June 18, 2021

Flipping houses is a common option for generating extra revenue, particularly for those who are good at handyman type repairs. That said, it’s often not a cheap endeavor. The cost can add up quickly because you’re typically not simply buying the land with a building on it; buy also appliances, and are on the hook for any repairs and improvements you can’t do yourself. You must wait on the sale of the property before you can collect any profits. This process can often take months or even years to complete. Luckily, there are several financing options out there for flippers. Below are some of the common options to help bridge the gap until you can collect from the sale.

Commercial Loans

Commercial loans are loans secured by liens on commercial property. If the borrower has no financial track record or credit rating, lenders will typically require them to guarantee the loan. If a guarantee is not required, and the property is the only means of recovery in the event of default, it is known as a non-recourse loan. In this scenario, lenders have no recourse against anyone or anything beyond the property. Generally, the longer the loan repayment schedule, the higher the interest rate. Commercial loan Interest rates tend to be higher than on residential loans so its important to understand how much interest you will be expected to repay before agreeing to any commercial loan deal you are offered.

Equity Crowdfunding

Equity crowdfunding’s are equity stock offering from a company not listed on exchanges, which differs from rewards-based places (like Kickstarter) where investors get an incentive/perk for their donation. With equity-based crowdfunding, the investor receives equity.  Flippers in these scenarios do not need to become a fully reporting public company and investors don’t not be accredited, which makes for fewer hoops to jump through when securing financing of a real estate flip investment.

Home Equity Loans

A home equity line of credit is a loan secured by your primary residence when you own a home. You can usually get financing at a low interest rate with these types of loans. Home equity loans are, as the name indicates, based on home equity.  To figure out the potential equity you may have to invest, you should take the current value of your home and subtract what you owe on the mortgage. The difference will give you the equity accumulated on your primary residence.

Investment Property Line Of Credit

For this type of line of credit, you borrow against your investment property’s equity. The property serves as collateral to secure the loan. To qualify for these, you will generally need good to excellent credit, and a history of successful real estate investments. In general, you must own the property at least one year for eligibility. As a result, investment property lines of credit are usually not the best option for first time house flippers.

Business Line Of Credit

With a business line of credit, you get access to a revolving credit line. You can use up to a set amount, but only make payments and pay interest on the amount you actually use. You may use it repeatedly if/when issues pop up or when it’s time for your next real estate flip. You generally need great credit, with a stable history of flipping success to qualify for a business line of credit.

Seller Financing

With these deals, you work directly with the seller to come up with the terms of a payment plan and create an agreed upon contract. You will pay directly to the seller on an agreed-upon schedule, based on a price you both set, with interest. This poses more risk to the original property owner. Therefore, you will often pay a higher interest rate, with a shorter repayment term than other types of loans.

Bridge Loans

Bridge loans cover the gap between when you want to buy a property, and when you can secure long-term financing. They can be used to help cover the cost of the down payment on your next flip. This frees you up to then focus on finding another financing option to cover the remaining amount. Most of the time, bridge loans will be secured with collateral, so you can often get approved for a loan with a lower interest rate, versus other options. Bridge loans are generally easier to qualify for than most other types of loans.

Cash Out Refi

Cash out refinance loans enable you to refinance an existing property to fund your house flipping project or for any necessary repairs. Borrowers can put up their own home’s equity to take out a new loan and then pay off the existing mortgage balance. Once complete, they may then use any remainder balance to finance their flipping projects. In order to be cost effective, however, you generally need 30-40% equity in your home. Otherwise, a cash out refinance loan is likely not the best option for you.

Long Term Bank Loans

These are traditional mortgages with fixed interest rates. Bank loans are usually best for those buying a home to stay in for five years or more while renovating it. You will usually pay lower interest than with other financing options with up to 30 years to pay. With these traditional loans, however, you will need enough for a down payment, good to excellent credit, and a stable income, to qualify.

Hard money loans

With hard money loans, you work with non-bank lenders.  Hard money lenders often have less stringent eligibility requirements and you can often qualify even with poor credit. These loans tend to have higher interest rates, often with shorter repayment terms.

Conclusion

Whether you are a long term fix and flip investor or are interested in just getting started in house flipping to generate some extra income, try the above funding options to hopefully lay out less of your own money on the path of generating a new stream of investment income.

June 11, 2021

Getting a loan for an investment property can be tricky but it doesn’t have to be. Obtaining a loan to invest in real estate isn’t too different from seeking a loan for a primary residence. There are, however, several different things to consider and some additional avenues to explore. Investing in real estate can turn out to be quite beneficial, but can also be risky, and you can lose dearly if you don’t know how to play the game smart. Below is a list of basics to understanding what it takes to get a loan to invest in real estate.

