Proven Ways To Make Money In Real Estate

/in , , /by

There is no industry in the world where more money has been made than in real estate. Yet, many people still worry about getting involved in it, mainly because they feel that they need to have a significant amount of capital. However, that isn’t true. Hard money loans are just one way in which you can enter this market with little to no capital to your name.

Success Stories

There are numerous success stories out there from people who had made it big in real estate with little to no money. For instance, there is Kent Clothier Sr.

Before his career in real estate, Kent started out in the supermarket industry in the Dallas area, managing a billion-dollar supermarket operation by the young age of 32. Kent brought his expertise in the grocery industry with him to Memphis and began American Wholesale Grocers in 1987. By 1995, he built the enterprise into a $50-million venture, which he sold in the late 1990s before pursuing his passion for real estate and establishing Memphis Invest.

Another example is Dean Graziosi, who has a trailer park background and now owns more than 400 properties. There are many others like these two and what brings them together is not that they had, or didn’t have, any money behind them. It is that they had the guts to try things and now have a fantastic amount of money and knowledge.

Real estate is no more or less difficult than making money online. It is simply about knowing what you do and don’t need. One thing you do not need, which may surprise you, is good credit. You also do not need significant capital. Yes, you will have to start with the lower priced properties at first, but this is where you can start to grow. Lastly, when you start, you also do not need to have any major assets to get financing. You simply need to get creative.

How to Make Money in Real Estate

There are two key ways to generate money in real estate. The first one is the passive method, which means you buy property and hold it, by purchasing turnkey properties.

If you leverage turnkey investment properties, then most everything is already done. All you would need to do is purchase the investment property, let the professionals manage it and collect your monthly cash flow checks while your tenants help you build equity.

Your second option is to earn an active income. The most common way to do that is by flipping properties, after you have added value through renovations or development deals. The big thing to learn about, however, is how you can get your foot in the door without having a huge amount of capital. To do that, there are multiple options available to you, including:

  • Lease options for seller financing
  • Trading jewelry, cars, and other fixed assets you have
  • Finding someone in a distressed situation and taking on their payments
  • Finding an investment partner
  • A loan
  • Peer to peer lending
  • Home equity lines of credit
  • Hard money lending

If you are hoping to earn an active income through real estate, which means you will buy and sell properties in a short period of time, then hard money lending is probably the most viable option, and the most preferred one.

Hard money loans, sometimes referred to as bridge loans, are short-term lending instruments that real estate investors can use to finance an investment project. This type of loan is often a tool for house flippers or real estate developers whose goal is to renovate or develop a property, then sell it for a profit. Hard money loans are issued by private lenders rather than mainstream financial institutions such as banks.

The reason why this works is because real estate is based on a simple cash flow principle. This means that, so long as you earn more than you spend, which means you are in positive cash flow, you are doing well. Real estate investments are some of the best investments around to generate continuous positive cash flow, which is why they are so popular, and why so many people have literally made millions of dollars doing so.

8 Key Strategies to Make Money in Real Estate

There are eight key strategies that you could consider if you want to make money in real estate. You could decide to focus on one strategy at a time, or you could combine them in ways that are suitable to you. You are likely to find that, as your incoming cash flow increases and your assets and savings increase, it will become easier to make money in multiple ways, thereby also increasing the speed with which you make more money in real estate. The eight strategies are:

1. Investing in long term residential rentals, which is a passive form of income with a lot of security: people always need somewhere to live.
2. Taking out lease options, which is a perfect starting point in which you lease a property while also having the option to buy. This is a good option if house prices are going up, because you will have set the purchase price before this increase.
3. Home renovation flipping, for which you either need quite a bit of cash behind you, or a good relationship with a hard money lender. In this case, you purchase cheap and distressed properties, fix them up, and sell them for a significant profit.
4. Contract flipping, which means that you find people who are willing to sell at a ridiculously low price, and bring them together with an investor looking to buy. This means that there is less risk for you, because you will never have to close escrow either. However, it is quite tricky to identify these properties.
5. Short sales, which means you find those who are willing to sell their property for far less than it is actually worth, and certainly less than the balance outstanding on their mortgage. This is generally accepted if a quick sale is needed to avoid foreclosure.
6. Purchasing vacation rentals, which is a great way of earning a passive income while at the same time having a piece of property that you can use yourself if you are on vacation. By working with a good property manager, there is not much you need to do to earn your income.
7. Through hard money lending, which you will probably only be able to do once you have been involved in this field for quite some time. When you first start out, you will look for hard money lenders to help you get on the ladder. But as you continue, and if you are successful, you can become a hard money lender yourself. There is a lot of profit to be made in these loans, and the risks are very low.
8. Investing in commercial real estate, which you will probably only be able to do once you are truly established.

