Learn To Be A Fix & Flip Investor

Friday, February 24, 2017

Hard Money Lenders—Dallas Real Estate

By now, you have probably heard a lot about the west coast hard money lenders. Dallas, however, also has some reputable lenders that can help turn your real estate ventures into a truly successful investment.

The wonderful world of real estate investing can be exciting and extremely lucrative, especially with the right hard money lenders. Dallas lenders, in particular, offer a real chance at making a real profit while still being able to meet the terms of your loan. For instance, most hard money financing is used to fix and flip houses or rather it is the bulk of business for hard money lenders. Dallas lenders, especially come across borrowers as well as investors that fix and flip houses.

Why this matters is because this often is the most effective way to make a real profit when it comes to real estate investing, especially if you are starting out. Thus, let us say you are looking to get into the business of fixing and flipping, you, of course, would need short term financing to get started. This is where your lenders of hard money would come into play.

As briefly suggested, Dallas is home to a sizable number of this particular type of lender. A quick search will often lead you to a list of the top 75 lenders who offer hard money financing in Texas. Clearly, it almost goes without saying that you should select a few local lenders. Thus, if you are looking to fix and flip in the Dallas area, you should start there or if you have a local lender where you do business you can also start there. Once you have selected a few lenders for your hard money financing, your next step is to try and find the lender that allows you to get ahead and maintain.

How to Make Money
Obviously, the main goal with any real estate investment is to make money. But, the trick with fixing and flipping a house is to figure out how to make money and pay off your loan at the same time. This delicate balancing act has more to do with the lender you choose to work with than any other factor. Therefore, you want to make sure that you are working with a local lender that allows you plan accordingly and has been open with you about your loan type as well as loan terms. The best way to ensure that you find this kind of lender for your hard money financing is to do your research or due diligence. In doing so, you will have created the necessary foundation for staying successful.

Staying Successful
In the end, making a profit and meeting terms of your loan can be a reality if you stay focused/plan ahead i.e. make it a point to stay informed as well as organized. Ultimately, if you are in the business of fixing and flipping houses, you know that time is of the essence but that does not mean you rush into things without knowing what you have signed up for.

Happy senior business man making his notes at work

About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Free Report The 8 Things You Must Do To Be A Successful Home Flipper

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Hard Money Loans –California Homes and First-Time Buyers

If you are like many first time buyers, you are probably looking for that dream home with not so great credit, which can definitely be a stumbling block. Of course, if you are a savvy first-time buyer you may be wondering about the world of hard money loans, California especially.

When setting out to buy a new home or rather your first you may feel lost when it comes to the lending process, specifically when researching hard money loans. California lenders of hard money often work with a standard borrower base, which can also be misleading. For instance, if you choose to fix and flip a house, start a business, have a construction project or are looking own a multi-family property then hard money is often the solution.

But, you are a first-time home buyer looking for a place to live and settle down in, thus, you may be thinking that you can’t benefit from hard money loans. California lender, however, will tell you otherwise. The truth is you can, as a first-time home buyer, benefit from hard money financing. You do, however, need to know how hard money works in your particular situation.

For instance, hard money financing is great for short time financing and you can typically expect about somewhere around 65% of the value of the home you are trying to purchase. So what does that mean for you? Well, if you have turned to hard money financing because of not-so-stellar credit then hard money is an opportunity for you to improve your credit and still get your dream home. Think about it this way, hard money financing generally needs to be paid back within six months to a year, therefore, you have six months to a year to raise your credit score and find long-term financing.

Your Win-Win Solution
Sure, you may be wondering how hard money financing under these limitations is truly a win-win solution. Well, the reality is hard money financing is most borrowers last resort for a variety of pertinent reasons—some good and some bad. Thus, if you absolutely need that home right now and have a solid plan of how to improve your credit score while finding long-term financing then what is stopping you. Remember, real estate professionals use hard money financing as a stepping stone all the time so you can too.

Small Piece of Advice
Nevertheless, before you go looking for lenders that offer hard money financing, it is important to remember that nothing comes easy or in this case cheap. Your hard money financing is short-term financing for a reason—there are fees, interest rates and more that making finding long-term financing an absolute must. In other words, you may have literally got your foot in the door, but you need to make sure that you move quickly in order to keep your cost down. Lastly, you will need to have that remaining 35% for purchasing your home. Therefore, you need to think long and hard about how quickly you need to move on purchasing that dream home.

