How to create wealth with a portfolio loan

Categories:

How to create wealth with a portfolio loan

Many real estate investors wonder how they can create wealth with a portfolio loan. Investors enter this community with the goal of creating generational wealth. This can be achieved by creating a portfolio of homes, as opposed to just acquiring just a few properties. What do you need to do financially in order to successfully create a portfolio? Let’s take a closer look at how you can create wealth with a portfolio loan! 

Changes in lending options. 

Investors who expand from a few properties to a portfolio of properties will need to open the door to other loan products. Those who invest in single family homes or have 1 to 2 units are using traditional loans, conforming loans, bank loans, or single DSCR loans. If you are transitioning to a portfolio loan it is important to take everything into consideration before diving in. 

Flexibility of a commercial loan.

A commercial loan can provide the flexibility you need to create generational wealth. One of the biggest benefits is that it provides the opportunity for you to use another person’s credit score as long as they are under your LLC. In doing so, a higher score can not only keep the transaction going, but it can open more doors. Another thing to keep in mind is that commercial loans are primarily based on the cash flow and the property value. This allows you to lock them in when rates are good so that you can use the slots to build up some additional properties on the side.

Create generational wealth.

By using a portfolio loan you are creating a bigger asset. More importantly commercial loans, unlike traditional loans, will not show up on your credit. Another thing to keep in mind is that banks often restrict your growth either by the number of properties or the loan amount. Those who are aggressive and use a portfolio loan have the flexibility they need to create the generational wealth that they want.

Is a portfolio loan right for you?

Real estate investors who have 20 properties or more need to start searching for other lending options in order to create the wealth they need to suceed. A portfolio loan is an excellent way to put all of your properties under one blanket loan. Is this the right loan for you? Contact us today to find out more about portfolio loans and other ways you can create generational wealth. 

Watch our most recent video to find out How to create wealth with a portfolio loan.

by

Investor Code Red: Doing Too Many Projects at Once

Categories:

Investor Code Red: Doing Too Many Projects at Once

Today we are going to discuss how doing too many projects at once can create a roadblock in your success. For example, we just worked with a guy who is a very successful business owner whojust got into flipping. He found 3 great properties and bought them all with our help. After finishing his first property, he gave us a call and said that he would never do that again. Unfortunately this is not uncommon in real estate investing. By biting off more than you can chew, you can quickly become overwhelmed. Don’t let this happen to you! 

Having too many projects can cost you more. 

By taking on too many projects at once, you can slow down the process entirely. From multiple property costs to paying contractors, investors can get too big too fast. It is important to “err on the side of caution” to prevent the “finance crunch” that often occurs. So, slow down, be realistic, and limit your losses.

Don’t focus on the unicorns.  

While there are some people who are unicorns and able to juggle multiple properties at once, they do not make up the majority of investors. The rest of us have to play by the rules and work hard in order to make money on our real estate investments. It is important to be aware of your own strengths and weaknesses throughout the process so that you can set yourself up for success. 

Limit your losses

You don’t want to get into your first property and lose $40K! In order to move onto the next property, it is important that you make money on your investments. We have seen so many investors who have hit a wall because they didn’t understand escrow, the need for cash flow, or they are doing too many things. Prevent the stress and move at a pace that’s right for you.

We are here to help!

Remember, what you can do in a couple years is a lot more than what you can do in a few months. Take the time to do things correctly in order to create the generational wealth you want. This is only one of the 5 major roadblocks that can prevent you from being successful in real estate investing. Where do you start? We can help you get on the path to success! Contact us today to find out more.

 

Watch our most recent video to find out more about Investor Code Red: Doing Too Many Projects at Once.

by

Real Estate Investing Tips: Getting 100% Financing

Categories:

Real Estate Investing Tips: Getting 100% Financing

Today we are going to focus on one of the biggest questions real estate investors have, which is how they can get 100% financing. Here at The Cash Flow Company, we talk to an average of 20 to 25 investors a day. Many of them are facing a number of hurdles that are not only impacting them, but their investments as well. By looking at the patterns that we have seen over the years, it allows us to better meet the needs of our clients. How can you get 100% financing on your next investment property? Let’s take a closer look.

