Tag Archive for: cash flow

How to build wealth at age 50

Today we are going to discuss how to build wealth at age 50! Nowadays many people are getting into real estate investing later in life because they are trying to build wealth for retirement. As a result, they are able to create an additional pocket of money that provides not creates more options for them, but financial security as well. Building wealth for your retirement and increase your cash flow today? It’s never too late to invest in real estate!

Example: Building equity

Purchasing properties prior to age 65:

Year 1 Buy 2 properties
Year 2  Buy 3 properties
Year 3  Buy 5 properties
Total  10 properties
Property value $250K (per property)
National average 4% We will use 3% for this example
Buying strategy BRRRR
Equity after 3 years $600K in equity  (per property)

What is BRRRR?

To put it briefly, BRRRR stands for buy, rehab, rent, refinance, and repeat. In fact, these properties are undervalued properties that you fix up and rent. Therefore, once they are fixed up then you are able to refinance typically at  75%. Another benefit to starting later in life is that you aren’t using your own money for your investment properties. Instead, you are using the strategies in order to buy these properties. By putting multiple strategies together, you have the opportunity to create more than most people have for retirement within only 3 years time.

Start now!

It’s never too late to get started in real estate investing! Set yourself up for the future you want by building your supplemental income today. Those who do it correctly by using BRRRR will have a lot of options down the road. Do you want to learn more about setting yourself up for the life you want? Contact us today

Watch our most recent video to find out more about How to build wealth at age 50!

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How to Unlock Your Rehab Funds from Your Lender

Many real estate investors wonder how they can unlock their rehab funds from their lender. The answer is understanding their escrow. It is imperative that real estate investors understand escrow in order for their business to be successful. What is escrow? Escrow is a portion of the loan that a lending company puts aside for repairs on the property. You need to understand both the rules and the regulations of the lender in regards to Escrow prior to purchasing. In doing so, you will prevent frustration, avoid a finance wall, build a foundation for cash flow, save money, and save time!  Let’s take a closer look! 

1.Understand the rules YOUR escrow

As a real estate investor, you need to understand your escrow because the rules and regulations vary by lender. It is important that you have a firm understanding of their policies prior to purchasing. Any misunderstandings can very easily stall or even jeopardize a project. Investors also need to construct a budget beforehand in order to ensure that they stay within their budget during the process. Unfortunately, there is no flexibility in the amount after it is approved by the lender. Without the ability to expand the escrow down the road, any additional expenses will come out of your pocket instead.  

2.Unlocking your rehab funds

Lenders allocate a set amount for the escrow that not only includes the amount needed to purchase a property, but also the funds that are needed to fix it up. To clarify, these repairs are intended to get the property market ready. Keep in mind that the only way to access the escrow funds when buying a fix and flip, or an undervalued rental property, is to submit proof. This proof can be in the form of receipts, photos, and other documentation. It is important to send this information to your lender in a timely fashion in order to show that repairs are underway. 

3. Optimize your profits 

Optimize your profits today and avoid missing the market when it’s “hot” by considering all repair costs, setting money aside for repairs, and completing work quickly. Remember the longer you’re on hold, the more it will cost you and further delay paying your contractors. Those who understand the importance of a timeline and the cost can maximize their profit.

We are here to help! 

Want more information on real estate investment roadblocks or have any other questions? Contact us today!

Watch our most recent video to find out more about How to Unlock Your Rehab Funds from Your Lender

So, what are the other Major Roadblocks that cause burn out, financial hemorrhaging, and unfortunately defeat? 

Watch our full interview to discover more about the 5 Major Roadblocks

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Real Estate Investing at 50: Worth It?

Today we are going to discuss if it is really worth it to invest in real estate at 50. The answer is yes! Many people are getting into real estate investing later in life because they are trying to build wealth for retirement. This additional pocket of money provides not only additional options for them, but financial security as well. Are you interested in building wealth for your retirement and increasing your cash flow? Let’s take a closer look at why it is never too late to invest in real estate!