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Thursday, February 23, 2017

Hard Money Lenders—California Underwriting Guidelines

You may be asking yourself what are the benefits to working with hard money lenders? California underwriting guidelines, in short, is one of the main benefits to working with lenders who offer hard money financing.

The underwriting process for any lender is a vital part of securing financing, which even more so true for hard money lenders. California lenders of hard money, in fact, have been so focused on what borrowers have to offer that for a quite some time the underwriting portion of the program was either overlooked or at best sub par.

The reason that the underwriting process has been essentially overlooked in most cases is because the potential value of collateral often overshadowed a borrower’s ability to meet repayment terms. Of course, this is not necessarily the borrower’s fault nor is it exclusively the lender’s lack of foresight rather it is the reality of the real estate market. Hard money financing is often thought of as a borrower’s, investor’s or builder’s saving grace for hard to finance projects and ventures.

Therefore, when both borrower and lender see the light at the end of the tunnel, some important details tend to be overlooked. So, at this point, you may be wondering, what exactly does this all mean when it comes to hard money lenders? California lenders, much like other lenders, have underwriting guidelines that need to be met regardless of the underlying situation. Thus, lenders of hard money also need to meet these regulations or guidelines. The good news is that there is a viable solution to this problem that ensures that everyone’s best interests are kept in mind.

How to Meet Underwriting Guidelines
The clear and obvious solution to this issue that lenders of hard money financing appear to have is simply put—outsourcing. Much like any other business or industry, outsourcing vital components of a larger process can ensure quality and so much more. In this particular instance, outsourcing can be used for a variety of underwriting components. For example, a lender of hard money can choose to outsource the loan package creation, document retrieval, document review, ordering appraisals, appraisal review, closing coordination, final document creation and so on. With that being said, it is still important to highlight the fact that there are some guidelines that simply should not be outsourced such the building of a lender –borrower relationships. For instance, both you as the borrower and your lender need to have a clear sense of one another; this means understanding each other’s character, business or credit history, etc. It is also important for the lender to have a firsthand understanding of your stake in the deal.

Going Beyond Regulations
Lastly, your lender should also make it a point to personally ensure that your collateral is adequate and easy to sell, all the while making sure that you have the ability to meet your repayment terms. If by chance, you feel as though your lender is more focused on your collateral, you may want to take a step back and ask if this is the right lender for you. Ultimately, you want a lender that can help you securing hard money financing and provide you will achievable loan terms as well as a seamless underwriting process.

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Hard Money Loans—California Advantages and Disadvantages

Doing your research on obtaining financing is a slow moving process, especially when researching hard money loans. California based lenders, however, are not afraid of you doing your due diligence thus they have clearly laid out the pros and cons of securing hard money financing.

If you are not new to the world of hard money financing, you more than likely feel like you are well versed in hard money loans. California lenders of hard money, however, are not your everyday lenders. In other words, each lender who offers hard money financing offers something a little bit different than the next lender. Consequently, you may not know everything there is to know about hard money loans. California base lenders, moreover, tend to focus on certain niches; therefore, you may only have knowledge of one particular niche.

With that being said, you may want to become clear on at least the top three pros and cons of using hard money. It is important to know the top three advantages and disadvantages of hard money because, as briefly suggested, your niche may be different then the next borrower’s or your lender may have slightly different requirements or conditions than your previous lender. The point here is that you will always have to do your research when approaching your next business venture or attempting to secure financing.

Therefore, you need to understand or rather be well-versed on the basics of what hard money financing can do and what it cannot do. Of course, the best way to go about being well-versed in hard money is to be clear on why borrowers, investors, and builders find a real benefit in using this particular kind of financing as well as why others are wary of using hard money for their venture.

Understanding those Universal Benefits
The top three advantages then include the ability to fund your project or commercial venture quickly with little to no waiting period for approval. If you are lucky enough to have all your ducks in a row, approval can happen same day once your lender looks at the basic of the potential property, available equity or down payment, your experience in the real estate market, your end game or exit strategy and of course what cash reserve you have available. Besides these basics, top reason number two is the fact that there aren’t really too many other requirements or at least there are not as many requirements as you would typically see with standard financing. Lastly, the third reason is the ability to fund that “unfundable project”.

Risk less by Staying Informed
More than likely you are aware of the top three disadvantages, but nevertheless, they include higher interest rate, short term use, as well as equity or a sizable down payment. The reality is that if you know exactly what you will use your hard money financing for and how long you will need it for, it is very feasible to risk less with hard money financing. Thus, no matter your niche and no matter your lender, you can stay on top of things and turn a profit if you do your research beforehand and stay informed during the entire process.

