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.

Achieve Financial Freedom

Step One, Improve Your Credit Score

In order to obtain financing or a hard money loan for your real estate project your credit score will be taken into consideration. While it’s not the only factor or the most heavily weighted when it comes to approval or denial, it is still an important step to take on your way to achieving financial freedom and setting yourself up for long term financial success. First, let’s look at the breakdown of credit score ranges and what is typically considered good, fair, poor and bad credit.

  • Excellent Credit: 750+
  • Good Credit: 700-749
  • Fair Credit: 650-699
  • Poor Credit: 600-649
  • Bad Credit: below 600

Everyone is entitled to one complimentary report per year from each of the three major creditors. Obtain these each year and make sure there are no discrepancies. If there are, you can dispute them with each creditor. Things to look for include:

  • All personal information is correct
  • The report reflects all your credit accounts
  • Look for missing or late payments that you believe were to have been made on time
  • Look for accounts or applications for credit you don’t recognize
  • Look for outdated items (a decade or more ago) that still appear on your report

Next it can be helpful to determine what areas of you need to improve upon. For example, if you have a habit of making late payments, set up payment alerts or reminders for each month. Lack of diversity can also cause a lower credit score. Many lenders want to see you can accommodate more than just credit card debt. This is where having (and paying on time) a car payment or mortgage can actually help you.

If you do have debt, stop moving it around and start paying it off. Some experts even suggest that you use your negotiation skills. For example, contact the debt collector and ask if they would be willing to hold off on reporting the debt to each major credit bureau in exchange for full payment. (Get the agreement in writing.)

Limit individual store cards. Sure it’s tempting to save an additional 10 – 20% on your purchase by applying for a Macy’s card but skip this as your credit takes a hit with every application whether you’re approved or not.

Another thing to limit is the amount of debt to limit ratio. Don’t allow the debt on your card to exceed 30% of your credit card limit. This can hurt your credit score even if you make payments in full and on time every month. One strategy to overcome this is to make an additional payment any time you feel you might exceed 30% of the allotted limit.

Your credit score is just one of many factors in obtaining a hard money loan and getting your start on the pathway to financial freedom through real estate investing. If you are seeking additional advice or would like to speak to a lending expert, please contact us.

Looking to Become a Landlord?

Becoming a Landlord

So, you’ve decided you want to try your hand at landlordship. We don’t blame you; even though there’s a lot of work upfront, the long-term return can be quite lucrative. We’ve put together this list of things to prepare and research before you purchase your first income property.

  1. Your Finances – Make sure your own finances are in order. It’s wise to have a little cushion in the bank because the fact of the matter is, it might be a few months before you start profiting.
  2. Property Selection – It’s not just about the neighborhood. Renters especially families will also consider the local schools, job market, crime rates and even amenities. This is especially true if you want to attract good, long-term renters, they’ll be looking to live and work in a safe area where they can easily access conveniences such as shopping and nightlife.
  3. Competition – Be sure to look into what future developments might be happening in the areas you’re looking to purchase your rental property. New construction could mean new competition.
  4. Vacancy Rates – These rates can affect your ability to generate income. High vacancy rates often force landlords to lower their monthly rent in order to attract tenants. Meanwhile, low rates often mean a landlord can increase the rental price.
  5. Additional Costs – Remember, you going to need to factor in the cost of insurance, taxes, legal fees, months where a unit or units are vacant, maintenance and a property management company among other things.

So before you begin, do your research, carefully manage your finances and plan ahead as best you can for both the expected and the unexpected expenses. If you’re ready to get started, click here to apply for financial assistance on your buy to rent property.

Hear Her Roar

Women of Real Estate

At the ripe age of 26-years old Sissy Knopps decided to leave her nine to five and embark on a real estate career. Married with two children at that time, she was inspired by both the ability to create her own schedule as well as help couples find a home to make lasting memories in, similar to what an agent had done for her in the past when she and her husband purchased their 3-bedroom (plus office), 2-bath, ranch style home on a half acre lot in Wisconsin.

Fast-forward four years and Sissy is mere 30-years old, still happily married and now a mother of three. She’s come a long way since the beginning of her journey and she’s experienced great success. Some of her accolades include: top sales agent of the month, multiple times for her Coldwell Banker office and in 2017 she was recognized globally and became member of the International Sterling Society. Her husband Mike is a Realtor as well, as of late their total sales volume looks like this: 2015, $7.9 million. In 2016, $8.1 million and in 2017 they reached a combined $12.3 million with Sissy being solely responsible for 9.2 million of the total.