How do I get 100% financing?

Everyone wants to get into real estate investing with 100% financing. However, many of them wonder how can they get the money they need for their rental property or fix and flip. While there are some lenders who offer 100% financing, they will only do so if you have already done 1 or 2 deals. To put it another way, investors who have not had the experience yet, need other lending options immediately. Many traditional lenders will only lend 80% to 90%. Become a real Real Estate Investor by building your confidence to go ask people for the money you need for your investments. By finding good deals and demonstrating your confidence, the sky is the limit to your success.

First, HELOCS:

HELOC stands for home equity line of credit. A HELOC allows you to take money out of your property or a rental property. You can then use these funds to bridge the lending gap for your next investment.

Second, Real peoples money:

Real people are those within the community who are in search of better returns on their funds. There are a ton of people out there who have $20K to $100K to invest and are looking for better returns. 

Third, Start using creative financing today:

Creative financing includes business credit cards, which can be used to fund the rehab, staging, and even a Vrbo. However, it is important to keep in mind that the credit card needs to be a business credit card at 0%, otherwise it will not be beneficial to you or your investment needs. 

Fourth, What is stacking and how can it help you reach your financing needs?

The lending journey begins with your primary mortgage company who will give you 80% to 90% financing. As a result, investors must begin the search for additional financing options in order to get up to 100% financing. Gap funding options can actually include HELOCS, family friends, real peoples money, as well as establishing a partnership. 

Are you on the right path? 

Contact us today if you have any questions on how to get started in real estate investing! Do you have a property in mind? Send us the numbers and we will see if it is a good investment opportunity for you. Nowadays funding is a critical piece to real estate investors’ success, it is important that you know your numbers ahead of time to make things easier, cheaper, and faster. 

Watch our most recent video  to learn more Real Estate Investing Tips: Getting 100% Financing.

by

Real Estate Investing: Popular Questions Asked and Answered

Categories:

2024 Real Estate Investing: Most Popular Questions Asked and Answered

Today we will be answering a few popular questions in real estate investing. On average, we talk to 20 to 25 investors a day. Many of them are facing a number of hurdles that are not only impacting them, but their investments as well. By looking at the patterns that we have seen over the years, it allows us to better meet the needs of our clients. What are the hurdles and how can you avoid them? Let’s take a closer look.

#1: How do I get 100% financing?

Everyone wants to get into real estate investing with 100% financing. How can they get the money they need for their rental property or fix and flip? While there are some lenders who offer 100% financing, they will only do so if you have already done 1 or 2 deals. For those who have not, it is important that they look into other options. If you are looking for 100% financing on a property it is important that you open up to other financing options other than traditional loans. Many traditional lenders will only lend 80% to 90%. Become a real Real Estate Investor by building your confidence to go ask people for the money you need for your investments. By finding good deals and demonstrating your confidence, the sky is the limit to your success.

HELOCS:

HELOC stands for home equity line of credit. A HELOC allows you to take money out of your property or a rental property. You can then use these funds to bridge the lending gap for your next investment.

Real peoples money:

Real people are those within the community who are in search of better returns on their funds. There are a ton of people out there who have $20K to $100K to invest and are looking for better returns. 

Start using creative financing:

Creative financing includes credit cards, which can be used to fund the rehab, staging, and even a Vrbo. However, it is important to keep in mind that the credit card needs to be a business credit card at 0% in order to be beneficial to you and your investment needs. 

What is stacking and how can it help you reach your financing needs?

The lending journey begins with your primary mortgage company who will give you 80% to 90% financing. This creates a funding gap that leaves you searching for additional financing options in order to get up to 100% financing. Gap funding options can include HELOCS, family friends, real peoples money, and even establishing a partnership. 

#2: Be prepared. 

Inflation is causing everything to become tighter and as a result it is harder to find financing for your investments. In order to be successful, investors need to be prepared before they go out and look for properties. This will give them a better chance of being approved for the lending that they need. Here at The Cash Flow Company we are searching  for deals where we can lend people money, get it back, and lend it back out again. What do you need to do to be prepared?

