Tag Archive for: new investors

5 Simple Steps to Starting a Successful Business

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5 Simple Steps to Starting a Successful Business

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

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

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

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

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

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

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

You are not alone!

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

Establishing your goals are the key to success! 

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

Fitting into the lending box.

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

Build the migration from personal credit to business credit.

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

Play the game to win it.

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

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

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

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Where to Find Gap Funding

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Where to Find Gap Funding

In the past few days we have spoken with 4 clients who lost properties because they didn’t secure financing beforehand. While getting into real estate investing requires a lot of planning, it is imperative that investors set up their money correctly from the very beginning.  This often includes finding gap funding options prior too shopping for properties. Those who take the time to set things up correctly will have more opportunities than those who wait!

What is gap funding?

Gap funding is borrowing money from someone for the down payment, carry, or any money that you have to put into the deal. When you are buying a property, the first lender requires something in order to approve the loan. This could be a down payment, reserves for payments, or they may require you to do the fix up. Many investors don’t have the additional funds that are needed in order to meet the lenders requirements. Real estate investors might go out and find a family member, friend, or someone in the real estate community who can lend them that money to bridge the gap. It is important to make sure that your primary lender allows gap funding before purchasing a property. If the lender doesn’t allow gap funding, it could jeopardize the deal. 

How do you find gap funding?

There are a lot of people out there who have anywhere between $10K to $50K that they are looking to invest. By working with you, they have a chance to receive a better return on their investment. So how do you find gap funding? There are real estate groups throughout the community that provide opportunities for investors to meet. While peer investors are not often interested in diving into real estate themselves, they are interested in getting a better return on their money. While you can start by asking family and friends, many fear that it will create an awkward situation. By finding peer investors in the community who have $100K or $200K set aside, you will be able to compete in today’s market!

Ready, set, GO!

In order to be successful in real estate it is important that you find and secure funding prior to purchasing properties. Thankfully there are a lot of options out there to help investors. These include HELOCs, credit cards, and peer lending, just to name a few. Here at The Cash Flow Company we have seen people use multiple ways to get the gap covered. Those who take the time to  gather pre-approvals, will be ready to go when the next deal comes!

Contact us today to find out more about gap funding and what you need to do to get pre-approved.

Watch our most recent video to learn Where to Find Gap Funding

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2024 Real Estate Investing: Why Should I Invest?

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2024 Real Estate Investing: Why Should I Invest? 

2024 is going to be an excellent year for real estate investing. Whether you are a new investor who is just starting out, or a seasoned investor who is looking to decrease your inventory, there is no better time than now. Today we are going to answer the question “why should I invest”. We will not only look at how things have changed over the years, but we will also discuss how the real estate community is changing in this current market.

New real estate investors

For new real estate investors there is no better time to get into the game. There are more deals coming out and more foreclosures. This is due to the fact that many people are becoming overwhelmed by debt and needing to give up their properties. New real estate investors will see 5% to 10% more homes available to them this year!

Investors are leaving the community

We are seeing more investors leave this community. The changes in the market over the past few years has caused everything to tighten up. The banks are swimming upstream to find the best of the best and lending has become harder to obtain. Many investors are not willing or able to continue in this current market We are seeing less people who are sticking around and even fewer who know what they are doing. As a new investor, the competition is going to be better for you, thus creating better deals.

If they are leaving? Why should I step in and take over?

By having less investors, it creates more properties and better deals for the people who are sticking around. For the first time in a long time, there are better deals, as well as better margins on deals. To put it another way, there is “more meat on the bone” with more properties coming up. Real estate investing is like anything else. Not everyone will be successful every time. There are a lot of people who do succeed and make a lot of money in real estate investing. 

What deals should you expect? 

In 2024, you are going to find better deals, including 60% to 70% LTV. There will also be more opportunities for you to succeed than there were two years ago. A few years ago there were more people bidding on properties. When there are too many people bidding, they become overzealous and crazy. This creates overbidding and causes properties to become less profitable. By having less investors in 2024, you will have more properties available, resulting in better deals for people who are sticking around.

What is the biggest hurdle you will face?

The biggest hurdle that you are going to face is finding money. Over the last 10 years, real estate investors have had big pools of money available to them and the rates kept going down. In today’s market, you will need to be prepared and ready for anything that lies ahead. In taking the time to set yourself up properly, you will have the opportunity to create the wealth and income you want. 

Now is the time to buy!

Now is the time for you to invest in real estate. This is the opportunity for you to take advantage of not only more deals, but more profitable deals in this market. As a new investor, you need to be able to jump in when other people are getting out. Here at The Cash Flow Company we can help walk you through the steps and ensure that you are on the path for success.

Watch our most recent video 2024 Real Estate Investing: Why Should I Invest? to find out more!

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How to Build Wealth Through Real Estate Investing

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If you want to build wealth through real estate, the key is leverage.

In the investing world, leverage is using other people’s money (typically in the form of loans) to build income.

If you master the art of using leverage, you’ll be able to build wealth easily in the real estate game.

Especially at the beginning, it can be tempting to try and use only your own savings for your real estate projects. However, those funds are limited, and it can take forever to save up for a full down payment on your own. Using loans and debt wisely will help you turn larger profits faster, ultimately making you more money, even factoring in the cut of the lender.