Example: Building equity

Purchasing properties prior to age 65:

Year 1 Buy 2 properties
Year 2  Buy 3 properties
Year 3  Buy 5 properties
Total  10 properties

 

Property value $250K (per property)
National average 4% We will use 3% for this example
Buying strategy BRRRR
Equity after 3 years $600K in equity  (per property)

What is BRRRR?

BRRRR stands for buy, rehab, rent, refinance, and repeat. These properties are undervalued properties that you fix up and rent. Once they are fixed up then you are able to refinance typically at  75%. Another benefit to starting later in life is that you aren’t using your own money for your investment properties. Instead, you are using the strategies in order to buy these properties. By putting multiple strategies together, you have the opportunity to create more than most people have for retirement within only 3 years time.

Example: Making money for later

Create the options and security you need before age 65!

Number of properties 10
Cash flow $300 (per property) or $3000 (10 properties) 
Property #1 Paid off in 5 years
Property #2  Paid off using Property #1 
Property #3 Paid off using Property #2
By age 65 You own 3 properties free and clear! 
Property #1, #2, and #3  Worth $400K each totaling $1.2 million
Property #1, #2, and #3  They bring in $2100 each per month

Just to clarify, the only things that you would need to pay once the properties are paid off are taxes and insurance.

Supplemental income options.

First and foremost the money that you are making off of the rental properties can supplement social security or retirement. The second option that you have is to take out a new loan and get money out of one or all of the three paid off properties. Finally, you could sell a property every three years, which would get you to age 95 by just using the proceeds from the property. Keep in mind that you will have some taxes, however, it provides more flexibility and financial security in the long run. Just to clarify, once the 10 properties hit maturity, they will be $600K each for a total of $6 million! 

Start now!

It’s never too late to get started in real estate investing! Therefore, you need to set yourself up for the future you want by building your supplemental income today. Those who do it correctly by using BRRRR will have a lot of options down the road. Do you want to learn more about setting yourself up for the life you want? Contact us today

Watch our most recent video to find out more about: Real Estate Investing at 50: Worth It?

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What is a PadSplit?

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What is a PadSplit?

Today we are going to discuss the newest real estate investment concept, PadSplit! This is something that will be growing more and more popular in the near future due to affordability. By creating a PadSplit property, investors will be able to double and even triple their income off of a property.  What exactly is a PadSplit and how can it create greater cash flow?  Let’s take a closer look! 

What is a PadSplit?

A PadSplit is where you take a regular house that is a 3 bedroom/1 resident, and convert it to a property that has 6 to 8 bedrooms/6 to 8 residents. In doing so, individuals are renting the property by the bedroom as opposed to renting the whole house. To clarify, these bedrooms would be a suite and would have a private bathroom attached with only the kitchen being the shared space. Each bedroom can then be rented by the week, month, or year depending on individual needs. By creating a PadSplit property it creates an affordable property for investors because they are getting 2 to 3 times the rent that they would have before. Also, no need to worry about rooms not being rented. There are companies available that can help to ensure your property is full. 

For example:

Regular investment property: 4 Bedroom with 1 stream of income totalling $2,300 

PadSplit property: 6 Bedroom with 6 streams of income totaling $4,800

Affordability is key

Nowadays, more people are only able to afford $800 per month for housing. This includes young people, old people, singles, and others who are traveling for work. Families are typically the ones who want the full house, as opposed to those who are just searching for affordability. PadSplits are becoming a bigger part of the real estate community because there is such a need in the community to create affordable housing. By putting 6 to 8 units into a property, investors can then afford to buy properties where people want to live.

Is a PadSplit right for you?

We are here to help answer your questions regarding PadSplits and run through the numbers with you to see if it’s right for you. If you do it right and make your payments, you will have the opportunity to make a lot of money! Contact us today to find out more and get in before everyone else does! 

Watch our most recent video to answer the question, What is a PadSplit?

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PadSplit: Introducing the Newest Real Estate Investment

Today we are going to discuss the newest real estate investment concept, PadSplit! This is something that will be growing more and more popular in the near future due to affordability. By creating a PadSplit property, investors will be able to double and even triple their income off of a property.  How do you create affordable homes that are cash flowing?  Let’s take a closer look! 