Valuation:

It is imperative that you have all of your numbers in line before talking to lenders. Keep in mind that wholesalers often stretch the value of the property. That is why it is important that you look at the numbers yourself to prevent frustration. When you are coming to lenders make sure that you know your values, know how appraisers look at properties, and make sure that your numbers are in line. These numbers include purchase, rehab, and rent. At the end of the day your goal is to create income and wealth. 

For example:

Someone reached out who is buying a single family house and he is going to make it into a two unit property. This single family property will sell for $200K. However, his belief was that the property will be worth $400K because he is splitting it into two properties. Unfortunately, that is not how the market works. 

#3: The future of real estate investing.

Many people wonder what the future of real estate investing is. How can they make money on buying rentals? Making money on rental properties right now is becoming a struggle because properties are $600K to $800K. While this is a concern for many investors, there are some options available to make investments more profitable. 

What is a padsplit?

A padsplit is when a property is divided into multiple single units. For example, a 3 bedroom could be divided into a 6 or 8 bedroom property. Just to clarify, each of the bedrooms would have a bathroom and all they would share is the kitchen space. Each unit could bring in a rental amount of $1,000, which could potentially total $6,000 to $8,000 per month depending on how many units you have. With an overall monthly rent of $3,500, the investor would have the cash flow they need to be successful. This method provides the flexibility and affordability that many people are looking for.

#4: Credit score obstacles.

Your credit score can often hinder your success in real estate investing. Over half of our calls are from people who have a score that is too low for them to get what they want. For example, we have a guy from Texas who is trying to get his property refinanced.  While the property is great and he has an amazing tenant, his credit score is too low for him to get the rate he needs to cash flow. By working on your credit scores and setting things up right, you can achieve the credit score you need to get what you want. 

Business credit cards.

Getting business credit cards is the #1 thing that will help you achieve your goals in real estate investing! Those who are able to get business charges off of their personal credit cards will in turn open up a lot of funding options. Struggles with credit scores is often the cause of people getting out of real estate investing. Don’t let this happen to you! 

Increasing your credit score quickly.

We have a lot of different options available to investors that will help them get their credit score back on track in a matter of weeks!

Usage loan

A usage loan is used to pay down credit cards by using a private loan. As a result of paying down the credit cards, it raises your credit score. By increasing your credit score it will then allow you to refinance and buy your next investment property.

Business credit cards

We can not stress enough how important business credit cards are! By setting up business credit cards instead of personal credit cards it will help to increase your funding options. The majority of business credit cards do not report your usage. Therefore they are not hurting your DTI or your credit score. Make the change today and see the effects it can have on your credit score! 

#5: Small steps vs Giant leaps

Oftentimes real estate investors make the process of getting started into such a big deal that their brain shuts off. As opposed to looking at one property a day, many attend a class that says that they need to purchase their first property within the first 30 days. This method is not always realistic for most people. Instead, you need to focus on the steps that stretch you a little bit as opposed to shutting you down. Consistency is the tortoise in real estate investing. By looking at one property a day and talking to one contractor a day, you will be better prepared to purchase your first investment property. Remember, it’s better to have 2 properties that are successful than to have 5 that are struggling.

Are you on the right path? 

Would you like to find out more about the popular questions in real estate investing? Contact us today! Do you have a property in mind? Send us the numbers and we will see if it is a good investment opportunity for you. Since funding is such a critical piece in real estate investors’ success, it is important that you know your numbers ahead of time to make things easier, cheaper, and faster. Also remember that by building your team now, you can set yourself up for the generational wealth that you want. 

Watch our most recent video 2024 Real Estate Investing: Most Popular Questions Asked and Answered to find out more.

by

How Credit Affects Your Entire investment

Categories:

How Credit Affects Your Entire investment

Today we are going to explore how credit affects your entire investment. Here at The Cash Flow Company we have a magical solution that can easily solve this problem, which is the 911 usage loan! Our goal is to help people raise their score immediately so that they can get the loan they need. On average we see 7 out of 10 people struggle with a usage problem. As a result of the immense strain on their credit, investors are struggling with getting the funding they need. Don’t let your credit affect your entire investment. Let’s take a closer look!

