Creating a Flipping Business Plan

Creating a Flipping Business Plan

If you’re just getting started in real estate creating a business plan can be helpful. Even if you’ve been flipping houses and investing in real estate for a long time, going back and creating a business plan or revamping your original plan could prove wise. In the very least, the plan helps outline your business, provides direction and can even help clarify and put meaning to why you’re in business. When you get stuck or lost, the plan can be a great tool to revisit. We’ve put together a brief outline of items you might want to include in your home flipping business plan.

  1. A Mission Statement. On a deeper level this may touch on your purpose or what they now call in business your, “why.”
  2. Summary of Objectives. This might include what it is you aim to do, or problem you aim to solve and/or what your goals are for your business.
  3. Leads and Sales. This section might include a brainstorm of ideas for how you plan to generate and follow up with leads as well as manage leads through the sales pipeline. This includes leads for both the properties themselves as the buyers once you’re ready to sell the properties.
  4. Timelines. You might consider thinking about how much time you’ll spend or already do spend buying, fixing and selling the property. Once mapped out you may see room for improvement!
  5. Budget. This is a no brainer. However, sometimes business owners forget to include things like marketing and advertising budgets. Remember to consider these areas as well as the cost of property and renovation costs.
  6. Funding. List out any and all funding resources.
  7. Exit Strategy. This one is huge because investors will want to see it. Your exit strategy outlines how you plan to get out of the property. (Usually selling.)

Carve out time to complete your business plan so it’s ready to go when an investor requests it. This will save you time and money! For additional information on real estate investing and private lending please contact our loan specialists, Michael Barker. MBarker@LendSomeMoney.com or reach out via our website chat feature!

Why Wholesaling is a Winning Strategy for the Novice Investor

Why Wholesaling is a Winning Strategy for the Novice Investor

The most common barrier to entry in real estate investing is simply having the starting capital. Full financing doesn’t exist in the hard money arena, and the best terms lenders offer are for the experienced investor. Capital is necessary to start investing in real estate. If a down payment, closing costs, and interest reserves aren’t liquid then wholesaling is the best method to start with. With wholesaling you can begin to build the capital and developing the skills needed to start flipping properties or building a rental portfolio for income.

Many real estate investors use wholesaling as a way to start investing in real estate with little risk exposure. It is a simple strategy where you get a fee for finding a good deal for another investor. There’s no need to qualify for funding, repairing the property, holding costs, and the time should be significantly shorter. It’s also repeatable which investors who only try to build portfolios find that they don’t have capital to repeat the process to grow the portfolio and often receive much less monthly income than expected when they’ve used financing for the acquisition.  After acquisition also tenants are another added risk to the bottom line as they can damage the property, or not pay rent.

The initial capital for a wholesale is much less than of a flip or rental property. In a wholesale deal the investor only needs capital for a deposit on a contract. Since the contract will be assigned to the actual buyer, the wholesaler only needs to put down the deposit to get into contract. This could range from a few hundred to a few thousand depending on the property and market.

It’s often a necessity to start with wholesaling in order to build capital. However, it’s also practical for a novice investor who is trying to build the skills necessary to evolve into flipping and rental investments.  These skills include: learning how to find and analyze a deal (you make your money when you buy the property), finding the buyer for the property, learning  how to negotiate the offer, how to predict expectations of profit, and getting comfortable with contracts and  assignments, are the main stepping stones to moving from a novice to an experienced real estate investor.

Let’s Make a Deal

One Where, Everyone Wins

We want to help fund your investment projects. So, we’re sharing key insight on what lenders look for when striking a deal. Remember, if the lender doesn’t see the value, then it’s a good indicator that you might want to think twice about the viability of making money on that project too! Here’s what makes a good deal through the eyes of the lender:

The down payment compared to the purchase price – The more the merrier in terms of what you have to contribute. When investors are seeking 100% financing it raises a red flag for lenders. It’s to everyone’s advantage for both parties to have some skin in the game. Additionally, it motivates each party to move the project along.

The renovation cost compared to the purchase price – A good rule of thumb is not to exceed 50% of the purchase price. From the lender’s prospective the collateral for producing an asset-based loan should have value throughout the entire project.  The scenario both parties want to avoid is:  an investor attempts a complete gut or tear down of a property, and then can’t finish the project, the lender has to attempt to sell a property that has less value then the loan amount. Smaller projects also pose less risk for those new to investing.

The overall condition of the property – As the lender we’ll evaluate the property from the following point-of-view, would we like to live there ourselves? Not only do we look at the condition of the home but we consider the neighborhood in terms of location and safety. These are questions you should ask yourself too. Remember, even if the end goal is to rent the property, the lender still has to consider its ability to be sold in the event that the investor defaults on the loan.