When considering acquiring a loan for real estate there are a few different loan options for you to consider, including:

Traditional bank loans

You’ve probably had some familiarity with this option, especially if you’ve secured an owner-occupied property in the past. Securing more traditional financing can make the process simpler, but it’s important to know that most banks expect a down payment of 20% for the purchase of a home. If you’re obtaining a loan for an investment property, many institutions may require 30% of the value up front as a down payment. Your ability to get approved, and the kind of interest rates offered, will depend on your individual credit score and history. Most lenders will also review your income and assets before making a determination on whether or not to approve you for a loan. For traditional bank loans you will also need to be able to show you can afford any existing mortgages and monthly loan payments for the investment property.

Hard money loans

Another loan option you should research is a “hard money loan.” Hard money loans are basically short-term loans that investors can use to purchase, renovate or build a property. These are typically offered by private lenders as opposed to traditional bank. One of the many benefits of hard money loans is their flexibility, as they depend on the discretion of the agreement made between you and the lender.

Factors for getting a loan

There are several factors you should consider to help you in the process of obtaining a loan. You definitely want to ensure you are well organized and prepared ahead of time so that either banks or private lenders will be willing to take a risk on lending you money.

Saving for a down payment

Saving for a down payment usually takes some time, but it’s the easiest way to secure a loan for a property. The money saved for a down payment can be used to secure a property. The more money you have for a deposit, the fewer hurdles you’ll have to jump through.

Home equity

If you don’t have the money saved for a down payment, or the necessary time or means to save up for one, you can potentially avoid this is if you already own a home with positive equity. You can use part or all of this equity as a down payment for your investment property.  How much equity you have is calculated by subtracting the value of your remaining mortgage debt from the market value of the property. Keep in mind that when you use the equity from another property, the principal you have to repay will increase. It’s important to make sure you can handle taking on that extra load and also make the required loan payments, or increase the overall amount you are repaying, before making the decision to tap into your home equity.

Guarantor

You can also choose to use a guarantor on your investment property loan. This is usually done by asking a close family member to use a part of their own equity to secure a loan for you. The guarantor must be at least 21 years of age, have a good credit history, financial stability and it also helps if they own their own home.  This is a common option for many investors wishing to speed up the process of obtaining a property. Like with all things, however, there are risks that both the buyer and the guarantor should be aware of before moving forward.  Mainly, if the borrower is unable to repay the loan, the guarantor will be liable to repay the portion of the loan they agreed to secure.

Ability to make repayments

Everyone, regardless of whether they use a private lender or bank, needs to prove that they are able to make payments in a timely manner. This is the most important aspect of any lending process so most lenders and banks will look at the following: Your income, employment history, previous bank statements, spending history, any assets you own as well as your credit history.

Summary

There are quite a few things to consider when looking into obtaining loans for investing in real estate. First, you need to decide what loan you need based on your circumstances and where you are going to get your loan from. Second, you need to go through the process in order to obtain a loan. Use the above options as a guide on the necessary steps to take. If you follow the recommendations listed above, you should be on your way to obtaining the necessary funds to invest in real estate.

May 28, 2021

Vegas odds would suggest that if you’ve invested in real estate, it was likely to make money. Knowing when the right time to sell can be challenging. If you are unsure if now is the best time to sell and make a decent profit, the below advice may help you determine if now is the right time to sell.  You could have hundreds of reasons to sell a rental property, but here are the most common reasons people sell:

You’re Done With Real Estate Investment

Whether you’ve been investing in real estate for a few months or years, there often comes a time when you’re just over it. Maybe it wasn’t what you expected, it takes too much time and energy, or things have just naturally run its course.  There’s nothing wrong with throwing in the towel and calling it quits, as long as you do things strategically.

The Appreciation Grew Significantly

If properties in the area are selling for much more than you bought for, you may consider if you should sell. Appreciation naturally occurs, but you can expedite it by making enhancements to the home and stay on top of needed repairs.  Deciding when it’s the right time to sell when the property appreciates depends on your goals. Are you needing to save for retirement or for a shorter-term return? If you invested for retirement, you might want to hold onto the home longer so you’re certain the capital gains will be worthwhile.  It all boils down to timing the sale right, which we will discuss below. If you sell during a year you have a high income, you may increase your tax liability significantly and walk away with less money in your pocket than you thought.

