improvements when you don’t have the cash on hand.

1. Home Equity Line of Credit- This type of loan allows you to draw out money as you need it from your home loan and pay it back at your own speed through minimum monthly payments. Typically the equity line is good for 10 years and still requires you to pay interest.

2. Construction Loan- There are specialty construction loans that can be used to build a house or make major renovations. They typically come with a lot of requirements. However, while they are short-term loans, they can typically be refinanced into a traditional mortgage when the renovation is done.

3. Home Equity Loan- With this type of loan, you can borrow a fixed amount of money and pay it back over a certain amount of time. Typically, a 15 year term is standard, but you can make the term lower. Many times, it is a cheaper option than a construction loan.

4. Credit Cards- Credit cards are a popular way to pay for all or parts of home renovations. Many people prefer credit cards over cash because it allows them to earn points.

5. Borrowing From Your 401(k)- There are many 401(k) programs that will allow you to borrow from your account and pay back the loan over a course of five years. However, if you leave your job, you will likely need to pay that amount back right away.

6. Hard Money Loan- A hard money loan is a great option to get some extra cash in your pocket to cover the cost of your home financing. This is a reliable option if you don’t have any other viable solutions.

7. A 203k Loan- These loans are typically used when you buy a house that needs a lot of repairs. They are also used for refinancing. With this type of loan, you typically have to carry mortgage insurance with your loan.
Consider these financing solutions if you are interested in doing some major home improvements to your property. They can go a long way in turning your home to the property of your dreams.

House flipping has become extremely popular in recent years. From reality television shows like Flip or Flop and Fixer Upper filling up the screens, to city neighborhoods completely transforming thanks to home flippers, there is no shortage of people talking about home flips.

Now, many people, including many with no prior home renovation experience are considering buying homes and flipping them for profit. Whether you are planning on living in this flipped home or if you are just looking to make some money, there are a few things that you should consider when deciding whether or not to flip that house. Here are the biggest mistakes people tend to make that turn flips into flops.

1. Not Enough Funding

It can be easy to underestimate the costs associated with home flipping. You need to make sure that you have enough money for the acquisition costs, and the ability to finance all of the repairs. If you are financing the renovations, not paying for them cash, you will need to make sure you are paying attention to the interest costs. After all, every cent you spend, means another cent you need to earn when you cell.

2. Insufficient Time

It takes a lot of time to renovate and flip a house. The whole process can take months and months and you need to make sure that you take the time to insure your project meets building codes. Remember, the more time you spend in the home once you buy it, the more it will cost you. Every day, you spend fixing up the property is a day you are spending paying back the loan.

3. They Don’t Know What They’re Doing

There is a lot that goes into flipping a home. You need to find the right property, the right neighborhood and you need to buy and sell for the right price. It requires researching the neighborhood and knowing what you are getting into. Say you buy a house for $100,000 in a neighborhood where homes are selling for $130,000-$140,000. You may have big dreams for your renovation, but If you put $120,000 into renovations, can you really expect to sell the home for more than $220,000? You need to know where you’re buying.

4. They Don’t Have the Patience

Flipping a home, especially for the first time, takes a lot of time and a lot of patience. You need to wait and find the right property, wait and find the right contractor and wait to make sure that the job is done correctly. Not having this type of patience only means cutting corners and delivering a sub-par final product.

Of course, the main goal of a successful home flip all comes down to buying low, selling high and making a smart investment. However, as with all things related to real estate, nothing is ever guaranteed and the market can be tricky, so the more research you do the better.

When it comes to understanding all of the different types of loans that are out there, some of the biggest questions that potential applicants tend to have are about Fannie Mae and Freddie Mac. So, what are these parties and what do they do?

The answer is actually quite simple, and the more you know about these entities, the better off you may be with your upcoming loan application. Here are the most important facts:

1. Freddie Mac and Fannie May were both created by Congress.
2. They were both designed to provide stability, liquidity and affordability to the mortgage market.
3. Both companies provide easy-to-access funds to banks and mortgage companies that finance housing.

Fannie Mae first started in 1938. It was designed by Congress to help make certain there would be a reliable and affordable amount of mortgage funds available throughout the country. Today, Fannie Mae is a company that is owned by shareholders and that operates under a congressional charter.

Freddie Mac was chartered by congress is 1970 as a private company. The company was established, like Fannie Mae, to help make sure there was a reliable and affordable supply of mortgage funds available throughout the United States.

How do Fannie Mae and Freddie Mac Work?

So, how exactly do these companies work and how are they sustained? Well both Fannie Mae and Freddie Mac purchase home loans made by private companies. Then, they package those loans into what are known as mortgage-backed securities. They then guarantee a timely payment of the principal and interest on these mortgage-backed securities to other investors.

Both companies also have some of these securities of their own.

So, what is the incentive? Since mortgage lenders don’t have to hold these loans on their own balance sheets, they have more capital available to give loans out to other worthy borrowers. They are also more reliable options since these companies guarantee payments, even in the event of a default. This is why they are so attractive to many investors.

How Do They Impact Homebuyers?

As a homebuyer, you may never directly work with either Freddie Mac or Fannie Mae, but they may still be able to help you as you get your own home loan. While there are certain requirements you will need to make in order to get this type of loan. If you qualify it typically comes with lower interest rates and origination fees and more customizable programs. Both companies also have programs that can help first-time buyers better understand the mortgage process and secure the loans they are looking for.

If you are interested in seeing if you qualify for a loan backed by these two companies, the first step is to meet with a loan specialist to learn more about Fannie Mae, Freddie Mac and what it may be for your home buying process.