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California Hard Money Lenders and Spec Construction Loans

California hard money lenders seem to be able to help borrowers and investors do the impossible, but what about for builders? If you have been in the business for a while, you know that most lenders do not rush to approve spec construction loans, but can the same be said for California hard money lenders?

The good news is that California hard money lenders are known for providing a helping hand when borrowers need it the most. Of course, this is not to say that every lender in California who offers hard money financing is willing to take a chance on Spec construction. If you do not know what Spec Construction is, it is basically construction that has no guarantee of making a profit once sold. More specifically, Spec loans do not have the requirement of having the debt ratios calculated.

Generally, most construction does not provide a clear indication of a profit, but with Spec construction, the end result is very much unclear. With that being said, you can see how any kind of lender or traditional lending institution would have some reservations about approving such a loan. What’s more, banks typically decline these particular loans without a second. But, as briefly suggested, lenders who work exclusively with hard money financing tend to have a different approach to Spec construction loans.

For instance, you can find hard money Spec construction loans surprisingly easy with competitive terms. The reasons that hard money lenders are willing to go out on a limb where other lenders won’t is because these particular lenders understand the nature of the construction business. In other words, sometimes you secure a Spec construction loan with no real profit margin insight and to your delight, you make more than enough profit. Other times, a builder or investor may barely break even. But, with incremental funding options, that builder or investor will more than likely be able to meet their terms and move on to the next venture that will hopefully allow them to recoup and profit.

Benefits of Hard Money Spec Construction Loans
Besides being able to secure financing for such an endeavor, the real benefit of hard money spec construction loans is that your lender is willing to work with you when it comes to your loan terms. For example, many lenders that offer this particular kind of financing offer no prepayment penalties, no seasoning of funds for closing, 24-month terms and much more. It is also important to note these lenders only care about the loan being paid off, not how you accomplish it. Thus, you have even more flexible than you would normally see with non-traditional lending institution or banks.

Things to Consider
Ultimately, you can see how hard money lenders can be a true lifeline in a variety of ways. Nevertheless, it helps to keep things in perspective i.e. a strong project means better funding, even bank funding if you play your cards right. Therefore, you should really take a look at your future Spec construction project and make an educated guess as to the outcome.

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Start-Ups and Business Purpose Loans

Welcome to the world of small businesses and start-ups. If you are exploring your financing options for your newly formed company, make sure you explore all your options including business purpose loans.

There is never a more exciting time than when you get your business dream up and running. In many ways, you feel accomplished and you are more than ready to take on everything that comes next including securing funding or financing. If you are like most newly formed companies, you are probably chomping at the bit to get to the next level or step. But, before you end up with just any loan, you should take a second to explore all your lending options, especially since this loan can ultimately make or break your company.

If you have been doing some research up to this point, you are probably aware that as a start-up you have several options such as funding your start-up by using your retirement account, looking at peer-to-peer lending, relying on credit cards to see your business through the initial stages or applying for business purpose loans. Clearly, all of these options can help you achieve your business goals. But, it can be difficult to determine which option is truly the best one for your company.

More than likely, you have some experience with borrowing against your retirement account or relying on credit cards to do some of the financial heavy lifting. But, peer-to-peer lending, on the other hand, may be a new concept and that’s fine. Most peer-to-peer options require stellar credit, short-term needs and typically only work with more established businesses rather than start-ups. So needless to say, if you are just starting out and don’t want to max out your credit cards or potentially ruin your retirement fund then you might want to focus on business purpose loans.

Business Purpose—the Real Deal

If you aren’t quite sure what these particular kinds of loans are then you came to the right place. Loans that are designated for business purposes, in essence, involve utilizing your home’s equity. In other words, these specific loans allow you to borrow against your home for business purposes i.e. getting your start-up off the ground. The benefit to choosing this particular option is that often you can negotiate a low-interest rate which is much lower than the rates you would have if you used your credit cards or were able to qualify for short-term financing. However, it is still important to note that the one clear disadvantage is the risk of losing your home, at least in certain states.

Is this your win-win solution?

So now that you know a little more about your lending options as a start-up, obviously, it is time to start weighing the pros and cons of each option. Ultimately, you may decide to rely on your own funding (retirement account or credit cards) until you are a more established business if you want to play it semi-safe. But, remember no option is without risk and obviously securing a loan would provide you access to a larger amount financing.

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