Flipping Haunted Homes – The Next Big Money-Maker

/in /by

The paranormal, ghost hunting and spiritual activities are very popular and fashionable right now. Yet, in all of this country, there is just one recognized haunted house. It is in Nyack, NY, and is legally recognized as being haunted.

“As a matter of law, the house is haunted.” This sentence in a ruling by the New York Supreme Court in July, 1991 generated international headlines for a real estate dispute surrounding the sale of 1 La Veta Place.

This is of significance because according to law people cannot just describe their house as being haunted when they want to. This, in turn, makes it an important issue for real estate professionals, who must make sure that they represent their properties properly.

Meanwhile, every year, thousands of people travel to Salem, MA, during Halloween in the hopes of being able to witness some spooky goings-on. There is a real appetite for the paranormal, such as for things that make noises in the dark. And that includes haunted properties.

Are Ghosts an Investment Risk – Or the Opposite?

Trulia has completed a piece of research that indicated that a haunting was not good for house prices.

We found that most Americans consider both deaths and hauntings when finding their next home. Millennial men are the exception, with some possibly dying to live in a haunted home, according to Trulia’s September survey, conducted online by Harris Poll among 2,098 U.S. adults ages 18 and older.

What this research showed more than anything, however, is that it presents a very interesting possibility for investors. On average, 43% of us will not buy a haunted property, rising to 50% among those who did not complete high school. What this means, in conjunction with the fact that there are legalities involved with whether or not a house is haunted, is that people have the opportunity to snap up properties at reduced prices because of suspected hauntings.

Fix and Flip – Seance and Flip?

It seems that there is a real market for haunted properties. Indeed, the haunted house in New York was sold and is now worth quite a bit money. Men who are between the ages of 18 and 34, meanwhile, are also a target demographic as they would like to purchase haunted properties. Meanwhile, those with a graduate degree and those over the age of 65 don’t care about ghosts, so they are also a purchase demographic.

But then, there are those properties that you could snap up because of the worry that there are ghosts, and hold a seance or other event to “evict” the ghosts, only to then sell it at a profit. This is perhaps the easiest, as well as quickest and cheapest, way to fix and flip a loan, and you are guaranteed that hard money lenders will be interested in it.

Paranormal Disclosures

Hard money lenders want to see a quick profit. They will happily lend you money to purchase a property if they believe you will be able to sell it within no more than three to five years and at a profit. This is easily achieved with a haunted home. However, you do have to be aware of the paranormal disclosure laws, which lead us back to the property in New York.

Essentially, some states require homeowners to disclose certain events. Those events include hauntings and also recent deaths, or any criminal activity that took place in the home. Hence, you need to make sure that you remain within the law, and that you find out how long after those events you no longer have to disclose them. Buy cheap because of a ghost, sell expensive because it is probably gone. It is the perfect way to flip real estate.

2020 Loan Originations Through Anchor Loans Now Exceed $1 Billion

/in /by

Anchor Loans is the largest hard money lender in this country for fix-and-flip investors. Once again, it has proven its worth by exceeding $1 billion in loan originations within one year, and the year is not even over yet! They have been able to do this for the second year running, allowing real estate investors to get the funds that they need. This is a new national record, as well as a new record for Anchor Loans itself.

No private money lender has been around longer, or loaned out more money to the fix and flip market than Anchor Loans. In 2016 we set the standard yet again, becoming the industry’s first to originate over $1 billion in loans in a single year.