Tenant Retention Challenges

You have to keep the home occupied with tenants if you own a rental property. It’s not always a simple task, and some areas that were once great markets may die out over time.  If you’re having a hard time keeping the home occupied, you may want to cut your losses and try selling for a profit so you can invest your money elsewhere.

You Found A More Lucrative Investment

If another investment appears more lucrative, you may want to pull money from your real estate investment and invest in something with potentially higher returns. If all goes well, you may want to sell your property to use the money to enhance your new investment.  If you invest the funds in more real estate investments, you may get away with a Like-Kind Exchange, which means you don’t get hit for taxes on the property since you use the money to invest in another home. However, if you’ve invested in anything else, you’ll likely pay the taxes on your capital gains, which requires proper timing.

Too Much Upkeep

Let’s face it, handling a rental property can be hard work. You are the landlord, aka the person responsible for every little thing that goes wrong with the home. You’re also must handle payments, defaults, and lease contracts.  The work load can add up quickly. You can hire a property management company, but unfortunately that will eat up a lot of your profits. If you can’t keep up with all that’s involved, you may decide to sell and invest your proceeds elsewhere. Whenever you decide to sell, you have a few considerations to make.

Tax Obligations

When you sell your rental property, you’ll owe taxes on the capital gains. Unlike primary residences, you won’t likely receive the capital gains exclusions for living in the property. You’ll most likely pay taxes on every dollar you gain.  You should try your best to time the sale to minimize your tax liability. Unless you are just over real estate investment, you may want to consider a Like-Kind Exchange or at least see if you’re eligible instead. It’s worth the money to consult with a licensed tax professional or accountant to determine your eligibility.  If you are done with real estate investing, its critical to understand the tax implications ahead of time. If you’ve owned the home for less than one year, you’ll probably pay a short-term capital gains tax. This means you’ll need to pay taxes at the current rate. If the capital gains bump you up to the next tax bracket, you’ll end up paying even more.  If you owned the home for a year or more, you’ll likely pay a long-term capital gains tax, with the average investor paying 10% of their capital gains in taxes.

Tenants

If you have tenants in your rental property when you decide to sell, you’ll need to choose how you’ll sell. Here are a few options to consider.

Wait for the lease to expire – If you have a current tenant lease, you can wait until it expires, fix up the home and list it. If you choose this option, you can market the home to any buyer, not just investors. The downside is you have to wait to sell until the lease expires. If you have a lot of time remaining on the lease, you may not make as large of a profit as you hoped if the market changes.

Pay the tenant to vacate – If you want to sell now, you may be able to convince your tenant by paying them to vacate early. How much you should offer depends on the circumstances. You may go back and forth with the tenant a few times before you can reach an agreement. You’ll likely need to pay to help them move, cover the difference between the new rent and your rent for the remainder of the lease, or come up with another compromise.

Sell with a current lease – A final option is to sell with an active lease on the property. Also known as a turnkey property, you sell the home to another investor who takes over the landlord duties and earns cash flow from day one.

Answering the above questions, will be a critical first step in deciding whether or not now is the best time to sell your rental property or if you should wait until the cards are stacked more in your favor.

May 21, 2021

If you’ve invested in a rental property hoping to make money, you may find it hard to get a high return if you don’t have the right help. Selling your rental property requires proper timing, pricing, and marketing to the right audience.  Here are several tips to help you sell your rental property quickly and for the highest return on your investment.

Include Your Tenants

Having a tenant in the property could be an important factor in how much money you may make when it comes time to sell your rental property. You need to decide whether or not it’s best to wait until the lease expires, pay to relocate the tenant, or sell the property with the tenant still living in the home. These decisions can make a huge difference in how you sell your property. If you must wait until the current lease expires, you’ll be more at the mercy of whatever current market situations you face when it comes time to sell. If the market is hot, but your lease doesn’t expire for six months, you will likely have to wait to sell unless the tenant is willing to work with you. On the flipside, you won’t need the tenant’s help if you wait until the lease expires. When the tenant vacates the property, you can make any necessary repairs or renovations and get the home ready to sell. Without tenants in the house, you are free to market it as a primary residence or investment property.  If you’re selling the home with a tenant in place, you can sell when the market is hot, but you’ll need the tenant’s help.

Depending on the relationship, its often at least worth asking the tenant politely to allow scheduled contractors in to fix up issues the home may need repaired. If the tenant is staying until their lease ends, they likely wont mind someone enhancing the home.  Staging the home is also important to discuss with the current tenant.  Since you will likely need to market the property to other renters down the road, it’s worth trying to stage the home in a way that wont disrupt the tenant too much but also will enhance the appeal of the home.  Dont forget to work on the curb appeal as well. While you don’t want to ask your tenant for too much assistance to sell the property, having their help is valuable, especially when it’s time for the inspection and appraisal.