Credit score struggles.

The percentage that is used on your credit card is referred to as the credit utilization rate. If you are above 30% usage on your credit cards, your  score  will begin to decrease. Investors who come in with a 640 or a 660 credit score often need to increase their score to 700. In doing so, they will be able to get either the LTV or rate they need to create cash flow. Nowadays rates are still in the 7’s or 8’s. That is why it is so important to get the best rate you can in order to maximize both your LTV and cash flow. 

Where do you get started?

The first thing that you need to do is run a simulation. We ask investors to do a simulation on MyFico, Credit Karma, or Experian to see how paying off a credit card will impact their credit score. We have seen people max out their credit cards at $3K, while others are maxed out at $175K. These maxed out credit cards are not only impacting their credit scores, but their DTI as well. To clarify, DTI stands for the debt to income ratio. 

For example: A client in Texas just went through a simulation and his credit score went up 100 points. He went from 653 to over 753 by simply paying off the credit cards that he had maxed out. 

High credit score means higher cash flow.

In the following example we are going to look at how credit scores can drastically impact your ability to qualify for a DSCR loan. Not only will a lower credit score increase your interest rate, but it will decrease the cash flow for your property as well. Remember, hurdle number one is making sure that both you and your property qualify for the loan. By taking 2 to 4 weeks to get the 911 usage loan, you will be able to not only buy the property, but you can then refinance it later on. This method also provides the opportunity for you to move over any remaining balances over to a business credit card.

Loan Type Property LTV of 80% Net Rent
DSCR $312K $250K $1,800
Credit Score Interest Rate Monthly Payment Can it Qualify?
680 8.8% $1,976 No
760 7.45% $1,740 Yes

Learn this magic trick today! 

Business credit cards are an excellent way to separate business expenses from your personal accounts. These credit cards are not only easy to get, but they also work the same as a personal credit card. By moving expenses over to business credit cards, it wipes the charges off of your personal credit completely. As a result, your credit score, cash flow, and ability to qualify will all increase. 

We are here to help!

Don’t let credit affect your entire investment! Here at The Cash Flow Company we are here to help you get on the right path. Contact us today to find out more about usage loans and how they can set you up for long term financing. To clarify, the usage loan is a private loan that does not show up on your credit for 60 to 90 days and won’t affect your DTI. Now is the time to set yourself up for success! 

Watch our most recent video to find out more about How Credit Affects Your Entire investment.

by

The pros and cons of a portfolio loan

Categories:

The pros and cons of a portfolio loan

Today we are going to discuss the pros and cons of a portfolio loan. Nowadays real estate investors enter into this community with the goal of creating generational wealth. Generational wealth can often be achieved by creating a portfolio of homes, as opposed to just acquiring just a few properties. Let’s take a closer look to see if a portfolio loan will be the right product for you to create generational wealth.

Changes in lending options. 

Investors who expand from a few properties to a portfolio of properties will need to open the door to other loan products. Those who invest in single family homes or have 1 to 2 units are using traditional loans, conforming loans, bank loans, or single DSCR loans. If you are transitioning to a portfolio loan it is important to take everything into consideration before diving in. 

Is a portfolio loan right for you?

Pros to using a portfolio loan: Work smarter not harder! 

  1. All mixed properties are under one blanket
  2. One monthly payment
  3. Some have nonrecourse (Nonrecourse does not require a personal guarantee)
  4. Commercial based
  5. The loan is bases on the income from the properties
  6. Don’t have to pay for underwriting on each property
  7. Typically there is a better rate on a larger loan
  8. Can clear up some slots for you.
  9. Can use another person’s credit score if they are under your LLC 

Cons to using a portfolio loan:

  1. Lower LTV
  2. Individual appraisals are needed for each property
  3. Pulling a property out is a hurdle (You won’t be able to sell properties to generate money)

Flexibility of a commercial loan.