Excellent Performance for the Past 19 Years

To date, the company has had a total volume of $5 billion. They have been in business for 19 years, surviving the Great Recession with ease. Over those 19 years, they have funded some 16,000 loans, setting themselves apart as one of the go-to companies for hard money loans. Their focus, meanwhile, is specifically on the fix and flip investment market.

It costs a lot of money to fix and flip houses. In addition to buying the home, fix and flippers need to pay for repairs, contractor fees, listing and broker fees, holding costs until you sell the home, and more. […] Hard Money Loan / Private Money Loan – Best for experienced or inexperienced flippers who need money quickly.

Anchor Loans as Industry Leader

Anchor Loans first surpassed the $5 in total volume in November 2019, which is an important record in itself. Nowhere in the industry have results like that been achieved before, which has really set Anchor Loans apart as the best in the country. Indeed, their president and CEO, Stephen Pollack, is incredibly proud of the achievements of the company. He believes it is a testament to the dedication, energy, and hard work of every staff member in the organization. Furthermore, he is proud of the fact that the company is now an industry leader.

Given the extremely fragmented nature of lenders to the fix-and-flip market, where substantial numbers of small local firms fund between $5 million and $50 million per year, our attainment of over $850 million in assets under management and $1 billion in loan origination volume in 2016 is a significant achievement for our industry.

There are numerous reasons why Anchor is such a standout company. Their proprietary Fintech platform is one of those reasons, as is their excellent relationships and their overall experience. No other lenders have been able to evaluate, underwrite, and fund their applications as quickly as what this company can. In fact, most of their clients see payments in as little as between three and 10 business days. This is why the company is so preferred across the nation, even outside of California, where they are headquartered.

Anchor Loans has positioned itself as the go-to intermediary between lenders and investors. They help them create opportunities that benefit everybody who is involved. They specialize particularly on rehab properties, as they believe these properties help to improve neighborhoods in particular and local economies as a whole. The company spends a great deal of time, effort, and money on anticipating and understanding clients’ needs, thereby ensuring that they can provide the most reliable funding in the quickest way possible. This strategy has enabled them to build long term relationships based on honesty and trust. More and more, the company is able to enter other types of markets as well, where they also quickly become the recognized expert. 2020 has been an excellent year and they expect 2021 to bring more of the same.

How To Get A Hard Money Loan

/10 Comments/in , /by

If you are a small business looking to invest in your company, a land developer or even an architect, you may already be aware of hard money loans. With the inflexibility of banks or other traditional lending institutions, you may have decided that a hard money loan is the best way for you to finance a project without having to sell any property or assets.

How do you go about getting a hard money loan? Much easier than you might think. Here are some tips to go about it the right way.

Find a Good Hard Money Lender

Firstly, it’s important to do your research. The American Association of Private Lenders estimates that there are around 40% more hard money loan providers in the country than there were three years ago! So, although the market has widened, it is not subject to much regulation, so don’t just go to the first one that you come across.

Genuine hard money loan providers will be interested in your project, and they hope to build long term relationships. Some, although thankfully very few, are simply glorified loan sharks. Learn the difference before you get burned. According to Jay Garner, chief executive of Quicken Loans, a lender who has provided hard money loans nationally, companies such as theirs has a mission “to lend to people properly and responsibly, following the guidelines established by the particular agency that we’re selling mortgages to.”

Here are some ways to discern the good from the bad:

  • Reviews – ask around locally, especially with real estate companies, if there’s anyone they have heard of who is well regarded in the area.
  • Has this lender financed loans like the one you are seeking at any time in the past? It’s a red flag if they haven’t.
  • Can you meet the hard money lender, or at least someone that works for them? If not, it’s best to avoid them, as they may just want to get your money.

Applying for a Hard Money Loan

Now you have found a reliable lender you need to present your plan. Even though you don’t need the same amount of documentation as for a normal bank, you still have to come prepared.