Know The Home’s Value

It’s easy to think a home is worth a lot more than it is without researching the current market trends. Researching the market value of newly sold homes in the area will help you understand how much you can make on the sell of your property.  Often, if you inflate the price because you believe your home is more valuable, lenders often wont approve the loan. Therefore, unless the buyer is paying all cash, you won’t likely get more than the home is worth.  You should look at several properties in the area that sold within the last six months and are similar to the home you’re selling.  It’s important to compare not only your properties size and location but also all of its features. Your property may have more or fewer features than the comparable properties, in which case, you’ll need to adjust accordingly.

Take Professional Photos

This seems minor, but bad pictures can often break a deal. The better the pictures you take of the home, the more potential buyers will look at your property, and the more interest you have in your home, the faster it will sell.  The majority of buyers nowadays will only see properties online because it’s more convenient or they do not live close to the property. Furthermore, investors often look to invest in other areas where real estate is cheaper or where home prices are increasing to get the best deal.  Needless to say, high quality pictures are an important part of the selling process.

Before taking photos, make sure the property is properly staged and decluttered. If you have tenants living there, ask them politely for their assistance to showcase the home properly. It’s also important that the photos are honest and realistic. There are many programs like Photoshop that will make it easy to manipulate photos, but this practice should be avoided. It is normal to utilize a wide-angle lens which allows you to capture more room in a picture without inflating its  true size. You should also use the sun to your advantage. Wait until the sun is behind your home to take exterior photos. You should also try to avoid shadows by taking photos at an angle.  It’s recommended to take interior photos mid-day, not too early, but not too late. Try to aim for around noon when the sun is the highest.

Learn The Market

As described above, it’s important to learn everything you can about the current market before posting your property for sell. Understanding what buyers want makes all the difference. If you’ve owned the property many years, it’s likely the market has changed. Knowing the latest trends will help you get the most for your home.  Don’t worry to much about making the necessary renovations.  You’ll make it back when you sell the home for more than you would have otherwise. If, for example, the kitchen or bathroom in the house is outdated, you may want to fix those areas now. Knowing what buyers/renters want will help you make the home more attractive for investors willing to pay more money for a property they plan to keep for a long time.

Making top dollar for your rental property requires that you do your research, price the house correctly for the area, and renovate and repair things before you place it on the market. It may take a little time to sell your rental property, but with the above tips, hopefully you will make the most profit possible and sell it faster than you would otherwise.

May 14, 2021

Most new investors do not have a bunch of excess capital lying around to purchase a loan without some type of mortgage loan.  While there are many valid mortgage terms out there to meet the unique needs of the borrowing community, there are some loan types that should be avoided at all cost. Below we will discuss some of the worst home loan types you should avoid as well as provide you with a few reasons why these are not as good as they sometimes sound.

Balloon Mortgages

Balloon mortgages may be structured in slightly different ways, but at their core they are all basically the same. After a small period of time passes, a large lump sum payment comes do.  With a balloon mortgage, you’ll normally make payments for around a 5-7 year term. After that you’ll owe the entire remaining balance of your mortgage loan, which can often mean a payment of several hundred thousand dollars.  Some balloon mortgages don’t charge monthly payments. Other times, the monthly payment is based on what you’d owe if you were paying your loan off over a longer period of time. Regardless, whatever terms these balloon mortgage offers, there will always be a large lump-sum payment.

A lot of borrowers sometimes will take out balloon mortgages because they offer lower interest rates or reduced monthly payments.  Generally, they hope to refinance their loan before the lump-sum payment is due.  Refinancing isn’t always possible, however, and if you can’t pay off your entire loan, the property could go into foreclosure and you could lose the property. This risk with these loans far outweigh the pro’s and this is why you should avoid balloon mortgages at all costs.

Interest-only mortgages

Interest-only mortgages are structured so that you only pay for the interest on the loan and no principal. This means a lower monthly payment, however, the problem with these loans is that you don’t make any progress with paying off the property. You send interest payments every month without gaining any equity in your home.  Eventually, you’ll be required to start paying off your loan, or you’d be in debt forever. Here are a few ways this could happen:

Interest only loans are often structured as balloon loans. As discussed above, this means you pay interest only for several years and then owe a huge lump sum. Some terms may have a short interest-only period, afterwards, you’ll start to pay both principal and interest. These payments will be much higher than if you’d simply been paying principal and interest from the start. These loans carry a lot of risk. You could struggle to afford the higher monthly payments or balloon payments down the road. Since you aren’t building any equity in the property, you could be in trouble if property values decline. You could even end up owing more on the loan than the overall value of the home.