Location – You’ve heard it before but we’ll say it again; location, location, location. Properties near/on water are the easiest to fund. Properties in major cities are also easier to fund simply because the market is larger making it easier to unload a property and finally, due to the fact that the values of the homes in these areas are typically higher.

We acknowledge there’s many other factors. However, keep these four things in mind as you search for your next investment property. Then, keep us in mind as your private lender! Questions? Contact us today, we’re available by phone (860.670.4309), email or live chat.

Don’t be Jealous, It’s Not a Good Look

Competitive Private Money Rates

You might have noticed that conventional mortgage rates are at an all time low for the 2019 calendar year. Perhaps you’re feeling a little like the green eyed monster as you stare longingly at those offers.

The good news is, LSM is closing the gap with its competitive private money rates. We want to help portfolio builders find low rates for their long term financing too. Contact us today to learn more about how we can help you build long-lasting wealth in the real estate sector.

LSM a One-Stop-Shop

Lend Some Money is Now a Direct Lender

What does this mean and how does it benefit you? Take a look at some of the advantages provided to you by working with a direct lender versus a mortgage broker.

  1. Relationships – Our customers matter and we strive to build relationships that lead to more lending. Meaning, we’ll prove ourselves to be a reliable partner you can trust for each and every transaction.
  2. Access – Using a direct lender means you deal directly with the source of your loan and with our loan officer and no one else.
  3. Savings – By being the originator of the loan, LSM can save you money during the loan process.
  4. Time – Time is money and we want you to have both. Direct lending is the fastest route between loan application and closing.

In order for us to make a deal we are looking for applications which:

  • Start at 75K
  • FICO Minimum of 620
  • Renovations are half the purchase price or less

Our loan expert, Michael Barker is on standby, waiting to hear from you. Visit our website to chat with him or call/text: 860.670.4309 today!

A message to brokers. We understand the value of your role! This is why we have a strong focus on our relationships with the brokers we work with, offer broker protection, and work expeditiously with you so you can deliver the same service to your clients.

How to Get Time on Your Side

Quick Loan Approval

We all know that hot properties move quick. Sometimes they sell before they’ve barely hit the market or spend less than a day on MLS. What should you do when find yourself scrambling to scoop up a property other people are interested as well? First, you’ll need to make sure you’ve got a partner that can provide you quick and reliable financing so you don’t have to worry about missing out on the investment.

We spoke last month about the average time it takes to close on a loan. Two weeks, but what if you don’t have two weeks to wait around to see if you’re financing will pull through? One thing that can help is by building a rapport with one lender. At Lend Some Money, we can close on loans faster with those who have borrowed from us in the past. Some of the reasons behind this are, because we know the investor has experience and we likely already have their credit, background and LLC information on file.

Additionally, the hotter the property and the more potential the investment has, the easier it is push the deal through and to close at a quickened pace. We also mentioned last month that who you choose to use for the appraisal can help get a little more time on your side. By using a lender, verified appraiser you know you’ve partnered with someone who understands that the turnaround time needs to be immediate.

When you think about building your investment business, carefully consider who is on your team. Starting with trusted partners from the beginning can help move your career along smooth and faster. Our goal at Lend Some Money is to earn your trust and help you do business over and over again. Contact us today, let’s chat and get this party started!

It’s a Done Deal

It’s a Done Deal

Plus, Insider’s Tip

Ever have a deal get denied with no explanation as to why?  Do you find it confusing when some of your deals are pushed through no problem while others seem to struggle down the pipeline? If you’re a newer investor maybe you’ve simply never been educated on the qualities that make an attractive deal. Here are five things that Lend Some Money looks for when presented with an opportunity.

  1. Asking for a loan of at least 75K.
  2. A credit score of at least 620.
  3. This includes: contracting, wholesaling and of course, investors who have previously bought, renovated and resold property. In addition, those who hold property for rental purposes are considered to have experience.
  4. Hard money lending deals with cash. It’s ideal if you understand the value to having money to bring to the table in addition to the cash you borrow.

And last but not least; location, location, location! Properties in metropolitan areas, by water and in well-kept neighborhoods make an application appear more attractive. This is because the resale opportunity is likely higher.

If you’ve got a deal that meets the aforementioned qualities then let’s work together! If you’re not quite there yet, don’t worry! Contact us today and we’ll help education you on the necessary steps to take to become a lenders ideal customer.