  1. Let the hard money loan provider know the value of the property in question. This is one of the most important pieces of information for them, not your credit score. The loan will be given against this. You may need to present budgets for construction or renovation and repairs.
  2. Tell them about the area that the property is in. Have information on how much other homes/businesses went for in the area. They are looking for a good investment. Have your prices of other developments and properties in that area? You can check out zillow.com and realtor.com to do some research.
  3. Show them your financial plan for the property. You can likely get between 60 – 70% of the after-repair value of the property, but you’ll need to come up with the rest. If you have some cash in hand, then it will make the approval even quicker.

If you have a history of making risky, but ultimately good investments, then let them know.

Ensure that you get some legal advice before you sign a contract with a hard money lender. You need to make sure that you are protected within the terms of the agreement. Also, ask your lawyer about any impact that the hard money loan may have on your personal liability.

You should stay in contact with the hard money lender. Give them the information they need to show how much you want the loan. Especially in cases where they only lend to a small number of people, if you miss out, they may have decided to lend to another party.

Things to Note

A hard money loan is not the same as a mortgage or a loan from a traditional lender. The terms are different – usually the approval time is a lot less, and you require less documentation. However, you also will have to pay the loan back much quicker than a traditional loan and at a higher rate of interest. If you think that this works in your favor and that you still stand to benefit from the transaction then it could be a fantastic decision.

Resources:

https://www.bloomberg.com/news/articles/2019-06-12/high-interest-lenders-up-40-even-as-home-flipping-trend-weakens

https://www.nytimes.com/2019/06/11/business/risky-borrowing-shadow-banking.html

Fast Hard Money

Fast Hard Money When Its Needed

/1 Comment/in /by

Do you need a loan right away? Some people find it too hard to get traditional loans from credit unions or banks. Hard money loans might be just what you need when everyone else is denying you money for your new investment idea such as flipping houses. Learn more about how hard money loans can help make your dreams of real estate investment a reality.

Why You Need Fast Money

Are you looking into flipping houses as your new career change? If so, you might need money right away to make this happen. You might be desperate for a money loan as quickly as possible. Other investors buy real estate property off the market in a blink of an eye, especially if they see similar potential. This means you need the money right away to buy it before another buyer grabs the opportunity for themselves.

Most traditional money lenders take too long to grant you the loan. Or you might not be eligible enough to get their approval. They might take as long as 30-45 days to approve you for one. By then, someone else will have used their loan or cash to buy the property you had your eye on.

So, what can you do? You don’t have to give up because hard money loans can be the answer to all your money struggles.

How to Get One When You Need It

Have you ever heard of a fast hard money loan? You can easily search for reputable hard money lenders online. There are a lot of options to choose from, whether it’s companies or individuals who’ll invest their money into your new lucrative business. With it, you can restore those real estate properties, and both of you can gain profit from it.

According to Washington State Department of Financial Institutions, “hard-money loans are based primarily on the value of the property with which they are secured, which the borrower already owns or is acquiring with the loan.” Therefore, you still have to give up some types of property as collateral to get a hard money loan. They won’t hand over a loan with no backup, especially if you have bad credit.

Benefits

Applying for a loan is as simple as filling out an application online. The best part is that you don’t even need to have the required eligibility rules that most traditional lenders expect. This means you that even those with bad credit scores or an unreliable income can get approval from these lenders.

It’s also much faster for hard money lenders to approve you for a loan. You could have it as soon as a few weeks after you submit everything required for the process. However, you need to create a thorough plan when you apply to explain how you will repay them on time. Having an excellent plan will also give you an easier and faster approval for a loan, so that can be an incentive to create an excellent one. Investors will take you more seriously than if your plan was sloppy or confusing.

Pitfalls

What happens when you aren’t able to stay on track with your detailed plan? Other complications can arise with construction or unexpected costs. Or you could fail to remain committed to the project. This can all lead to you not paying them back the money within the time frame you agreed on.

When you don’t pay them back on time, this means you’ll default. As reported by the Washington State Department of Financial Institutions, when the borrower defaults, the moneylender can take control of the property and sell it themselves. This could make you question getting this loan. If you aren’t confident in making a profit or repaying them the amount within a shorter time than traditional investments, it might not be the right loan for you.