A 40-year fixed-rate loan

40-year fixed-rate loans are very similar to 20- or 30-year fixed loans. The difference, obviously, is that the loan repayment timeline is 10 years longer.  While these terms will lower your monthly payments, they also add a lot to your total interest owed. An extra decade is a very long time when someone is trying to be debt free. There’s a high probability you will carry your loan into your retirement years. This would also mean you will need to save additional funds for later. These loans may also reduce your ability to accomplish other financial goals because your interest costs would be much higher and you’d have to make that mortgage payment for an extra decade.

Instead of going with any of the above risky loan types, it’s best practice to stay with a traditional 15-year, 20-year, or 30-year fixed-rate loan. These loans have stood the test of time and remain the right options for most borrowers.  The above loan types often sound like good opportunities to potentially save on your mortgage. Chances are; however, interest rates won’t stay put for much longer and avoiding the above mortgage loan types will help keep you financial fit long term.

May 7, 2021

Any smart real estate investor’s main goal when investing is to maximize profits. That said, the market often experiences changes rapidly, and competition can cause restrictive returns. Rental investments generally have higher occupancy rates but economic fluctuations can cause increase devaluation of these long-term assets. These factors can have significant effects on your property’s future potential profitability. To avoid this scenario, you may have to strategize on ways to increase the value of your investment property for future revenues. If you’re a first-time investor, here are a view of the best ways to increase your rental properties value long term.

Energy-Efficiency

Energy-efficient upgrades are a leading way to push down electricity bills. Investing in these environmentally conscious renovations could help you cut down on expenses down the road. Once invested in, you can use your freed up funds on other repairs to help develop your property.  Energy-efficient lighting and appliances help enhance the physical and social value of a property. There are a lot of potential renters who seek green living lifestyles and are willing to pay a little bit extra for rent if they find a suitable place with environmental upgrades that align with their values.  These upgrades often times don’t need not be high end to accomplish the goal of saving money and catering to green living lifestyles. Here are some simple ways you can make your rental properties more energy-efficient:

Upgrade the windows and install blinds that block direct sunlight in order to keep the house cooler. A lot of money can be saved this way by keeping the electricity bills more energy efficient. Installing solar panels, smart thermostats, low-flow toilets and showerheads in the bathroom are all great potential energy savers worth looking into upgrading.

Curb Appeal

Curb appeal is another critical part of a properties overall value. Making the necessary enhancements to your property’s first impression is important to attract the right clients. It’s important to have a well-maintained lawn, a kept garden when applicable, and an overall clean exterior.  Attending to the curb appeal of your property, especially landscaping, can often times get expensive quickly. That said, having clean flower beds and properly trimmed trees could increase the appeal of the yard significantly. It’s important to consider ways for noise reduction and privacy as well. Adding, for example, a small fountain or planting tall hedges to your front yard could block out traffic noises and make it drastically quieter. It’s important to consider the long-term benefit of a great investment over just saving as much money as possible and doing a cheap job. Putting in the time and money upfront could put more money in your pocket down the road. The right curb appeal enhancements will make your property attractive to more prospective buyers or renters. Curb appeal enhancements could be just the thing you need to have your house stand out amongst others and bring in long term financial security.

Maintenance, Maintenance, Maintenance

The best way to ensure your property will continue to provide an increasing profit is to stay on top of all the proper maintenance. Between tenants, it’s wise to invest in professional cleaning and small maintenance jobs where needed, whether that be electrical work, plumbing, roof repairs, or pest control. These problems won’t just go away on their own, and you will certainly lose money if your property isn’t desirable to the right kind of buyer.

Modern Kitchens

The kitchen is the heart of any good home. If a home’s kitchen is clean, modern, and is ready-to-use, most serious renters will jump on securing these properties right away. When it comes time to sell, most buyers look at the kitchen before any other room in the house. Therefore, it’s so important to make sure it’s always the best room in the house.  If your investment property needs an upgrade, here are some things you can do to renovate the kitchen:

Upgrade appliances: Consider replacing old stoves and oven. It’s important to look for appliances that blend the style of your kitchen to increase your properties overall value. Update outdated electricity systems to avoid safety concerns as well. This way, you can guarantee safety to any interested tenant or buyer with confidence.