A portfolio loan can provide the flexibility you need to create generational wealth. One of the biggest benefits is that it provides the opportunity for you to use another person’s credit score as long as they are under your LLC. In doing so, a higher score can not only keep the transaction going, but it can open more doors. Another thing to keep in mind is that commercial loans are primarily based on the cash flow and the property value. This allows you to lock them in when rates are good so that you can use the slots to build up some additional properties on the side.

Create generational wealth.

By using a portfolio loan you are creating a bigger asset. More importantly commercial loans, unlike traditional loans, will not show up on your credit. Another thing to keep in mind is that banks often restrict your growth either by the number of properties or the loan amount. Those who are aggressive and use a portfolio loan will not only have the flexibility they need to be sucessful, but they will also create the generational wealth they want.

Is a portfolio loan right for you?

Real estate investors who have 20 properties or more need to start searching for other lending options. A portfolio loan is an excellent way to put all of your properties under one blanket loan. Is this the right loan for you? Contact us today to find out more about portfolio loans and other ways you can create generational wealth. 

Watch our most recent video to find out The pros and cons of a portfolio loan.

by

5 Simple Steps to Starting a Successful Business

Categories:

5 Simple Steps to Starting a Successful Business

Many real estate investors and contractors wonder how they can get everything done that they need to. From setting up the EIN to naming the business, it can all be daunting. Today we are going to discuss the 5 steps to starting a successful business in order to get you on the right path quickly and easily. 

What are the 5 simple steps to starting a successful business?

#1: Make sure that your personal credit is set up for success. This will look differently for each person, so be sure to focus on the areas that need improvement.

#2: Define your business by deciding what the business is and how many businesses you want.

#3:  Decide the name for your business. It does help to have a parent company with no specified direction. Not only will it simplify things for you, but more importantly it will smooth things out for the banks for future financing needs. 

#4: Create an EIN by registering the company with the secretary of state.Setting this up correctly will ensure that you are seen as a business not only to lenders, but to clients as well. 

#5: Define your goals. Be very clear with your goals! Where do you want to go with your business, how many properties do you need, do you need to buy machinery? All of these goals need to be established first and foremost when starting your business. 

You are not alone!

There are a lot of companies out there who can help you through the process of setting things up correctly. They can help you find the right bank for your needs, register for an EIN, and even complete a DBA to change the name that you are working under. Contact us today to find out what you need to do to get started and ways you can set yourself up for success.

Establishing your goals are the key to success! 

Even though we have goals as #5 on our list, it really should be first and foremost in all of your business decisions. Those who don’t have their goals established will only focus on completing a checklist, which will result in more work. Maybe your goal is to buy five more properties this year. Another person’s goal might be to scale their business so that they can bring on two more employees. No matter what the goal is, make sure that you achieve it using your company name. In doing so, you will be able to work backwards and determine the steps you need to take in order to complete your goal.

Fitting into the lending box.

Those who establish their goals in the beginning are able to create a roadmap to success. As a result they can then begin looking for banks, as well as vendors, who have the products they need to succeed. Just to clarify, vendors can include home depot, lowes, and the gas company. These are just a few of the companies that can help you build business credit if you do it correctly. It is important that you get into the charge accounts as well. This will help you to not only grow your business, but build  your business credit score as well.

Build the migration from personal credit to business credit.

Finding the right vendors can help you begin the transition from personal credit to business credit. By having business credit you will be able to open more doors that will allow you to reach your business goals. Do you need a business credit card? Contact us today to find out more! 

Play the game to win it.

Real estate investing is all about leverage. In order to be successful in this community, you need other people’s money, loans, and debt. This will allow you to buy properties, as well as fix up properties. Investors and contractors who take the time to work on their credit will be able to open more doors than they would have otherwise. It is important to remember that times have changed and will continue to do so. Those who can set things up correctly, take the steps to get there, and focus on the quickest steps will have a greater chance of winning the real estate game!

Watch our most recent video to find out more about the 5 Simple Steps to Starting a Successful Business.

Are you starting a business and not sure where to begin? Contact us today to get on the right path! 

by

Create Generational Wealth with a Portfolio Loan

Categories:

Create Generational Wealth with a Portfolio Loan

Real estate investors enter into this community with the goal of creating generational wealth. Generational wealth can be achieved by creating a portfolio of homes, as opposed to just acquiring just a few properties. Many investors wonder what needs to happen financially in order to successfully create a portfolio. Success begins by finding the right portfolio loan for your needs. Let’s take a closer look at how you can create generational wealth today by using a portfolio loan!