Another thing to consider is the high-interest rates and points that the lenders can also add to the total amount you owe them. There are a lot of benefits to this loan, but you can weigh in if it’s right for you.

Are you letting a lack of money keep you from your dream job? Whether it’s flipping houses or another type of investment business, don’t allow money to get in the way. Hard money loans can solve your money troubles. As long as you have a well-thought-out plan for repaying your lender off, then you can do this. You could also gain enough profit to make a full-time career out of it. The choice is yours to consider taking action today and researching the best hard money lenders in your area.

 

 

Hard Money Equity Loans Can Help In A Jam

/in , /by

So, you are in a bind. Maybe money has become temporarily tight. You feel the stress of the unexpected and do not know what to do. Perhaps, you are trying to flip a house that needs a little more work than you originally planned. Now you need the funds to cover you until you can sell the property. Perhaps, you have thought about taking out a traditional type equity loan but, your credit score is not what it used to be. You apply for the loan with hopes that you will be funded.

They start by running your credit report and checking your loan to value. Then, the bank tells you that even though you have enough equity, you do not qualify for any type of traditional home equity loan through their financial institution because your credit is not to their qualifications.

The big banks base most if not all of their decisions around what your credit ranking is. You could have 200% equity and a low score and they may turn you down. You know you can afford the monthly payments once you have gotten out of this bind. But, if the big banks will not lend you the money what other choices do you have?

In another instance, maybe you have the credit score but need the money faster. Hard Money Equity loans are fast funded. This may you can get funded and take care of what you needed the money for.

How Hard Money Equity Loans Can Help

Hard money equity loans may be the right option for your situation. If you have the equity, but your credit score is not enough for the big banks then you can look into Hard Money Equity Loans. Well, what are hard money equity loans? Hard money equity loans are loans you take using the equity on property or properties.

These type of loans are really good when you know you will have a quick return. This way you get the money and pay it back fairly quickly.

Hard Money Equity Loans are done through private parties. With how hard it is to get a traditional loan through your typically big banking establishment, hard money equity loans may become a more sought out type of loan. According to Lending Tree, “One percent of American families applied for personal or family loans in 2017, and 24% of those received at least one denial for their requested loan amount.”

What are the risks of Hard Money Equity Loans

Hard money equity loans often have high-interest rates. These loans have been known to have interest rates ranging in the high 10-15%. This means a higher monthly payment. When taking out the loan make sure it fits your budget. If you are unable to pay it back, there is a lot on stake.

Another thing to keep in mind is that most of these hard money equity loan private lenders will want to be at the first loan position. Rarely will the lender allow their status to be the second on the property. This is their protection in the case that the receiver of the loan defaults on the loan or foreclose.

What are Hard Money Equity Loans good for?

Hard money loans are typically used for the following:

  • Construction; maybe you want to add another room, dig a pool, roof repair and so much more. y take out a hard money loan to put into the property they are going to sell.
  • Land loans; Buying extra land to build on. Or perhaps, to just widen your current land.
  • Quick money; you need the funds right away.
  • Bad credit;  bad credit makes loans harder to obtain.
  • Vacations; You know you have a big vacation coming up and want to make sure you have enough funds to spend and enjoy yourself.
  • Renovating; maybe you are not flipping a property but want to just improve the asthetic of your current home.

The Federal Reserve Board offers some great insight into Home Equity including HELOC (Home Equity Line of Credit).

Whatever your need for the extra funds, a hard money equity loan may be the right choice. The loans are quick, easy and readily available if you have the equity.

References:

https://www.federalreserve.gov/pubs/feds/2007/200720/200720pap.pdf

https://www.lendingtree.com/personal/personal-loans-statistics/

The Hard Money Rehab Loan

/in /by

You’ve applied for a housing loan with your local bank. After waiting for a few business days, you find out that you’ve been denied. You’re not alone in this. Nearly 11 percent of all people were denied a home loan in 2017 alone according to the Customer Financial Protection Bureau. There is an easier way for you to get a home. It’s called the hard money rehab loan.