New countertops: Freshen up the kitchen with new countertops. From granite to laminate or even wooden countertops, there are plenty of options to upgrade your kitchen. Don’t forget to look for options that are easy to care for but have elements of style as well. These are two aspects both buyers and renters will be looking for when deciding on whether or not they like a kitchen.

Painting: If the cupboards are looking a little old but you don’t have the time or money to put in new ones, a simple paint job could turn a kitchen completely around. Many people are stunned by what a fresh coat of paint can do to enhance a kitchen.

New handles: After painting, you should also consider upgrading to modern handles for the doors and drawers. Like painting, this is a simple and easy method to breathing new life inside a house.

Conclusion

Above are just a few ways you can make an investment property more profitable. One of the most important considerations is to keep your property looking desirable and functional for possible tenants or buyers. You need to consider where to spend money and where to put your time and effort regarding improvements and repairs. You might have to spend a bit here and there to get more back down the road but these improvements are well worth it long term. The things discussed above, such as energy-efficient appliances, fixtures, curb appeal, maintenance, and upgrading the safety and style of your kitchen, are just some ways you can ensure the value of your property will increase with the market.

April 30, 2020

When seeking a loan for an investment, it’s common to focus on interest rates, fees, and repayment terms. While all of these are important areas to consider, dealing with a legitimate company should out way all of these other considerations when deciding who to have fund your next investment project. Scammers often pose as personal loan providers to trick those seeking loans into giving up their hard-earned money.  Scammers can be tough to spot because many of them sound convincing. By understanding the most common types of scams and their warning signs, you can hopefully avoid becoming their next victim. Below we will look at some of the most common personal loan scams.

Loans Without Credit Checks

Getting a loan without the company requiring a credit check is appealing to borrowers with poor credit who may struggle to secure loans with legitimate companies. Often times, loan seekers are so relieved to find a company willing to work with them that they don’t do their due diligence before agreeing to the terms of the loan agreement. It is only after they hand over their personal information and possibly some fees to the scammer and the funds promised never appear that they realize their mistake. All reputable lenders assess credit when someone applies for a loan. Some legitimate lenders do occasionally offer loans to borrowers with poor credit, but they will still run a credit check and use it to offer a higher interest rate.  Instead of falling for this common scam, you should opt to apply for a secured credit card instead.  If you come across a lender offering a personal loan with no credit check, run.

Loans With Fees Or Collateral Upfront

Legitimate loan providers commonly charge origination fees, which are typically a small percentage of the approved loan balance requested. That said, these fees are almost always paid out of the loan amount, meaning, they deduct the fees from the full amount you borrowed. Investors don’t typically require an applicant to write the lender a check in order to receive funds.  Some scammers take advantage of the fact that not everyone is aware of this by requesting victims send in origination, application, or processing fee money prior to releasing funds to the applicant. The scammer take the loan victims money and simply disappear.

Unsolicited Loan Offers

Legitimate loan companies do send offers via mail, phone or email, but scammers often throw their letters into the mix, hoping you’ll mistake them for a legitimate company. Bold scammers may even show up at your front door to bully you into a deal that is often too good to be true.  No real loan company contacts prospects in these ways, so these methods are good indicator of a potential scam. Be careful of companies sending you links to fake websites, requests personal or financial information, high-pressure sales tactics, and grammatical and spelling errors in any documents you receive.

What To Do If You Discover A Potential Loan Scam

If a loan offer sounds too good to be true, it probably is. Never hand over funds or personal or financial information to the company until you’ve ensured the company’s reputation. You can check if the company is registered to do business in your state through your state attorney general’s office. The Federal Trade Commission requires legitimate lenders to be licensed in each state they conduct business in, so if it’s unlicensed in your state, that’s a good indicator you’re dealing with a scam. Additionally, all websites requesting financial information should be secured to prevent hackers from stealing it. You can tell if a site is legitimate by looking for “https” at the start of its URL. If the “s” is missing, that’s a sign the company isn’t taking steps to protect your financial information, and you should avoid them at all costs.  Perform a search of the company online and look for any negative reviews from other consumers. A missing address is another red flag. Some scammers pretend they work with a legitimate company, so compare the emails, websites, and phone numbers the scammer gives you with the ones that come up during your internet search.

If you confirm a scammer, you should report the company to your state attorney general’s office, the police in your area and the FTC. Try to provide as much information as you can about the scammer to help them track down the scammer and prevent future consumers from getting hurt.  If it is too late and you are already the victim of a scammer, you should pull your credit reports and look for any unusual accounts or activity you don’t recognize. If you see any, notify your financial institution and put a fraud alert on your account so lenders know to take extra steps to verify your identity before opening a new credit account in your name.

