Tag Archive for: HELOC

Real Estate Investing Success: The Secret Formula Revealed

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Real Estate Investing Success: The Secret Formula Revealed

Real estate investing can be incredibly rewarding, but what’s the secret formula for success? The top investors follow two key principles. First, they are always on the lookout for properties. Second, they ensure they have the funding ready to seize opportunities when they arise. Let’s dive into these secrets and how you can use them to your advantage.

Always Be Looking for Properties

Top investors never stop searching for properties. They know that good deals can appear anytime and anywhere. In order to be successful, you must develop a habit of constantly scanning the market, attending open houses, and networking with real estate agents, as well as wholesalers.

Be Ready with Money

Besides searching for properties, the second key to success is having the money ready to buy properties quickly. This brings us to the concept of a “funding stack.” Top investors have multiple funding options lined up so they can act fast when a deal comes along. Let’s explore these funding options.

1. Other People’s Money (OPM)

Using OPM means borrowing money from family, friends, or other investors. This method often involves no credit checks or income verification. Therefore, if you present a good deal, people will be willing to invest.

Example: Borrow $20,000 from a friend for a down payment, promising an 8-12% return, which is better than the 3-5% they’d get from a bank.

2. Home Equity Line of Credit (HELOC)

A HELOC, or home equity line of credit, allows you to borrow against the equity in your home or rental properties. This is like a credit card where you can withdraw money as needed, making it perfect for down payments, renovations, or purchases.

Example: Use a HELOC to withdraw funds to buy a fixer-upper, then pay it back as you flip and sell the property.

3. Business Credit Cards

Business credit cards are crucial as they offer financial flexibility without affecting your personal credit score. These cards can cover expenses such as materials and labor for your real estate projects.

Example: By using a business credit card for rehab projects, you can in turn avoid the impact on your personal credit score while keeping your finances organized.

4. Hard Money Lenders

Hard money lenders provide short-term loans based on the property’s value rather than personal credit scores. They are more flexible and can close deals quickly. This makes them ideal for flips or urgent purchases.

Example: Secure a hard money loan in order to purchase and renovate a property that is in a remote area. Properties that are more remote are often avoided by traditional banks.

5. Private Lenders

Private lenders are national companies that offer loans without requiring extensive documentation such as tax returns. They often provide up to 90% of the purchase price and can cover 100% of the renovation costs.

Example: Use a private lender to buy a rental property. Then use OPM or a HELOC to cover the down payment and renovation costs.

6. Local Banks

Local banks often have favorable terms for real estate investors. Although they may take longer to process loans, they offer lower rates and can provide lines of credit for future purchases.

Example: Partner with a local bank to secure a line of credit. This gives you the flexibility to buy new properties or cover ongoing project costs.

Building Your Funding Stack

In order to build your funding stack, start with the most flexible options. These include OPM and business credit cards. As you grow you can begin to incorporate HELOCs, hard money lenders, private lenders, and local banks. In doing so, you’ll be prepared for any opportunity that comes your way.

Conclusion

Success in real estate investing comes down to two things: always looking for properties and being ready with the funding to buy them. By building a robust funding stack, you can ensure you’re always prepared to seize the best deals and grow your wealth exponentially.

For more information and resources, visit The Cash Flow Company website. You’ll find tools like our Deal Analyzer and a comprehensive guide to building your funding stack.

Watch our most recent video to find out more about: Real Estate Investing Success: The Secret Formula Revealed

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HELOC vs Cash Out Refinance

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HELOC vs Cash Out Refinance

Are you thinking about tapping into your home equity? If so, you might be wondering whether or not a HELOC or a Cash Out Refinance is the better choice. Both options have their perks, however one may suit your needs better than the other in 2024. Let’s break down the differences to see which option is best for you! 

What is a HELOC?

First and foremost, what is a HELOC? A HELOC is a Home Equity Line of Credit, or an equity line on your property. It operates like a credit card and you can draw from it as needed by using your home as collateral. To clarify, you only pay interest on the amount you borrow, not on the entire line of credit. Here are some key points about HELOCs:

What is a Cash-Out Refinance?

A Cash-Out Refinance on the other hand replaces your existing mortgage with a new, larger one. Therefore, you receive the difference in cash. This option can be helpful if you need a large sum of money and would prefer a single monthly payment. Here are some key points about a cash-Out Refinances:

Which One is Better for You?

