Tag Archive for: loan

Busting Myths: How You CAN Afford Hard Money

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Busting Myths: How You CAN Afford Hard Money

Busting Myths: How You CAN Afford Hard Money

It’s time to start busting myths about hard money, and discover how you CAN afford hard money.

Today, we’re going to bust one of the most common misconceptions about this investor-friendly lending option:

“Hard money is too expensive!”

False!

When you get a hard money loan, it doesn’t mean you have to automatically pay 12% interest or more.

In fact, if you take these 3 steps, the cost of your hard money loan will be drastically reduced:

Prove you have experience.

If you show a hard money lender you’ve completed real estate deals successfully, then they’ll feel more confident in giving you money. And confidence means better rates.

How can you show your experience? The best way is to present a real estate portfolio with before and after pictures, budgets, and profits earned.

Be willing to put money down at closing.

If you have skin in the game, then a lender will likely be more willing to lower the cost of your loan. Why? Because it reduces their risk.

But how much money should you try to put down at closing? Ideally, 10% or more. But even as much as 5% will help lower your loan’s cost.

Maintain a good credit score.

Your credit score matters when it comes to loans. The better your score, the better your rates.

If your credit score is on the low side (below 670), then you can find simple ways to boost it. Here are 3 tips to get you started:

  • Stop using your credit card and start paying it off. Simple, but effective. And when you hit a $0 balance, do NOT close the account. Closing an account that’s in good standing is anti-productive in keeping your score healthy. You want to show you have good credit history. So if you close your accounts, then your history won’t exist.
  • Keep your card balance low. Like, under 30% of its maximum. So, if your card has a maximum credit line of $1,000, then don’t let your balance rise above $300.
  • Pay your credit card bill on time. Again, simple, but effective. If you make your payments on time for the next 12 months, your score WILL rise.

Hard money doesn’t have to eat up all of your profits. We assure you that if you take these 3 steps, you can greatly reduce your costs and actually boost your profits considerably.

Stay tuned for our next video where we discuss the myth of getting trapped in a hard money loan. Spoiler alert, another pitfall that’s easily avoidable if you take a few simple steps.

Ready to chat about your hard money and other lending options? Great! Our team is here to help.

What is hard money? Learn more on our YouTube channel!

Happy investing!

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Busting Myths: What Is Hard Money

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Busting Myths: What Is Hard Money

Busting Myths: What Is Hard Money

What is hard money?

More importantly, what is it NOT?

Today, we’re starting a new series about busting hard money myths. Because there are so many rumors and misconceptions out there about this type of real estate funding. Unfortunately, most of these are negative.

Real estate investors all around the country say things like:

“Hard money is too expensive for me and my wallet.”

“It’s a trap!”

“Bank lines are so much cheaper.”

“Hard money is a curse!”

First of all, FALSE!

Second, we’re going to bust these myths and show you how hard money is not something to fear or avoid. In fact, it’s something to utilize so you can boost your cash flow and profits.

Yes, boost. Not obliterate.

But, before we dive into each myth in our upcoming video series, let’s talk about hard money.

Here are 3 keys facts you should know:

  1. It’s a special type of loan that’s usually secured by a real asset—aka, real estate. The funds for these loans is typically provided by private investors or companies.
  2. They’re not like normal bank loans that you pay off for 15-30 years. They’re meant to be short-term. Like, 3 to 9 months. You can pay them off quicker or slower than that timeframe, but this is the typical range.
  3. They’re perfect for real estate investors who want to buy value-add properties FAST, because hard money loans can get closed in days, not weeks. They’re ideal for buying discounted non-MLS properties. For example, think about wholesalers and other under-market deals.

Now that you have a better understanding of hard money, we can dig into the myths and misconceptions that revolve around it.

Our new video series busts these myths and show you how it isn’t something to fear or avoid. It’s actually something to use so you can generate positive cash flow and profits.

So, are you ready to talk about your real estate funding options? Great, our team is here to help.

Happy investing!

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How to Get Out of Your Hard Money Loan Now

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How to Get Out of Your Hard Money Loan Now

How to Get Out of Your Hard Money Loan Now

Do you know how to get out of your hard money loan?

Because if you’re a real estate investor and like to buy value-add properties FAST, then these are the types of loans you likely rely on. And if you work with wholesalers (who have tight, strict deadlines), then you most definitely need to use hard money to close your real estate deals.