It will allow you to find a fixer upper, do some repairs, sell it, and pocket the money. You could then take that money and do whatever you want with it. Including putting a down payment on that home you were looking at.  Sound good to you? Keep reading for a complete guide on these types of loans including the requirements, rates, terms, where to find them, and what to do once you’re approved.

Interest Rates

The interest rates for hard money rehab loans can be high. They run anywhere between 7.5-12 percent. The reason why it’s so much higher than traditional mortgages is because of the risk with rehab projects and the short 12 to 36 month loan time. As far as the loan amount that you’ll receive, it’s determined by the lump sum of the purchase price and the credit line for the expected repair cost. This usually adds up to around 75 percent.

Pre-qualification Process

To get started you’ll go through the prequalification process. You’ll need to turn in two or three months’ worth of your personal bank statements. Your credit score will need to be at least 550 which is about average. Lastly, you’ll need to answer a few questions about yourself, the property, and your expected offer amount. Make sure you have your tax ID ready to go too.

Final Approval Steps

Once you’ve been prequalified for the loan, you’ll need to take a few steps to get that final approval. Gather the purchase contract for the property you’re looking at along with a list of past projects that you’ve done and turn them into the loan provider. The lender will send back an application for you to fill out. Keep in mind that there will be an application fee of a few hundred dollars. Give or take.

Your Financing

When you’re approved for financing the lender will go everything with you about interest rates, fees, and a closing date. Once you’ve signed on the dotted line, you’ll be in the clear to get your loan. It’s not very often that the lender will give you all of your rehab money upfront. For example, if you have a 5,000-dollar budget on redoing all the floors in the home, you’ll get half of it before you start the floors and half when they are done.

Titles

When your Rehab loan is in underwriting, your lender will run a title search. The title to the home that you’re flipping will be required by the lender. If you’re not sure what title company to go through, your lender can suggest a few. Once this is done, you’ll receive a commitment letter from your lender letting you know when the loan closing can happen. There will be a closing fee.

Do your Renovations

Finally, you own the property and have your loan. Now you can get to your renovations. These need to be done professionally because according to Daniel Bortz, writer and licensed realtor, “even small cosmetic flaws, like an ugly shade of carpet, can make some home buyers run” but they need to be done quickly. The longer it takes you to sell the property, the higher or carrying costs will be. This means less profit for you.

Now that you’ve finally got the property renovated, you’ll need to start your exit strategy. Most people do this by refinancing into a more permanent loan or selling the property for a short-term investor. Whatever you do, you’ll need to do it quickly to avoid extra holding fees.

Getting Your Hard Money Rehab Loan

If you can’t seem to get approval for your home loan, you can go forward with a hard money rehab loan. It’s a bit more work but at the end of things, you’ll have the money you need for another home. Talk to your lender today.

Sources:

5 Strange Things That Can Stop a Home From Ever Selling>Daniel Bortz – https://www.realtor.com/advice/sell/problems-home-sellers-had-to-change-to-sell/

7 Reasons Your Mortgage Application Was Deniedhttps://www.magnifymoney.com/blog/mortgage/7-reasons-your-mortgage-application-was-denied/

 

 

Getting a Hard Money Loan for Flipping Houses

/in /by

So, you want to get into flipping houses? Perhaps you have some extra cash, or you’re just handy at fixing things up. It’s hard to know where to begin, but one thing you will need is some cash.

Remember that it can take more money to flip a house than buying a house for your own residence, mostly because you’ll have to do more work in order to make it an attractive prospect on the market.

Doing your research on your specific location is important too.

It’s harder to flip homes in certain states, but if you’re in states such as Tennessee, Pennsylvania or New Jersey, you could be making up to 140% return on investment for your hard work.

Plus, some states such as Washington have a Usury Law that sets guidelines for all interest charges, including home loans.

If you don’t have the spare cash to buy but have the technical know-how and the location in your favor, then you’re probably wondering where you can get the extra cash.