Choosing between a HELOC and a Cash-Out Refinance depends on your financial goals and current market conditions. Here are some scenarios to help you decide:

Choose a HELOC if:

  • Low upfront costs.
  • Flexibility in borrowing.
  • You plan to pay off the borrowed amount quickly.
  • Receive 80% to 85% LTV.
  • Interest on mortgage is 3% to 4% and will not be affected by HELOC. 
  • Less paperwork and closing in 1 to 3 weeks.

Choose a Cash-Out Refinance if:

  • You need a large sum of money all at once.
  • Fixed monthly payments.
  • Payments are included within the life of the mortgage.
  • Receive up to 75% LTV.
  • Interest on mortgage will increase to 7%.
  • More paperwork and closing in 3-4 weeks. 

Conclusion

In 2024, a HELOC often provides more flexibility and lower upfront costs than a Cash-Out Refinance. However, your choice should depend on your specific needs and financial situation. Think about your goals, how much money you need, and how quickly you plan to repay the loan. What works best now might not be the best choice in the future. Therefore, always keep an eye on the market and consult with a financial advisor to make an informed decision.By making the right choice, you can save money, reduce stress, and improve your overall financial well-being.

Need More Information?

If you have questions or want more personalized advice, check out our website or give us a call. We’re here to help you make the best financial decision for your future.

Watch our most recent video to find out more about: HELOC vs Cash Out Refinance

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Top 5 Benefits of Using a HELOC

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Top 5 Benefits of Using a HELOC

Are you considering tapping into your home equity? A Home Equity Line of Credit (HELOC) might be the best option for you. Today we are going to discuss the top 5 benefits of using a HELOC. Let’s dive in! 

First and foremost, what is a HELOC?

First and foremost, what is a HELOC? A HELOC is a Home Equity Line of Credit, or an equity line on your property. It operates like a credit card and you can draw from it as needed by using your home as collateral. To clarify, you only pay interest on the amount you borrow, not on the entire line of credit. Here are some key points about HELOCs:

Top 5 Benefits:

1. Lower Costs

A HELOC often costs little to nothing to refinance. This means you can access your home’s equity without the high fees associated with other types of loans. For example, many HELOCs have low or no closing costs if you keep the loan for a few years. This can save you thousands of dollars upfront.

2. More Funds Available

HELOCs usually allow you to borrow a higher percentage of your home’s value compared to Cash-Out Refinances. For instance, while a Cash-Out Refinance might let you borrow up to 75% of your home’s value, a HELOC can allow you to access up to 85%. This means more money is available for your needs, whether it’s for home improvements, debt consolidation, or other expenses.

3. Keep Your Low Mortgage Rate

One of the biggest advantages of a HELOC is that you don’t have to refinance your existing low-rate mortgage into a higher-rate loan. Let’s say you have a mortgage with a 3% interest rate. Refinancing that into a higher rate to get cash out wouldn’t make sense. With a HELOC, you keep your low-rate mortgage separate, avoiding higher interest costs.

4. Fast and Simple

HELOCs are fast and simple to set up, often with less paperwork than a traditional refinance. You can typically get a HELOC approved and funded in a few weeks, whereas a traditional refinance might take longer. This quick access can be crucial if you need funds quickly for an emergency or a time-sensitive project.

5. No Regrets

With a HELOC, you’re not committing to a new long-term, higher-rate mortgage. This can potentially save you money in the long run. For example, if interest rates drop in the future, you won’t be stuck with a high-rate mortgage. You can pay off your HELOC as needed without the long-term commitment.

Conclusion

In conclusion, a HELOC offers lower costs, more funds, the ability to keep your low mortgage rate, a fast and simple setup, and financial flexibility without long-term regrets. If you’re looking for a smart way to use your home’s equity, a HELOC might be the perfect solution. 

If you have questions or want more personalized advice, check out our website or give us a call. We’re here to help you make the best financial decision for your future.

Watch our most recent video to find out more about: Top 5 Benefits of Using a HELOC

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HELOC Vs Cash Out Refi: Which One is Better in 2024?

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HELOC Vs Cash Out Refi: Which One is Better in 2024?