Changes in lending options. 

Investors who expand from a few properties to a portfolio of properties will need to open the door to other loan products. Those who invest in single family homes or have 1 to 2 units are using traditional loans, conforming loans, bank loans, or single DSCR loans. If you are transitioning to a portfolio loan it is important to take everything into consideration before diving in. 

Conforming loans:

Conforming loans limit investors to 10 properties and have a lot of qualifications that you need to meet. 

Bank loans:

Many people use bank loans when they have a portfolio, however, banks normally write their products for 5, 7, or 10 years. This means that every 5, 7, or 10 years investors have to refinance. Some clients are having to refinance properties every year depending on how their cycle is set up.

Portfolio loan:

A portfolio loan is used for 5 to 100 properties and covers all of the properties in one loan. This umbrella loan can not only help investors who have mixed properties, but it also prevents you from needing multiple loans. Another benefit is that a portfolio loan will provide you the support you need as you expand the number of doors per unit. 

Is a portfolio loan right for you?

Benefits to a portfolio loan:Work smarter not harder! 

  1. All mixed properties are under one blanket
  2. One monthly payment
  3. Some have nonrecourse (Nonrecourse does not require a personal guarantee)
  4. Commercial based
  5. The loan is bases on the income from the properties
  6. Don’t have to pay for underwriting on each property
  7. Typically there is a better rate on a larger loan
  8. Can clear up some slots for you.
  9. Can use another person’s credit score if they are under your LLC 

Cons to a portfolio loan:

  1. Lower LTV
  2. Individual appraisals are needed for each property
  3. Pulling a property out is a hurdle (You won’t be able to sell properties to generate money)

Flexibility of a commercial loan.

A commercial loan can provide the flexibility you need to create generational wealth. One of the biggest benefits is that it provides the opportunity for you to use another person’s credit score as long as they are under your LLC. In doing so, a higher score can not only keep the transaction going, but it can open more doors. Another thing to keep in mind is that commercial loans are primarily based on the cash flow and the property value. This allows you to lock them in when rates are good so that you can use the slots to build up some additional properties on the side.

Create generational wealth.

By using a portfolio loan you are creating a bigger asset. More importantly commercial loans, unlike traditional loans, will not show up on your credit. Another thing to keep in mind is that banks often restrict your growth either by the number of properties or the loan amount. Those who are aggressive and use a portfolio loan have the flexibility they need to create the generational wealth that they want.

Is a portfolio loan right for you?

Real estate investors who have 20 properties or more need to start searching for other lending options. A portfolio loan is an excellent way to put all of your properties under one blanket loan. Is this the right loan for you? Contact us today to find out more about portfolio loans and other ways you can create generational wealth. 

Watch our most recent video to find out how you can  Create Generational Wealth with a Portfolio Loan.

by

Better Credit, Better DSCR Loan

Categories:

Better Credit, Better DSCR Loan

Today we are going to explore how better credit results in a better DSCR loan. Here at The Cash Flow Company we have a magical solution that can easily solve this problem, which is the 911 usage loan! Our goal is to help people raise their score immediately so that they can get the loan they need. On average we see 7 out of 10 people struggle with a usage problem. This prevents them from being successful in real estate investing. Don’t fall into this trap! Improve your credit today and get the DSCR loan you need.

Usage problem uncovered.

Usage loans are very common in this business because many investors have a usage problem. The usage problem is created when investors excessively use their personal credit cards or personal loans to pay for their business expenses. This will affect you everywhere you go, whether it’s a flip project or you’re applying for a DSCR loan. Here at The Cash Flow Company we deal a lot with credit score struggles, fix and flip properties, and rental properties. No matter what the project is, having good credit is the key to getting the funding you need.

Credit score struggles.

