When you’re looking to finance a real estate investment project there are a few ways to go about getting your funding: you can apply for conventional loans, hard money loans, and private loans. Each of these options has their own unique set of guidelines and regulations, and they’re all inherently different. For example, the application and approval process for a conventional loan versus a hard money loan is much different, whereas a private loan may not have any formal process other than knowing the “right people.”
So, you’ve decided to get into the investment property game - that’s great. Whether you’re planning to flip some single-family homes or invest in a multi-family property as a landlord, the first step is to figure out how you’ll be financing your project. After all, without a clear idea of where your funding will be coming from you won’t be prepared to make an offer on the property in the first place.
Investing in real estate tends to follow a different path than purchasing your own primary residence. Investors tend to use private money lenders because it affords them more flexibility in the process and also allows them to build a business relationship that, as time goes on and their property portfolio grows, only becomes more advantageous to both sides. But choosing the right lender can be tricky - if you’re hoping for your deals to move swiftly and seamlessly, you’ll want to do your due diligence and select the right lender.
So, you've found a great fix and flip opportunity, but you lack the time or the pristine credit profile that an institutional lender typically requires. Next stop? A private lender that offers the speed and flexibility that will get you to the closing table before the competition.
Here are four ingredients to a solid business presentation that will help get your real estate investment funded.
To succeed as a real estate investor, you need to know how to use the available tools and resources as efficiently as possible. You likely aren't going to have hours upon hours every day to sit in your office and mull over the numbers, search for hard money lending options, scout potential properties and reach out to potential buyers. Rather, you are going to be a mobile operation, spending more time at your investment properties than you will behind a desk.
From assessing your potential profit to determining if a particular hard money lending option is the right fit for your investment, these apps will make you a better real estate investor:
Having a reliable lender back your real estate investments is crucial to ensure your venture is successful. But where can you find a reliable fix and flip lender? If you’re new to flipping properties or don’t know where to start looking for lenders, there are two ways to find reliable and trustworthy hard money lenders:
Some may say HGTV has made house flipping seem glamorous. A real estate investor identifies a distressed property, knocks down walls, picks out new appliances, granite and tile, paints the walls, plants some flowers and voila - there's a $50,000 profit to be had. However, in the real world, it doesn’t always work out that way.
Here are 5 mistakes to avoid to help ensure your house flip is a success:
It's tempting to visualize how a remodeled condo will be furnished, or to fantasize about how to spend your share of the "flipping" profit. But without a specific action plan that includes a detailed cost estimate, a realistic schedule and the talent to make it all come together, such dreams can become exercises in futility.
The business of real estate investing is just that, a business that requires mastery of a specific set of skills. It's not rocket science, but it's not as easy as flipping burgers either. Here are some tips to assure that your dreams of fix and flip success become reality.
Some may feel that the concept of “leverage” is difficult to fully grasp, but it’s an important one for borrowers to understand. Leveraged loans let you get a little more bang for your buck when it comes to real estate investing. This is especially true if you don’t have a lot of capital to work with in the first place. Before you decide whether leveraged lending is right for you, read on to learn how it works.
No lender wants to be left holding the note on a property that won’t sell or has to be foreclosed upon. The goal of an ethical and successful private lender is to build mutually profitable relationships with builders, resulting in gains for both parties and, in turn, additional deals. Due diligence before funding the deal is in both parties’ best interests. A private lender taking the time to learn the building industry also can provide value-add opportunities for the borrower.