Are you thinking about tapping into your home equity to put more money into your life? If so, you might be wondering whether or not a Home Equity Line of Credit (HELOC) or a Cash-Out Refinance is the best choice for you. Both options have their perks, however one may suit your needs better than the other in 2024. Today we will discuss HELOC Vs Cash Out Refi. Let’s get started by breaking  down the differences and comparing them in order to see which option will put more money into your pocket.

What is a HELOC?

First and foremost, what is a HELOC? A HELOC is a Home Equity Line of Credit, or an equity line on your property. Therefore, it operates like a credit card and you can draw from it as needed by using your home as collateral. To clarify, you only pay interest on the amount you borrow, not on the entire line of credit. Here are some key points about HELOCs:

  • First, Low to no upfront costs: Many HELOCs have little to no initial fees if it is kept for a few years. Even if they do charge, it is normally only in the $400-$500 range.
  • Next, Flexible borrowing: You can borrow as much or as little as you need, as long as you stay within your credit limit.
  • Finally, Variable or fixed rates: Choose a rate that fits your financial plan. There are a variety of options available that can fit your needs.

What is a Cash-Out Refinance?

A Cash-Out Refinance on the other hand replaces your existing mortgage with a new, larger one. Therefore, you receive the difference in cash. This option can be helpful if you need a large sum of money and would prefer a single monthly payment. Here are some key points about a cash-Out Refinances:

  • First, Higher upfront costs: Expect to pay between $3,000 and $8,000 in closing costs.
  • Next, Fixed interest rate: Your new mortgage has a fixed rate, giving you predictable payments.
  • Finally, Longer loan term: You start a new mortgage term, which can be up to 30 years.

5 Benefits of HELOCs

Here are five reasons why a HELOC might be a better choice than a Cash-Out Refinance in 2024:

  1. Lower Costs: It often costs little to nothing to refinance into a HELOC.
  2. More Funds Available: HELOCs usually allow you to borrow a higher percentage of your home’s value compared to Cash-Out Refinances.
  3. Keep Your Low Mortgage Rate: You don’t have to refinance your existing low-rate mortgage into a higher-rate loan.
  4. Fast and Simple: HELOCs are fast and simple to set up, often with less paperwork.
  5. No Regrets: With a HELOC, you’re not committing to a new long-term, higher-rate mortgage, potentially saving you money in the long run.

Which One is Better for You?

When choosing between a HELOC and a Cash-Out Refinance it depends on your financial goals, as well as the current market conditions. Here are some scenarios to help you decide:

Choose a HELOC if:

  • Low upfront costs.
  • Flexibility in borrowing.
  • You plan to pay off the borrowed amount quickly.
  • Receive 80% to 85% LTV.
  • Interest on mortgage is 3% to 4% and will not be affected by HELOC. 
  • Less paperwork and closing in 1 to 3 weeks.

Choose a Cash-Out Refinance if:

  • You need a large sum of money all at once.
  • Fixed monthly payments.
  • Payments are included within the life of the mortgage.
  • Receive up to 75% LTV.
  • Interest on mortgage will increase to 7%.
  • More paperwork and closing in 3-4 weeks. 

Real-Life Example

Today we are going to use the numbers right from David Ramsey’s website. On his website he states that the average debt in America for real estate, car, and credit card totals $290,000. It is important however to understand that these amounts can be even higher for some people. Therefore these numbers can multiply to an even higher number of savings for you depending on your situation. 

Total Debt $290K
Current Mortgage 4%
Total Debt Payments Per Month $2,700 
Savings Goal Per Month $700 

 

Refinance: Mortgage, Car, Credit Card Into One Payment
Interest Rate 7%
Mortgage After Refinance $295K
Savings Goal Per Month $700
Cost Over the Life of the Loan $250K
Cost After Just One Year $113,000

 

HELOC: Take Your Debt and Move it into a Home Equity Line of Credit
Fixed Interest Rate 9%
Consolidate the Car and Credit Cards $57,000
Savings Goal Per Month $700
Cost Over the Life of the Loan $6,000 to $7,000

In sum, a HELOC is usually better for those who want low initial costs and flexible borrowing options. On the other hand, a Cash-Out Refinance might suit you if you need a large sum of money at once and prefer the stability of fixed payments.