The percentage that is used on your credit card is referred to as the credit utilization rate. If you are above 30% usage on your credit cards, your  score  will begin to decrease. Investors who come in with a 640 or a 660 credit score often need to increase their score to 700. In doing so, they will be able to get either the LTV or rate they need to create cash flow. Nowadays rates are still in the 7’s or 8’s. That is why it is so important to get the best rate you can in order to maximize both your LTV and cash flow. 

How can a private loan help your credit?

One quick way to increase your credit score is to use a 911 loan. The 911 loan pays down credit card debt by using private money. These funds are secured with a property to guarantee the repayment of the loan. As a result of removing the credit cards from the personal credit report, the credit score will reflect the changes after the statement cycle.

Where do you get started?

The first thing that you need to do is run a simulation. We ask investors to do a simulation on MyFico, Credit Karma, or Experian to see how paying off a credit card will impact their credit score. We have seen people max out their credit cards at $3K, while others are maxed out at $175K. These maxed out credit cards not only impact credit scores, but they also impact DTI as well. To clarify, DTI stands for the debt to income ratio. 

For example: A client in Texas just went through a simulation and his credit score went up 100 points. He went from 653 to over 753 by simply paying off the credit cards that he had maxed out. 

We are here to help!

Here at The Cash Flow Company we are here to help you get on the right path. Remember better credit will result in a better DSCR loan! Get your credit card debt off of your personal credit report today! Contact us today to find out more about usage loans and how they can set you up for long term financing. To clarify, the usage loan is a private loan that does not show up on your credit for 60 to 90 days and won’t affect your DTI. Now is the time to set yourself up for success! 

Watch our most recent video to find out how Better Credit, can get you a Better DSCR Loan. 

by

DSCR Loan: Can I Buy Down My Rate?

Categories:

DSCR Loan: Can I Buy Down My Rate?

Many investors ask whether or not they can buy down their rate when using a DSCR loan. The answer is yes! This is one of the many options available for investors who are searching for a DSCR loan. It is important to find the best one for your property to not only create greater cash flow, but create wealth as well. While rents are increasing, they are thankfully not increasing very fast. However, rates are still high and are falling between 7 and 8. These are the times when you really need to work your numbers and products in order to find the right DSCR loan for your rental property.  

Are you above the break even point for DSCR ratios?

A DSCR loan has always been a 30 year product, meaning that it is amortized over 30 years. However, there are other options out there that will typically give you the benefit of qualifying. Here at The Cash Flow Company, we typically see people who are just below the break even point on DSCR ratios. Just to clarify, the break even point on DSCR ratios is normally 1 or 1.1 depending on the lender. 

How do you change the numbers in your favor?

Many investors are wondering how they can change their numbers even when rents, taxes, and insurance are not going to change. In order to make an impact on your numbers you are going to have to change your interest rate, look at interest only loans, or find a 40 year product. By looking outside of the typical 30 year box, you will be able to find a number that fits your property. 

Let’s look at buying down your rate.

Buying down your rate means that you are paying an extra point, which is 1% of your loan to the lender in order to get a better rate. A better rate would be a better payment, and which would allow you to qualify.

Loan amount $250K
Net Rent $1,725
Pay down interest (1%)  7.35%
Monthly payment  $1,722
Break even point (Rents – Monthly payment) $3 under

While there is not much cash flow right now, it does allow investors to get into the property. It also creates an opportunity to build an asset. 

Set yourself up for success.

There is no reason to get into real estate investing unless you are creating wealth by creating cash flow. Just to clarify, creating wealth is setting yourself up for long term success. On the other hand, cash flow is what you are creating right now. It is important that you not only look at making the right moves now, but also understand how everything will line up for the future. For example, a property that was purchased for $25K 20 years ago is now worth $400K. There is a lot of money to be made in real estate investing. Set yourself up for success by going through the numbers and focusing on finding the best product. 

Start looking for the best product for you!

Now is the time to look into different products to see which is best for you and your property. By buying down your rate you will have the opportunity to create the cash flow you need to succeed. Here at The Cash Flow Company we want to help you find the best product for you! Contact us today to walk through the numbers.

Watch our most recent video to find out more about DSCR Loan: Can I Buy Down My Rate?

by