Most traditional lenders won’t lend you the money for house flipping, and those who do will likely want to see that you have the experience, for example, a house that you have flipped before. So, what do you do if this is all new and the bank won’t give you a loan?

Get a hard money loan.

But What’s that?

A hard money loan isn’t the same as a traditional loan or mortgage, let’s take you through what this is.

What is a Hard Money Loan?

It’s unclear where the name flipping houses comes from – whether it’s because the terms are “harder,” or the loans are available for “hard to finance” properties – hard money in some form has been around longer than most banks.

With these loans, private investors put up the money for houses that wouldn’t normally be financed by conventional mortgage providers. The collateral, in this case, is your home – a hard asset that they can collect on if things go wrong.

This may seem terrifying if you don’t know what you’re doing, but if it works outright, it can work out massively in your favor.

Know Your Loan Terms

The terms of a hard money loan are quite different from the terms of a normal home loan.

Usually, hard money loans are given for a length of a year or less, and their interest rates will be higher – around 12 percent to 18 percent, plus two to five points. Each point is usually worth 1% of the loan value, so if you borrowed $210,000 and the lender was charging two points, you’d pay $4,200.

With a conventional home loan, you pay these points at closing, but in a hard money loan, you often don’t have to pay points until the house sells.

Remember, a hard money lender is on your side. They want you to succeed so they can build a long-term relationship with you. In a hard money loan, the lender also bases the amount that you can borrow on the after-renovation value of the home, known as the ABV. This gives you greater flexibility when taking out the loan.

If the house price is currently $90,000 but the ABV is much higher, you may be able to take out the loan and cover costs such as lender fees, closing costs and selling with very little out of your own pocket.

This is how people who don’t have bags of extra cash can still manage to flip so well. Flipping can be very profitable, with the average profit in 2017 coming in at $68,143 per home. Even at just one home a year, that’s pretty comfortable living.

Tips for First-time Flipping Houses

When dipping a toe into the pool of real estate investment, it helps to be prepared. If you need to get a hard money loan, you can build the trust of potential investors by following a couple of steps:

  1. Begin networking in real estate.

It’s an industry where connections are vital. Many real estate investors often work on both sides – they also fix up and flip properties and look for investments where other people are doing the same.

New connections can provide a wealth of knowledge and may even end up being your hard money lenders.

You can join real estate associations in your area educate yourself before you decide to jump straight into the unknown and buying a property to fix up.

Your network will serve you in the long run – you’ll find out about areas where properties are selling well, discover hints and tips for staging a house, and may even make some contractor contacts to help you during the fix-up.

  1. Make a Business Plan

You need to do a thorough analysis of the property that you’re going to buy to assess if it has real value as a flip.

No one is suggesting a 30-page booklet here, but if you have laid out the basics, then hard money lenders will be much more inclined to see yours as a bankable investment, and you will be backing yourself by proving with the right information that this is a viable project.

Such details as the following are a good place to start:

  • Full address
  • Sale prices for the other homes in the neighborhood
  • Strategy and timelines for work
  • Scope of work required
  • A professional valuation of the property
  • Estimated value after renovation by a professional appraisal expert
  • Background details on anyone who is working on the project with you

Start Flipping Houses with a Hard Money Loan

If you’ve done your research and found your property, then nothing is stopping you from starting a new career or side hobby of fixing and flipping. And the best way to do this is with a hard money loan.

If you are confident that you can pay it back within the required period, you’ll find that the lack of red tape and the speed of getting the loan are highly conducive to getting your first project started.

Once you start looking, you’ll find hard loan money lenders all around, just be sure that you research them and find the one most suitable for your needs.

Different Ways To Earn With Real Estate

/in , /by

There are many different ways for someone to make money in real estate. It is for this reason that it is such a popular investment area. Lately, it has once again gained in popularity, but there are still a lot of people who don’t really know how to get into it and whether they have the finances to do it. The reality, however, is that it is possible to get into real estate investing without fantastic credit, million dollar assets, and a huge savings account. Rather, you could start a small escrow and get started straight away.