Conclusion

In conclusion, a HELOC often provides more flexibility, as well as lower upfront costs than a Cash-Out Refinance will. However, your choice depends on your specific needs and financial situation. Therefore, think about your goals, how much money you need, and how quickly you plan to repay the loan. Most importantly, remember that interest rates and market conditions can change. What works best now might not be the best choice in the future. Always keep an eye on the market and consult with a financial advisor to make an informed decision.By making the right choice, you can save money, reduce stress, and improve your overall financial well-being.

Need More Information?

If you have questions or want more personalized advice, check out our website or give us a call. We’re here to help you make the best financial decision for your future.

Watch our most recent video to find out more about: HELOC Vs Cash Out Refi: Which One is Better in 2024?

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What is a HELOC?

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What is a HELOC?

Today we are going to discuss not only what a HELOC is, but how it can help you succeed in real estate investing. Here at The Cash Flow Company, we always strive to make investing easier for you. One tool that can significantly help is the HELOC. To clarify, a HELOC stands for a Home Equity Line of Credit. It  is essential for making real estate investing simpler, faster, and more affordable. By opening this account, you gain flexibility, allowing you to fund deals yourself or secure contracts quickly. In fact, it’s surprising that not all investors have a HELOC on at least one of their properties. The benefits are so apparent that it’s wild that more people don’t use them. Let’s dive in! 

What is a HELOC?

Again, a HELOC, or Home Equity Line of Credit, and is like a big credit card for your home. It lets you borrow against the equity in your property. This can be your own home or a rental property. To clarify, you can get a HELOC on a home with no mortgage or even one that already has a mortgage.

How Does it Work?

Think of it as a revolving line of credit, much like a credit card. Here are the steps to use it:

  1. Get Approved: Apply at a bank or credit union.
  2. Draw Period: Use the funds for up to 10 years. You can pay it back and use it again, just like a credit card.
  3. Flexibility: Use it for down payments, purchases, or even repairs.

Examples:

Example 1:
Imagine you own a property worth $300,000 and get a HELOC for $200,000. You find a great deal on another property for $150,000. You can use your HELOC to buy it quickly, without waiting for a traditional loan approval.

Example 2:
Let’s say you own a property worth $400,000 and owe $250,000 on it. You get a HELOC for $75,000. Someone comes to you with a good deal on a property for $75,000. You can write a check from your HELOC and buy it immediately.

Apply today!

In conclusion, this resource can be a powerful tool for real estate investors. By offering flexibility, lower costs, and speed, it makes investing easier and more efficient. Therefore, if you want to streamline your investing process, consider setting it up. today. With the right strategy, you can use your home equity to seize opportunities quickly and grow your wealth faster. Visit our website to explore your options and get started today.

Watch our most recent video to find out more!

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HELOC: Make Real Estate Investing Easier, Faster, and Cheaper

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HELOC: Make Real Estate Investing Easier, Faster, and Cheaper

At The Cash Flow Company, we always strive to make investing easier for you. One tool that can significantly help is the HELOC. A HELOC, or Home Equity Line of Credit, is essential for making real estate investing simpler, faster, and more cheaper. Therefore, by opening a HELOC, you gain flexibility, allowing you to fund deals yourself or secure contracts quickly. In fact, it’s surprising that not all investors have a HELOC on at least one of their properties. The benefits are so apparent that it’s wild more people don’t use them. Let’s dive into why a HELOC is a game-changer for real estate investors.

What is a HELOC?

A HELOC, or Home Equity Line of Credit, is like a big credit card for your home. It lets you borrow against the equity in your property. This can be your own home or a rental property. To clarify, you can get a HELOC on a home with no mortgage or even one that already has a mortgage.

Why Use a HELOC for Real Estate Investing?

Using a HELOC can make your investing journey easier, faster, and cheaper. Here’s how:

  1. Flexibility: Access funds whenever you need them. You can write a check or wire money instantly.
  2. Lower Costs: Save on interest rates, fees, and other costs associated with traditional loans.
  3. Speed: No waiting for loan approval. Be a true cash buyer and grab deals quickly.

How Does a HELOC Work?

Think of a HELOC as a revolving line of credit, much like a credit card. Here are the steps to use it:

  1. Get Approved: Apply at a bank or credit union.
  2. Draw Period: Use the funds for up to 10 years. You can pay it back and use it again, just like a credit card.
  3. Flexibility: Use it for down payments, purchases, or even repairs.