But that doesn’t mean you want to get trapped in a hard money loan. Nobody wants that! Even as a hard money lender, we don’t want you to get stuck with high interest rates for months and months.

That’s why it’s important to know you have options. Hundreds of them!

Yes, you heard that. YOU have options, even if you don’t have:

  • Tax returns
  • Income
  • A business partner
  • Or a company name

So, as a real estate investor, why do you need hard money?

Well, as we mentioned above, it’s great for buying discounted, value-add properties, and then renovating and renting them. It’s also great for taking advantage of the free equity you get from discounted or wholesale properties.

But what can you do when you’re in a hard money loan and you’re ready to get out (meaning, you’ve already renovated and rented the property)? But you can’t get a traditional/conforming loan because you don’t qualify for a bank’s strict requirements?

The bigger question: How can you stop your hard money loan from eating up all of your positive cash flow? What can you do to stop giving your lender all of your profits, rather than yourself?

Well, here’s the thing. Both banks and lenders don’t like to tell you that you have OPTIONS.

Just because you haven’t been self-employed for more than 2 years, or you don’t have tax returns to show (or you don’t want to use them), you can refinance into a more affordable loan. And with that new loan, you can:

  • Keep it away from your credit score (because the more loans you have, the more it impacts your credit score).
  • Put it under your LLC’s name.
  • Have unlimited projects.

To find that affordable, flexible loan, all you really need are 2 things:

  1. A good credit score (if you need boosting tips, check out these videos on our YouTube Channel).
  2. A lease that will cover the rental payment.

Trust us when we say, you don’t need to get stuck in a hard money loan. Every real estate investor has options.

If you’d like to discuss your options, our team is ready to help!

Happy investing.

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How to Buy a Property with ZERO Money Down

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How to Buy a Property with ZERO Money Down

How to Buy a Property with ZERO Money Down

Did you know you can buy a real estate property with zero money down?

It’s true! Just check out these 4 key steps:

If you want to buy a property and put less money (or no money) down, then check out these 4 steps.

Buy discounted properties.

You might be able to find discounted properties on the MLS. Maybe. But you’ll probably have more luck finding them via a wholesaler. Especially when it comes to value-add properties (i.e. fix and flips and rentals).

Set up your loan properly.

This is an important 2-Step Process. The trick is to purchase with a hard money loan, and then quickly refinance with a long-term loan. That way you can get the highest loan amount possible. It all starts with discovering what you qualify for on the long-term side. Once you know what that loan looks like, you can match that number to your hard money loan.

Use rate and term, NOT cash out.

Okay, deep breath.

We’re not going to get into the nitty gritty of these mortgage terms, but we are going to highlight the significant differences.

Setting your loan up as a cash out can be very tempting. You get money at closing. What’s better than that, right?

Well, did you know when you set up your loan as a cash out, you:

  • Pay higher costs
  • Take a lot longer to refinance out of your expensive hard money loan
  • Qualify for lower loan amounts

With a rate and term, all of that changes. You:

  • Spend far less cash up front
  • Refinance out of pricey hard money loans a lot faster (like, we’re talking months faster than a cash out)
  • Enjoy lower rates

Better yet, your cash flow will multiply because you get to do more with your money when you pay less for your loans. This is actually a simple process to set up if you work with someone who can help you with both your hard money and long-term loans.

Put zero money down by finding the right lender

To seal the deal, find a lender who can handle these kinds of loans.

Unlike most other lenders, our team has the expertise, knowledge, and ability to handle everything from hard money to conventional loans. Plus, we treat you like a teammate, not a number.

With our help, you can start buying your properties with no money down today. Let’s chat!

Happy investing.

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Hold-and-Rent in Greeley!

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Check out this cozy little hold-and-rent property our client purchased Greeley, Colorado! This deal was funded using a Hard Money Mike loan.

We love seeing our clients’ success stories and look forward to checking in on the progress with their investments.

Ready to fund your own investment property deal? Chances are good that we can help!

Hard Money Mike is a lender based in Colorado. We regularly lend money on all types of commercial-based properties. So whether you have your eye on a potential fix-and-flip, vacant land, whole tailing, or a builder bridge loans, we’re happy to help make your investment property dreams come true.