In 2016 she and Mike took on their first flip project. Here are some things she wanted to share that might help you as you embark on your real estate investment career.

  1. In terms of overall property selection – “I try to steer clear of really old homes but overall you want good bones and a solid foundation.”
  2. In terms of renovating – “The key to finding a good flip is being able to envision what it could be. You have to look past a lot and imagine what it would look like completed. [This includes] “Things like moving walls, types of flooring and finishes, exterior and landscaping.”
  3. In terms of financing and budgeting – “It can be tough, make sure you look at the comps and are making a smart investment.”
  4. In terms of saving money – “Doing the demo yourself can save money and so can doing some of the renovations however, never cut corners, or do shoddy work to just save a few dollars.”
  5. Overall advice – “Be smart, stay within your budget and treat it as if it were your own home.”

If you’re looking to get your start in real estate investing and need a strong financial partner or would like to speak to an experienced hard money lender, contact us!

Factor In These Features

Flip & Investment Property Checklist

In a previous blog we reminded investors to consider the cost of landscaping in their overall evaluation of the property. Remembering to do this helps determine the renovation cost, loan amount, property list price and the potential profit. There are however, a few more things flippers and landlords often forget to inspect or consider prior to the purchase, here’s a helpful list of things to remember.

  • Exterior features such as siding, brick and stucco
  • Landscaping
  • Septic, well and indoor plumbing
  • HVAC system
  • Foundation and concrete work
  • Decking/railings, banisters and other features which may pose a safety concern
  • Any back taxes owed on the property
  • Homeowners association fee

Additionally, if you’re going to rent the property or you are a landlord to the property you’ll want to factor in these things as well:

  • Heating and cooling costs
  • Insurance
  • Routine maintenance
  • Legal expenses (should you have to evict a tenant, etc.)

Have an eye on your next investment project? Join the hundreds of other investors who are applying for and receiving funding right from our website! Call or text today if you have questions or would like to speak to a hard money lending expert. 203-974-3322.

Count On Curb Appeal

Why It’s Important to Factor in Exterior Landscaping

If there’s one thing you can count on it’s, first impressions matter. When you’re assessing a property’s “flip-ability” don’t forget to evaluate the current state of the landscaping. Sometimes flippers and real estate investors will only focus on the cost of the repairs inside the property. However, it’s also wise to consider budgeting for the cost to spruce up the look and feel of the exterior as well.

In addition, it will be easier to determine what kind of offer you want to make on purchase of the property when you consider both the interior and exterior rehab costs. It also makes it easier to calculate what your potential profit will be. Here are six some things to look and budget for.

  1. Replace (if necessary) or power washing siding.
  2. The planning of or removal of trees and shrubs.
  3. Painting and color coordinating exterior features like the shutters.
  4. Driveway and walkway maintenance.
  5. Incorporating landscaping and planting flowers where necessary.
  6. Pull weeds, add mulch or rocks, pull weeds and get the grass as green as possible.

When it comes to recouping your money on your investment property the curb appeal will make a world of difference. A standard evaluation is to invest 10 percent of the homes value on landscaping. Some experts say that you can count on curb appeal to increase the overall value of the property anywhere between 5 and 20 percent. Contact one of our lending experts for additional assistance determining the cost of your hard money loan request.

Property Pre-Inspection

A Marketing Strategy

There are several strategies that could potentially help you sell your listing faster and for top dollar. Providing a pre-inspection on the property is one of them. A pre-listing inspection is a written report that assesses the current condition of the home.  It is likely a potential buyer will still hire his or her own inspector, but having the pre-listing inspection completed sets you apart from sellers who haven’t taken this action.

By having a pre-inspection you can attract more serious buyers and it also shows you’re a serious seller. This is important because you’ll save time and money working with individuals who won’t back out at the last minute.

Other benefits of a pre-inspection include, it helps you or your agent market your home and it provides the buyer piece of mind as to what they are getting themselves into. Contact us if you’re looking for more marketing strategies to help sell your flip or investment properties.

How to Select Your Next Investment Property

Three Important Tips

Maybe you have one or more successful flips under your belt, or you purchased an apartment building and have experienced what it’s like to sit back and collect rent. Either way, if you’re hungry for more investment opportunities don’t wait! In almost all areas of the country the housing market is seeing high demand and low inventory. So, how do you select your next investment project? To help, we’ve put together this list of three things to keep in mind.