Examples of HELOCs in Action

Example 1:
Imagine you own a property worth $300,000 and get a HELOC for $200,000. You find a great deal on another property for $150,000. You can use your HELOC to buy it quickly, without waiting for a traditional loan approval.

Example 2:
Let’s say you own a property worth $400,000 and owe $250,000 on it. You get a HELOC for $75,000. Someone comes to you with a good deal on a property for $75,000. You can write a check from your HELOC and buy it immediately.

Benefits of a HELOC

First, Lower Interest Rates: Typically lower than credit cards and even some private loans. For example, while credit cards can have rates in the 20s, HELOCs often have rates around 8-9%.

Second, No Extra Fees: Save on appraisals, underwriting, and other processing fees. This can save you thousands of dollars per deal.

Third, Convenience: Use checks or debit cards linked to your HELOC for quick access to funds.

Why Aren’t More Investors Using HELOCs?

Many investors don’t use HELOCs because they find them confusing. But, with a bit of understanding, they can see how beneficial it can be. Even a small HELOC can cover down payments or monthly payments, making investing smoother.

How Much Can You Get with a HELOC?

The amount you can borrow depends on your property’s value and the current economy. Banks might lend up to 80-90% of your home’s value. Even if you start with a lower amount, you can always refinance later as the economy improves.

Setting Up Your HELOC

  1. Pay Down One Property: Focus on reducing the mortgage on one property to free up equity.
  2. Apply for a HELOC: Once you have enough equity, apply for a HELOC to use for future investments.

HELOC Tools and Resources

At The Cash Flow Company, we provide a HELOC questionnaire to help you determine the best options for you. Visit our website and check under the Tools section.

Apply for a HELOC today!

In conclusion, a HELOC can be a powerful tool for real estate investors. By not only offering flexibility and lower costs, but speed as well, it makes investing easier and more efficient. Therefore, if you want to streamline your investing process, consider setting up a HELOC. With the right strategy, you can use your home equity to seize opportunities quickly and grow your wealth faster. Visit our website to explore HELOC options and get started today.

Watch our most recent video: HELOC: Make Real Estate Investing Easier, Faster, and Cheaper

 

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The Key to Creating Leverage

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The Key to Creating Leverage

Today we are going to discuss the key to creating leverage in real estate investing. Here at The Cash Flow Company, we see success from the money side because money is the key factor in real estate. In regards to the foundation of this business, it is imperative that you have the leverage you need in order to build your portfolio. What is the trick that can help you accelerate your success? Let’s take a closer look!

Taking care of your leverage.

How can people take care of their leverage on certain properties or on their portfolio? Whether there are two properties or 10 properties, it is important to create leverage over someone else. This can be accomplished by picking one property and focusing on paying it down quickly. In doing so, it will free up the equity in that property, and will provide you more leverage. 

What is the benefit to paying one property off?

By paying down or off one property within your portfolio, you can then get a line of credit or a HELOC on the property. This provides the leverage you need to invest in other deals. We have seen a number of clients who are able to invest in new deals quickly because they had free cash flow. Just to clarify, we are not talking about these clients having money in their pocket. To say it another way, by either paying off a property completely or paying it down to a lower loan to value, you create more options for leverage. How can you take advantage of this additional leverage? One of the options is a HELOC. A HELOC is a Home Equity Line of Credit. Investors can take out a HELOC on the paid off property in order to take advantage of great deals quickly and easily. 

Free up the equity and create more leverage! 

In the world of leverage, an LTV of 75% does not free up any equity. This is due to the fact that investors are paying down each property equally as opposed to paying a little more towards a single property. For example, if there was a deal available for $150K, you would not have enough equity available to purchase the property. Just to clarify, lenders will not lend over 75% on an investment property. How can you set yourself up for success and use the equity in your properties? The answer is by focusing on paying one property down faster. In doing so, you will in turn free up the equity and create more leverage. Remember, those who will accelerate in this business are those who create financial flexibility. 

Contact us today! 

Use your equity to your advantage! Do you need some guidance on where to get started? Here at The Cash Flow Company we can help you get on the path to success! Contact us today to find out more about the The Key to Creating Leverage

Watch our most recent video to learn more about The Key to Creating Leverage.

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#1 Trick that Successful Real Estate Investors Use

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#1 Trick that Successful Real Estate Investors Use

Today we are going to discuss the #1 trick successful investors use. Here at The Cash Flow Company, we see success from the money side because money is the key factor in real estate. The foundation of this business is leverage in order to build portfolios. What is the trick that can help you accelerate your success and take advantage of more opportunities? Let’s take a closer look!