We even lend on deals in several states outside of Colorado, so don’t let our location stop you from achieving your investment goals. If we’re not yet lending in your state, we’re still happy to discuss your numbers and plans with you to make sure you’re on the right track.

In the market for a property in the single-family or commercial sector? Our sister company The Cash Flow Company funds investor loans on those, too! We’ve got a lending solution to most investment opportunities, so let’s get you on the path to investment property greatness.

Questions or just need help deciphering your numbers? Feel free to reach out!

Hard Money Mike 303-539-3000

*All non-commercial and construction loans offered by TNS Loans NMLS #1719349

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Investor Inspo: Texas Fix-and-Flip

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We might be based in Colorado, but that doesn’t mean that as our client you have to miss out on deals in other states! In fact, Hard Money Mike lends on properties in several states, like with this Texas fix-and-flip!

Texas fix-and-flip deal

We love seeing our clients crush their investment goals, even from afar! Take, for instance, this Texas fix-and-flip property purchased by one of our clients. We were able to fund this deal in a week.

Yes, you read that right.

Investors and wholesalers alike will find the short-term loan process at Hard Money Mike quick and easy. We pride ourselves on making it easier to get the cash flow you need for quick property purchases. Who wants to wait around when they’re trying to close a deal and add to their investment portfolio?

In other words, we want to help you make more money even faster!

Hard Money Mike is a lender based in Colorado, lending money on all types of commercial based properties: fix and flip, land, whole tailing, and builder bridge loans.

Have your eyes set on an investment property on the single-family or commercial building side? The Cash Flow Company funds investor loans on properties in both of these categories. Long story short: whatever deal you’re trying to fund, chances are, we can help you get it done!

Give us a call:

Hard Money Mike  303-539-3000

*All non-commercial and construction loans offered by TNS Loans NMLS #1719349

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Investor Mortgage Report 6.9.2020

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What We Know:

The markets are stabilizing, and underwriting term times are back in pre-Covid standards.

With rates for single-family investor properties on conforming loans hovering around the low 3’s, it might be time to look at locking in and increasing your cash flow.

What This Means for You:

As an investor, there is money in the money—Your money!

Your credit score is the key to keeping more of your money. No matter your income situation, the better your score, the cheaper the money. Cheaper money equals more cash in your pocket.

Investor Credit Score impact

Last week, we showed you how much money can be saved with a good credit score. Now, it’s time to go over how to increase that score quickly.

How to raise your score and increase your cash and cash flow

Want to save money as an investor? It might be time to crunch the numbers

Do you want to keep money in your life or keep supporting a banker’s life? We’re pretty sure we know the answer to that particular question.

They say that Vegas was not built on the gambler’s winnings. The same can be said about banks. Banks keep popping up everywhere, even when most banking has gone online.

 

Why is that? Because they know there’s money in your money.

 

So how can you better prepare your credit score for an investor loan?

  1. Plan before you apply by checking your score online.
  2. Stop applying for ANY credit at least 60 days before a loan application.
  3. Raise your score with one or two of these simple methods:
    • Use private money when you can and keep it off your credit. If you can borrow from a private individual or entity that doesn’t report on credit to pay off/down your credit, do it BEFORE your next statement date.
    • Don’t close paid off accounts.
    • Pay down your credit cards before due dates. This will take extra cash now, but it will save you tens of millions in the future.
    • Keep balances below 30% of outstanding balances on revolving accounts like credit cards.
    • Dispute any item that should not be on your report.

This list does not include paying your accounts on time. That’s a no-brainer. You should always pay on time. There’s typically no quick fix for late payments.

Stay tuned, because next up, we’ll be covering how to check your credit on your own! In the meantime, if you have questions about your score, what it’s costing you, or what a better score could save you, reach out! We’re always happy to go over the numbers with you!

*All non-commercial and construction loans offered by TNS Loans NMLS #1719349

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How to Know When a ReFi Makes Sense

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to refi or not to refi

To refi, or not to refi: That is the question.

And we get this question a LOT. “Does it make sense to refi if I only plan to hold onto the property for a few more years?”

Earlier this week, we discussed the power of refinancing (and the math behind it.) Do the numbers support taking on extra years of payments?