What is a PadSplit?

A PadSplit is where you take a regular house that is a 3 bedroom/1 resident, and convert it to a property that has 6 to 8 bedrooms/6 to 8 residents. In doing so, individuals are renting the property by the bedroom as opposed to renting the whole house. To clarify, these bedrooms would be a suite and would have a private bathroom attached with only the kitchen being the shared space. Each bedroom can then be rented by the week, month, or year depending on individual needs. By creating a PadSplit property it creates an affordable property for investors because they are getting 2 to 3 times the rent that they would have before. Also, no need to worry about rooms not being rented. There are companies available that can help to ensure your property is full. 

For example:

Regular investment property: 4 Bedroom with 1 stream of income totalling $2,300 

PadSplit property: 6 Bedroom with 6 streams of income totaling $4,800

Affordability is key

Nowadays, more people are only able to afford $800 per month for housing. This includes young people, old people, singles, and others who are traveling for work. Families are typically the ones who want the full house, as opposed to those who are just searching for affordability. PadSplits are becoming a bigger part of the real estate community because there is such a need in the community to create affordable housing. By putting 6 to 8 units into a property, investors can then afford to buy properties where people want to live. 

A growing need in our community.

There is going to be a greater need for PadSplits and smaller units in order to help people afford housing. With the ever increasing taxes, insurance, and rising rates, affordability means less. Also, there are a lot of people who need less and don’t want to take care of a whole house. That is where PadSplit can really make a big impact not only for investors, but for the public as well. It provides both affordability and the opportunity to interact with real people on a regular basis.

How do you finance a PadSplit?

PadSplits are a newer concept in real estate investing and because of that, they are new to the lending community as well. It is important that investors approach this strategically in order to get the funding they need to be successful. Keep in mind that there is a more limited market for PadSplits when you decide to sell the property down the road. However, it is just a matter of time before this concept becomes more common within our community. Here at The Cash Flow Company we are receiving a lot of inquiries regarding PadSplits and financing options. Let’s take a look at some of the options that are available for pad splits.

  1. The most important thing that you need to do is to get it funded before splitting it up. Get the property locked into a 30 year loan before dividing it into multiple units.
  2. There are also options under commercial for DSCR that could be used for PadSplits. These options are continuing to grow and there will be more available in the next few months.
  3. If you are looking for a refinance and you already have a PadSplit it is important that you have 12 months of experience and can show the numbers from bank statements or PNL from your company. This would allow us to use the income from the property to refinance the property

Is a PadSplit right for you?

We are here to help answer your questions regarding PadSplits and run through the numbers with you to see if it’s right for you. If you do it right and make your payments, you will have the opportunity to make a lot of money! Contact us today to find out more and get in before everyone else does! 

Watch our most recent video to find out more about PadSplit: Introducing the Newest Real Estate Investment.

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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.

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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.

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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.

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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?

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Help! I Can’t Get a DSCR Loan Because of My Credit

Many investors are struggling to get a DSCR loan because of their low credit score! However, there is a magical solution that can easily solve this problem. It is called a 911 usage loan! Here at The Cash Flow Company we help people raise their score so that they can get the loan they need. On average we see 7 out of 10 people struggle with a usage problem. How can they get back on their feet? Let’s take a closer look at how you can magically improve your credit score today!

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.

If you are above 30% usage on your credit cards, your  score  will begin to decrease. This percentage is also referred to as the credit utilization rate. 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. This loan is used to pay down credit card debt by using private money. These private funds are secured with a property to ensure the repayment of the loan. Once the credit cards are taken off of the credit report and the new statements cycle, credit scores will then reflect the changes. 

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 easy to get and work the same as personal credit cards. 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!

Here at The Cash Flow Company we are here to help you get on the right path. Do you need to get your credit card debt off of your personal credit report? Contact us today to find out more about usage loans and how they can set you up for long term financing. Just 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 Help! I Can’t Get a DSCR Loan Because of My Credit to find out more.

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