April 23, 2021

Much like any other investment, investing in real estate isn’t something you can perfect from the start. In reality, the lines between success and failure are paper thin. The investment decisions you make, from financing to managing tenants, can have serious impacts in the long run. This is not to discourage anyone or imply that real estate investing isn’t for everybody, but knowing your way around when it comes to seeking out the best deals and maintaining a healthy cash flow is critical. If you are looking to enter the competitive world of real estate investing, be sure to keep the following tips in mind:

Be proactive

It’s easy to lose yourself in the excitement of generating passive wealth as a new investor. While it’s possible to build a profitable portfolio with little effort, successful investment methods take time and a   lot of hard work. Having goals are great since they serve as the basis for the decisions you will be making, but focusing too much on the results can only distract from the real work involved. It’s great to think about the benefits of being a successful real estate investor, but your desires should be paired up with appropriate action.

Pick an asset class and location

Not all real estate investments can fit your means and needs as a first-time investor. When you are just starting out and learning the ins and outs of the real estate market, you should lean towards properties that are best suited for your current investment level. Investing in a single-family home is often a wise place to start, but as your portfolio grows, you may want to pursue bigger assets such as duplexes or apartment complexes. Picking the right location to invest in your first property is also critical to your success when starting out. For example, Atlanta and Orlando, are currently two areas that stand out due to their affordability and high job growth, so these investment hot spots are easy to maintain a stable cash flow if you acquire rental properties in these areas.

Create a financing strategy

Once you have determined the types of properties you want to purchase for your first investment, strategy becomes key on determining whether or not you will be financially successful right out of the gate. It’s important to find enough capital to finance your purchases. Unless you are lucky to have enough excess cash to afford a large down payment, you may need to look into utilizing your 401K or IRA’s, which may be necessary to fund your first investment. Another option is to pool together multiple family and friend members money in order to get the momentum you need to get started if you don’t want to use a traditional bank loan. There are a number of hard money lenders in the U.S. who have more flexible loan terms than traditional loans and will give you the funds you need upfront without having to invest a lot of upfront cost.

Research property management companies

Property management is a critical and often times overlooked area of successful real estate investing. You may attain financial freedom, but it’s worth noting that investment properties deteriorate over time. It’s important to make improvements to your assets if you want to maximize cash flow. Apart from screening tenants and utility expenses, you should find property management companies who focus on additional amenities, repairs, and building a comfortable community that fits the lifestyle of your residents. It’s super important to hire the right property management company to help you out in all of these aspects.

Real estate investing can be a lucrative market as long as you know how to play the game, as you learn as a new investor. It’s important to do your research so you can avoid making mistakes and successfully gain a passive wealth stream off your first real estate investment.

April 13, 2021

If you are looking for ways to expand your business, or are having cash flow issues, it is common for many folks to have a love/hate relationship with banks when it comes to securing a loan. Many people often feel like banks are most eager to lend to those businesses that least need to borrow.  Regardless of your past experiences or why you are seeking funding for your next project, below are some of the smartest ways to borrow money in the current market.

Line of credit

It is very common for investors to experience uneven cash flow from time to time. A line of credit allows you to get money quickly, with the understanding that you will pay the line of credit down once your deal has been closed or for a fixed amount of months depending on the terms of the agreement. Line of credit interest rates are variable and usually competitive and therefore, could be a positive short-term solution.

Review options with your bank

Obviously, banks are in the business of making money through loans. If you have a history with a particular bank and have a good payment history, they may be willing to get creative to come up with a solution for financing your next project.  Be aware, however, your bank will likely want to see a business plan. Many banks will not lend to startups because the risks are too great, so limiting the risks of your deal prior to presenting them with an option, could make the difference on whether or not they are willing to work with you. Here are just a couple ways to win your bank over to your side:

• Offer a personal guarantee. Banks are often cautious to lend money to a business they have not dealt with much or if the deal is riskier because if the deal falls through or you declare bankruptcy, the bank can lose big time. Offering to personally guaranteeing the loan may give you the bargaining power you need to secure funding.
• Secured loan. The most secured loans that appeal to a lender are deals with collateral involved. Securing the loan with the property you are trying to purchase or even another property you may own will give a bank or lender a lot more confidence when deciding to lend you the money you need or not.