Insider’s Tip: In addition to getting your deal accepted, everyone wants a quick close. The industry standard is two weeks although, most loans will require a longer amount of time.  The reason is for that is usually due to the appraisal process. It takes time to obtain, process and deliver. One work-around is by having a property in a hot location, or an area where we’re able to used preferred appraisers. Our preferred appraisers move fast and understand the important of an ARV appraisal.  Which helps us cut down time and close faster!

Quit Your Day Job

Start Living Your Best Life

Whether you’re 18, 38 or 78, years old, it’s never too late to chase after your dreams.  No matter if you’re seeking to make more money, be your own boss or, own your own company, all you have to do is, start. But where exactly is a good place to start? Ask anyone who has found success in any type of business and they’ll tell you they didn’t do it alone. Just like hiring a coach to get in good physical shape, you could consider hiring a coach or mentor to get in great “business shape.”

No experience? No problem! While we often cater to experience investors, we also teamed up with expert real estate investing coach, Joe Barletta in an effort to help your if you’re just getting started. Michael Barker, a loan officer for Lend Some Money recently teamed up with Joe to create this helpful segment for real estate newbies.

Click here to listen.

You can visit the coaching page on our website to learn more about hiring an investment mentor or even to chat with Michael live! You can typically catch him during business hours for immediate assistance and answers to your lending questions.

Happy New Year! We hope 2019 is your best yet!

Top Design Trends from 2018

Predicted Trends for 2019

We can all thank Chip and Joanna Gains for introducing us to shiplap. A material that became widely popular to use during home remodeling. Here are some more recent trends from this past year, as well as trends to watch for in 2019.

1. The Metal Roof. This trend is quickly spreading across the country. While metal roofs cost more upfront they also are said to last 50 years or longer depending on the type of metal. This past year it became not only popular to choose a metal roof but to go with a bright or bold color such as a red, stark white or even blue.

2. The Color Purple. Designers predicted lavender as the “it” color for 2018 and Pantone’s color of the year for 2018 was a shade called ultra violet.

3. The Colored Kitchen. For the past few years white has been the go to color choice for kitchen remodels. In 2018 we started to move towards colored cabinetry and that included miss-matched uppers and lowers. In addition, we started to move away from stainless and brushed nickel and we brought back metal tones such as aged bronze, copper and rose gold.

4. The curvature. 2018 furniture trends started moving away from sharp edges to more curved couches and chairs. These relaxed lines give off a more organic feel.

5. The Wonders of Wallpaper. Wallpaper made a huge comeback this year. Pretty much anything goes when it comes to selecting wallpaper too, from geometric patterns and shapes to eye catching metallic and even nature inspired prints.

What’s in store for 2019? Here are three additional trends sources predict:

1. All Black Kitchens. All black materials including painted wood, metal and stone, then paired with decorative green plants, will give off a sophisticated and contemporary look. In addition, stainless is dying. In fact, we won’t see as many appliances because hiding them behind paneling or other materials is becoming popular again.

2. Technology. Mirrors that double as entertainment, lighting and even health tracking devices are expected to continue to be on the rise making their way from hotels to inside homes.

3. Clean and Clear. Upper cabinets will continue to either disappear for floating shelving or no shelving at all. The demand for clean, clear sight lines and an even great open feel, will continue to rise in 2019.

To have your designs and transformations featured on our social media sites e-mail the images to: info@lendsomemoney.com.

Exit Strategies

Three Options for Paying Back Your Hard Money Loan

When you apply for a hard money loan you’ll be asked what your “exit strategy” is. What that means is simply, how do you plan to pay back the money you borrowed? In this blog, we’ll explore some of your options.

  1. Use the income you make from selling the property to pay off the loan. This strategy is ideal for fix and flip loans where the investor often purchases the property for a much lower price, fixes it and then sells it for a pretty profit. Hard money lending is perfect in this situation because it will provide the investor access to fast funding. The faster the transaction and flip, the less interest the investor pays and the more money they walk away with.
  2. This is often the strategy used for income/rental properties. Again, hard money loans are ideal because they provide the investor the quick funding needed to purchase when the right opportunity presents itself. The refinance option also allows the investor time to transfer the hard money loan/short term loan after they’ve lined alternative, long-term financing often from a traditional lender.
  3. Alternative Source. You might choose to use funds from another sale, investment, or even hard money loan. This often an investor’s fallback plan because it alters the course of funds from its original, intended use. It does however; buy the investor more time to find the right buyer or even more time to further the income potential on an investment.

Having an exit strategy is important. Ideally the investor wants to be able to cover the cost of the loan using the profits from the real estate deal. Experience, careful planning and matching the right exit strategy with each unique real estate transaction will help investors be more successful. Contact us to apply for funding or to speak to a hard money lending expert today.