Taking care of your leverage.

How can people take care of their leverage on certain properties or on their portfolio? Whether there are two properties or 10 properties, it is important to create leverage over someone else. This can be accomplished by picking one property and focusing on paying it down quickly. In doing so, it will free up the equity in that property, and will provide you more leverage. 

What is the benefit to paying one property off?

By paying down or off one property within your portfolio, you can then get a line of credit or a HELOC on the property. This provides the leverage you need to invest in other deals. We have seen a number of clients who are able to invest in new deals quickly because they had free cash flow. Just to clarify, we are not talking about these clients having money in their pocket. To say it another way, by either paying off a property completely or paying it down to a lower loan to value, you create more options for leverage. How can you take advantage of this additional leverage? One of the options is a HELOC. 

What is a HELOC and how can it help you?

A HELOC is a Home Equity Line of Credit. Investors can take out a HELOC on the paid off property in order to take advantage of great deals quickly and easily. These deals can come up in actions or on properties where someone needs to sell a property quickly. In many cases, you can get HELOCS at 70% to 75%, as long as the LTV is lower. Whether it’s $50K or $100K HELOC, you will have the money set aside for future investments that just make great sense. Just to clarify, you do not pay for the money from the HELOC unless you use it. These funds are just set aside in case you need them. The really good people who grow their wealth will be able to sit back and grab these deals quickly because they have the money to do so.

Let’s look at the numbers!

5 properties

Each  Total for 5 properties
Property Value  $200K $1,000,000
LTV (loan to value) 75% $150K $750K
Equity  $50K $250K

In the world of leverage, an LTV of 75% does not free up any equity. This is due to the fact that investors are paying down each property equally as opposed to paying a little more towards a single property. For example, if there was a deal available for $150K, you would not have enough equity available to purchase the property. Just to clarify, lenders will not lend over 75% on an investment property. How can you set yourself up for success and use the equity in your properties? The answer is by focusing on paying one property down faster. In doing so, you will in turn free up the equity and create more leverage. Remember, those who will accelerate in this business are those who create financial flexibility. 

Contact us today! 

Use your equity to your advantage! Do you need some guidance on where to get started? Here at The Cash Flow Company we can help you get on the path to success! Contact us today to find out more about the #1 Trick that Successful Real Estate Investors Use. 

Watch our most recent video to learn more about #1 Trick that Successful Real Estate Investors Use

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Real Estate Investing: Popular Questions Asked and Answered

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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.

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Why You Need More Money to Invest in 2024

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Why You Need More Money to Invest in 2024

2024 is approaching quickly! Will you have the money you need? Investing in 2024 will require more liquidity than ever before. What is liquidity? Liquidity is the money that is available to you to help fund deals. These funds are not from lenders, but are instead from you. This includes funds that you bring into your investments, the amount that you put down on a property, and the money that you have to carry on a project. Let’s take a look at why you need more money to invest in 2024.

Changes In Lending

Banks and credit unions are currently driving down their loan to value percentages, which is making it difficult for investors to qualify. As the new year approaches, Lenders are going to require you to be more liquid, have more reserves, and put more money down. So, by having more liquidity, you will have more opportunities, as well as a huge advantage in 2024 over those who don’t act now.  

Fill Your Buckets Now

The term, “save it for a rainy day” is exactly what you need to be focusing on in today’s market. There are four “liquidity buckets” that should be filled to the brim for not only buying properties, but making payments, doing construction, or any other expenses that may come your way. These four buckets are HELOCS, Unsecured Lines of Credit, Business Credit Cards, and Peer to Peer Lending. All of these resources cost little to nothing for you to have on hand for the New Year. 

Save Today So You Can Invest Tomorrow

The goal is to gather as much money as you can now by filling your liquidity buckets to the brim! As investors, we are all going to need these extra funds for down payments, escrow, paying contractors, as well as any other expenses that come our way. Investors who take the time to prepare, will set themselves up for success come the new year! 

Watch our most recent video to find out more about why you need liquidity. 

If you have any questions on liquidity, finding HELOCs, or have any other questions, please reach out to us!

We would be happy to help guide you to become more successful in 2024. 

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