  1. With just a little bit of online investigating you can find lists that contain the top five, ten, twenty, etc. areas where real estate investing is at an all time high. Just make sure you’re getting your information from a reliable source. (Not Wikipedia!)
  2. If you’re buying a property that needs renovation the main things to check for are: the building’s structure/foundation, can walls be moved, and if the amount of money you need to sink into renovations can be recouped when you turn around and sell.
  3. As always, location, location, location – it’s possible to be successful even in areas that don’t make the lists mentioned in number 1. Just remember to look at recent comps in the neighborhood, to help determine average home sales or the going rate for rent. Also keep in mind things like the average income for individuals living in that area and you should possibly consider the employment/unemployment landscape.

In real estate, time is always of the essence. The faster the purchase, flip/renovation and sale the more successful your likely to be. Hard money lending is often the fastest way to achieve funding for your investment and it allows for the most flexible loan terms. Contact us for more information or to apply.

Why You Should Use Our Money, To Make Money

It Can Be that Simple

You’ve likely heard the saying “get rich using other people’s money.” Maybe you dismissed it because it seems like a scam. However, it’s quite the opposite, its actually how strategic investors make viable careers in real estate.

In fact, one of the most common mistakes people make when investing in real estate is using their life savings, retirement, and/or credit cards to purchase and rehab the property. This method of madness produces a much larger risk to you, the investor. If you can’t unload the property in a timely manner you’re stuck with the debt. If an emergency should arise, all your finances may be tied up. Another risk you run is doing damage to your credit score and that can take time to repair.

The best strategy is to use a hard money lender. This also happens to be the route used by investors and flippers you see on TV. (Think shows like HGTV’s, Flip or Flop.) When you apply for a hard money loan you are essentially asking a private investor to lend you the necessary cash on a short-term basis. Not only does it allow you to remain in control over your savings and credit but also, hard money loans can be processed much faster than bank loans. This is helpful in a competitive market and allows you to present your offer, cash in hand.

For more information, to apply for a hard money loan or to speak with a hard money lending expert visit our website.

Are Hard Money Loans Hard to Get?

FAQ’s of Hard Money Lending

You might be wondering if it’s hard to get a hard money loan. We certainly don’t think so! In fact, we’ve made it our business to make hard money lending extremely accessible to anyone, no matter if you’ve borrowed before or not. Here are some frequently asked questions and some cold hard facts of hard money lending.

Q: What is the difference between conventional lending and private hard money loans?

A: Conventional for loans are governed by Fannie Mae and Freddie Mac and income and credit are considered for approval.  Whereas, private hard money loans are not regulated by the government, and offer short term lending with less restriction on the borrower’s income or credit.

Q: How do hard money loans work?

A: Hard money loans are short-term loans secured by real estate. They are funded by private investors as opposed to conventional lenders such as banks or credit unions. The terms are usually around 12 – 24 months. However, some lenders offer the option of three to five-year arms amortized for 30 years.

Q: How much is a hard money loan?

A:  There are two main factors. One is the loan amount and the other is the experience of the borrower. The better your credit, the better your terms may be.

Q: Where can I find a hard money lender?

A: You can start right here, on our website. Fill out our application and have it reviewed by the many different lenders who also have access to our website. These lenders are waiting to come across loan requests just like yours!

Q: What do hard money lenders look for?

A: Hard money lenders are looking at the value of the collateral which in this case, is the property you are seeking money to buy, fix/flip or rent. In addition, a private lender may consider the value and history of the neighborhood in terms of growth, comps, and details such as your renovation plans and a detailed outline of your financial plan for the property. In addition, hard money lenders will obtain a credit and background check and may ask for your personal tax return, not for income calculation but rather as evidence you are filing annually.

Q: When and why should you use a hard money lender?

A: Hard money loans are meant for short term investments. Typically, 12 – 24 months. Hard money loans are issued far quicker than traditional bank loans. Closing with a hard money loan can happen within two weeks. Therefore, when you need financing quickly and given the competitive nature of the real estate market, we often do, a hard money loan makes sense. If you are developer looking to purchase a building with units for rent you should consider a hard money loan. If you are looking to make home improvements to add value to your home, you should consider a hard money loan. If you are a developer or individual seeking to purchase or flip/rehab a property and then immediately sell it, you should consider a hard money loan. To recap, hard money loans are used when the borrower is looking for leniency on credit and timing.

Q: How are hard money loans structured?

A: Hard money loans are structured based on a percentage of the quick-sale value of the property. This is called the loan-to-value or LTV ratio and typically ranges between 60-85% of the market value of the property. Your LTV will depend on your level of experience as a borrower and your credit.

Call us today to speak to a hard money expert! 203-974-3322