Escrow is a legal concept in which a financial instrument or an asset is held by a third party on behalf of two other parties that are in the process of completing a transaction. The funds or assets are held by the escrow agent until it receives the appropriate instructions or until predetermined contractual obligations have been fulfilled. Money, securities, funds, and other assets can all be held in escrow.

There are a number of different ways to get into real estate investing as well.

1. Long Term Residential Rentals

The majority of people who invest in real estate do so by becoming a landlord. Because people will always need a roof over their head, investing in residential properties is a pretty safe bet. Play your cards right, and you can use this not just as an investment in your future, but even for present cash flow.

Many people invest in rental properties simply because of the cash flow – the extra money that is left after all the bills have been paid. The cash flow can provide ongoing, monthly income that is mostly passive, allowing you to spend your time building a business, traveling or reinvesting in more real estate.

However, getting into residential investments will generally mean that you have to save up for a deposit, unless you can find a reduced property and use the equity in the house as a deposit.

2. Lease Options

A second option is to lease, which is particularly good for those who don’t have a lot of money saved up or whose credit is less than amazing. Specifically, investors will lease to own.

A lease purchase is a written agreement between a landlord and tenant giving the tenant an option to purchase the property at some future point in time.

One of the greatest advantages is that, once you enter a lease to own contract, the existing owner cannot change his or her mind anymore. This also means that, if the housing market changes, you could get a significant discount on the property at the end of your lease term. If that happens, you can immediately sell the property at that point and make an interesting profit.

3. Fix and Flips

The next option is to fix and flip properties, which can be a very lucrative investment. However, don’t let the popularity of reality television shows fool you into thinking that this is easy. To properly fix and flip, you need a contractor and you must inspect each property. You then have to go through the five stages of fixing and flipping.

These steps are choosing the right neighborhood, checking housing market statistics, verifying the condition of the fix and flip properties, forecasting the overall budget, and calculating the potential profit.

Being successful in fixing and flipping means being very good at math. You have to calculate how much you will spend on the property and how much you will then need to sell it for in order to make a profit. The best investment properties are those that are selling for little money and that don’t require a lot of fixing, but they are also the hardest to find.

4. Contract Flipping Options

If you do not feel comfortable taking full responsibility for a fix and flip, you can venture into contract flipping instead.

Flipping a real estate contract involves transferring your interest in the contract (also known as assigning) to a third party.

In very simple terms, it means that you find a seller who is desperate to sell and put them in touch with a buyer who wants to make a purchase today. You then charge a fee for bringing these two together. Essentially, you won’t invest in actual real estate assets, but rather in contracts between those who want to own real assets.

5. Short Sales

The short sale option is quite tricky and difficult, but the potential for return is tremendous. In a short sale, someone who has defaulted on his or her mortgage hasn’t quite gone into foreclosure. Rather, the bank agrees that, instead of pursuing foreclosure, they will allow the house to be sold for less than what is still owed, which is generally much less than the actual value of the property. You need to have very strong negotiating skills to achieve this.

This type of sale is difficult and tricky, but it can bring in a huge return. This can happen when homeowners are behind on their mortgage, but the mortgage hasn’t actually gone into foreclosure yet. In order for a short sale to happen, everyone needs to agree because the amount will be less than what is still owed on the mortgage. You then negotiate a fair price that is acceptable to all parties.

6. Hard Money Lending

There are two ways to get into hard money lending: borrow money to purchase real estate or lend money to those wanting to get into real estate. Both options have their pros and cons, with the biggest disadvantage being the riskiness of the lending environment and the biggest advantage being the speed with which these loans are completed. Hard money lending is needed for loans on properties that banks will not touch, which include short sales, foreclosures, and fix and flip properties.

7. Commercial Real Estate

Getting into commercial real estate usually takes a great deal of money, not in the least because of the size of the properties, which means they are expensive. Not just that, they must often be fully repaired and renovated, after which they can either be rented or leased out, or they can be sold. Commercial real estate is a popular investment because there is a tremendous demand for it, particularly in certain up and coming areas. However, it is also incredibly risky due to the high expense involved in it.