Consider borrowing from family and friends

Instead of applying to the bank for a loan, ask extended family members to put up the money. These deal terms may include shared ownership of the business or a direct loan with often times more reasonable terms that a bank will offer. Regardless of who lends you funds or what the agreed terms are, you should always document the terms in writing. The most common need for documentation is a death or other instances when the loan is disrupted before it is repaid. Regardless the reason, it could be challenging to collect and resolve issues with family members down the road, so its always best to have proof in writing.

Government programs

The most obvious are the Paycheck Protection Program (PPP) loans the government has been making during the pandemic. This program included forgiveness provisions; loan similar to traditional grants. The government has also lent money through its “Economic Injury Disaster Loan program”. Additionally, some states and cities have also created lending programs to attract and retain small businesses.

Easiest isn’t always best:

Credit card debt

The rate of interest on cash advances is far higher than on purchases. The average rate on credit card purchases is 15 percent and higher, and the cash advance rate may be over 20 percent. Using credit card debt as a way to invest or borrow money for a loan project should be avoided at all cost.

Marketing emails

We’ve all gotten those marketing emails promising unreal deals only to read the fine print and discover they are a complete scam. You should always be highly suspicious of unsolicited emails offering you pre-approved guarantees. The golden rule for these types of offers remains, “If it sounds too good to be true, it probably is!”  Regardless of which route is best for you to fund your next project, use the above options as a road map for creative solutions next time you need to secure a loan.

April 9, 2020

Real estate investments are one of the safest and most effective ways to build wealth. The real estate market fluctuates but people will always need homes. Perhaps you’re just now getting your feet wet in real estate investment, or maybe you’ve already begun developing your portfolio. Either way, acquiring real estate is a valuable and proven strategy to earning passive income and becoming your own boss.

There is no “one-size-fits-all” approach to investing in real estate. Variables include access to capital, the shape of the local economy, and intensity of competition. While remaining open to adaptation for your local market. In this article, we will look at some of the best tips for starting or growing your real estate investment portfolio.

Buying your first property

It’s never too late to take the first step in building your real estate investment portfolio. Don’t rush when choosing your first property but it’s important to not over analyze either. Most likely, your first property purchase is going to be a learning experience no matter how good your decision. For your first purchase, consider acquiring a property where potential improvements are easy to spot. It’s smart to start with a less expensive property if possible to become more knowledgeable about how real estate investment works. Once you’ve had your first successful experience, you can more comfortably move on to larger deals.

Leverage your equity

After you’ve acquired your first property, speed up growth by leveraging the equity of your portfolio. For example, if you purchase a property for $250,000 and, after making improvements, the appraisal value comes back at $350,000. You now have $100,000 in equity. You can access this equity by selling the property and reinvesting the cash profit, or you can borrow money against the equity. Be aware that borrowing power is often capped at 80% of property value so be careful not to take on too much debt. You’ll need to maintain a positive cash flow to repay your equity loans.

Find off-market properties

“Off-market” is a real estate term referring to properties that are for sale but not advertised on the Multiple Listing Service (MLS) or other public resources. Brokers will occasionally try to create interest in a property through word of mouth or by listing it privately on their network. These homes can sometimes be undervalued with motivated sellers. Investors often find off-market properties by networking directly with real estate agents or attending real estate auctions.

Invest in rental properties

There are several ways to make money with a real estate portfolio. Buying, upgrading, and flipping homes relies on the time-tested truth that property values increase over time and with improvements. But what about a rental property? Monthly rental income can provide an additional passive income stream that you can reinvest into your real estate purchases. Passive monthly income also boosts your cash flow, enabling you to make improvements on properties in preparation for selling them later on.

Hire a property management team so you can keep closing new deals

As your real estate investment portfolio grows, so will the amount of time it takes to manage your properties. You may successfully manage your first property by yourself, but any ability to scale your business will be limited by hours in the day. At some point, it might be helpful to outsource some of your management labor.  Many real estate investors hire a team of property managers, attorneys, and/or accountants. These teams typically handle daily operations, which frees the investor up to conduct research, network, and close additional deals. Be sure to study up on the differences between in-house management staff and a commercial team before you make your outsourcing decisions.

Don’t hesitate to cut your losses

Sometimes, the single most important skill for growing your real estate investment portfolio is knowing when to walk away. If you acquired an investment that isn’t profitable or takes up too much of your time, it’s probably not worth keeping. Don’t hold onto investments to save face. Accept a disappointing outcome and spend your energy on opportunities that have a better chance of success.

If you’ve held back on investing in real estate or had a bad experience years ago, take another look at the opportunities available today. Advances in technology have removed many previous barriers to entering this market, greatly reduced research time chief among them. Investing still requires property management, but nowadays most of the legwork can be done right from your home.