For some of you, they do. For others, you might be left thinking, “But wait! What if I’m not going to keep the property for 24 or 30 years? At what point does it actually make sense to refinance?”

However, if you are not going to keep the property through the next 30 years, you’ll need to look hard at what the costs will be over the expected period. The key here is determining which path will cost you more money and which one will keep more in your pocket.

GOAL: Keep more money in your life and less in the hands of bankers.

Let’s look at an example:

You’re planning to keep a property for 3 years and then sell it. The question is, what will put more money in your pocket and cost you the least over those next 3 years?

Here is how we figure this out:

Step 1: Ask your mortgage company to run an amortization chart on your current loan and your new loan.

2: Then, pull your principal and interest from your current mortgage company’s website.

3: Next, ask your mortgage broker to give you the principal and interest from the new loan.

4: On each loan, multiply the payments by 36 (the 3-year window before you sell the property) and add the balance of your loan at the end of 3 years.

5. Lastly, compare notes and find out what would be the lowest amount. This is the one that will keep more money in your pocket.

Ultimately, this is just a pure and simple scenario of determining exactly how much the loan will take out of your pocket over the course of 3 years. We’re not looking at monthly cash flow, because true dollars out are pure and simple. This is your true cost out of your pocket.

If you need help, we’re happy to step in. Give us a call, and we can run all the numbers for you and see if it makes sense.  If it does, we can help you out even further by securing low rates and costs on your refi!

*All non-commercial and construction loans offered by TNS Loans NMLS #1719349

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Investor Mortgage Report 5.26.20

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Mortgage industry is showing signs of recovery.

The Mortgage Market is Showing Signs of Being on the Mend.

What We Know:

The mortgage market is finally showing signs that it is starting to recover and heal. As states begin to lift travel and business closure restrictions and reopen for commerce, lenders appear to be relaxing some of their restrictions in-kind.  Last week, we welcomed back a few lenders offering loans outside the standard conventional box.

This week, we see even more positive progress, such as lenders expanding the LTVs up to 70% on their investor cash flow loans (based on credit score and lease.)

We are noticing the lending requirements are a little more restrictive than before Covid-19, but at least additional options are making a comeback. Hopefully, this upward trend will continue over the following weeks.

What You Can Expect:

A return to business-as-usual won’t happen overnight, of course. The lower credit scores and higher LTVs will more than likely take some additional time to return to their pre-COVID closure state. Lenders will want more data on the unemployment and rental payment front before expanding.

Real estate investors may have to be more patient for normalcy to return to their lending markets.

Rates in the standard-conforming market are coming down.  For investors, 30-year rates are in the mid 3’s for purchases and no cash-out refinances.  Cash-out refinances are still a big challenge for investors, and will more than likely continue to be so for the next few months.

Expect to find the expanded requirements (up to 6 months reserves for each property) to be in place with underwriters through the end of the year.

*All non-commercial and construction loans offered by TNS Loans NMLS #1719349

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Investor Mortgage Report 5.19.20

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Non-Conventional Mortgage Loans Are Making a Comeback…

Non-conventional loans are closing again

Non-conventional mortgage loans are getting funded again.

What We Know:

Finally, we’re seeing an influx of non-conventional mortgage loans being funded. Hopefully, this positive change is bringing some relief to both investors and their buyers who don’t fit neatly into the conventional mortgage lending box.
 
Mortgage loans in this lending bucket typically do not require tax returns but rely on bank statements or leases for income.
 
Even though some are back, requirements for securing these loans have increased and are a little harder to obtain.  The majority of the lenders have a starting point of a max 65% LTV and a credit score of 700+.  The good news is the rates have not skyrocketed. There are now lenders lending who had previously been turning away would-be investors.
Light at the end of the lending tunnel

There’s a light at the end of the lending tunnel again.

 

The Takeaway:

We are on the road to lending opening back up. The economic restrictions and resulting uncertainty appear to be lessening. Apparently, to the point where lenders are feeling confident enough to begin closing riskier deals again.
Make no mistake, it will be a slow process. But there appears to be a light at the end of the COVID lending tunnel. Stay tuned as we provide continuing outlook updates over the course of the coming weeks.
In the meantime, if you’d like to review your financing options for investment properties, feel free to reach out! We’re always happy to run your numbers with you.
*All non-commercial and construction loans offered by TNS Loans NMLS #1719349
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