Leverage Makes Real Estate Investing Accessible

Especially in the central USA area, other people’s money (OPM) makes real estate investing accessible.

You don’t need to have generational wealth built up in your savings or your parents’ bank account. You just need leverage.

Leverage lets you grow your investing business from little-to-nothing. We see this over and over again in the industry. All you need is the willingness to take a little bit of risk and use OPM.

Types of Leverage and OPM

Leverage comes in many forms. When we talk about using OPM, we’re not implying you need to take up a collection at Thanksgiving dinner. 

These are the most common types of leverage/OPM:

  • Bank loans
  • Private loans
  • Hard money loans
  • Financial gifts

Obviously, in most of these cases, you need to pay the money back (with interest). However, that’s fairly easy to do once you’re selling an improved property.

What Does the Process Actually Look Like?

Most lenders want to see you put a portion of your own money into projects as well. But that doesn’t mean you need an extensive backlog of savings to get started.

Step 1. Buy

Hypothetically, if you wanted to buy a $200K property, you would only need around $10K of your own money. The rest could be covered with OPM. 

Step 2. Improve

If you put $30K-$40K into a property, you’ll significantly increase its value by more than you put in. These improvements can also be covered with OPM. 

Certain loans are created specifically for property-improvement projects, so look into options like DSCR or hard money.

Step 3. Sell 

This is where the money comes rolling in. You pay off your loans, and everything else is money in your pocket.

For our example of a $200K property, after $40K worth of improvements, it’s likely worth closer to $300K. 

That’s a worthwhile investment!

From $10K out of pocket, you end up with around $40K net worth that you’ve created with leverage.

The Long Haul Option

If you don’t want to do a basic fix and flip, you could go the rental route. If you keep a property like that as a rental, you’ll be able to pay the loan all the way down and own the property outright.

In today’s housing economy, hanging on to properties long-term is also a great investment. A property that began as a $10,000 investment could turn into your million-dollar retirement fund!

 

If you have questions about leverage or OPM, reach out to us at Info@TheCashFlowCompany.com or fill out a contact card.

You’re also welcome to check out our YouTube channel where we talk about how to WIN in real estate investing.

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Why You Need to Get Pre-Approved in BRRRR

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Why You Need to Get Pre-Approved in BRRRR

Today, we are discussing the importance of getting pre-approved in BRRRR. To clarify, BRRRR stands for Buy, Rehab, Rent, Refinance, and Repeat. Let’s break it down step-by-step.

Getting Long-term Loan Approval

Before buying, secure a pre-approval from a long-term lender. This step ensures you know the maximum loan amount you qualify for, which is crucial for the refinancing stage later on.

Buying with a Short-term Loan

Next, use a short term loan, like a hard money loan, to purchase the property. Short term loans are essential for fast closings and approved within days or weeks.

Rehabbing the Property

Once you own the property, it’s time to rehab it. Focus on making necessary repairs to meet the After Repair Value (ARV). Most importantly, remember that this is a rental property, so avoid high-end finishes. Just make it appealing and functional.

Renting the Property

After the rehab, find a reliable tenant. By renting the property, you journey begins because you are generating money.

Refinancing

Finally, refinance your short-term loan into a long-term mortgage. This step not only reduces your monthly payments, but it locks in a lower interest rate also. Having pre-approval speeds up this process while saving you money.

Repeating the Process

Build a robust rental property quickly and easily by being pre-approved in BRRRR today. Set your goals, search for the right properties, secure financing, and repeat the process. Contact us to find out more! Watch our most recent video.

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Expert Tips for Starting and Growing Your Real Estate Empire

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Expert Tips for Starting and Growing Your Real Estate Empire

Welcome to your journey in real estate investing! Whether you’re dreaming of flipping houses, building rental property portfolios, or simply exploring the vast opportunities in real estate, starting strong is crucial. Today we will be sharing expert tips for starting and growing your real estate empire! It all begins by setting up your business correctly. This can make all the difference in how lenders and partners view you, and ultimately, in your success.

In this guide, we’ll walk you through essential steps to set up your real estate business. First, we’ll discuss choosing the right name, then we’ll move on to securing funding and finding great deals. Additionally, we’ll share practical tips and real-life examples to help you understand and apply these strategies effectively. With a clear plan and the right approach, you’ll be well on your way to building a thriving real estate empire. Let’s get started!

Setting Up Your Business for Success

First: Choose a Business Name

  • Search for Availability: Immediately start by checking with your state to ensure the name is available.
  • Avoid Real Estate Specific Names: More importantly, opt for a generic name like “John Smith Consulting” instead of “John Smith Fix and Flip.”

Second: Obtain an EIN (Employer Identification Number)

  • Apply with the IRS: The EIN is actually a social security number for your business. It’s essential for not only tax purposes, but even for opening a bank account.

Third: Set Up a Business Bank Account

  • Separate Finances: Immediately separate business finances from personal finances. Keep your business and personal finances separate in order to make things clear for lenders.
  • Use Your EIN: Again, this is required to open a business bank account.

Forth: Establish Your Business Presence

  • Create a Website: By creating a simple website, it can show lenders as well as partners that you’re serious.
  • Get an Office Address: To clarify, even a virtual office can help establish credibility.

Building Your Bucket of Money

Leverage Other People’s Money (OPM)

  • Private Loans: Begin by approaching family, friends, or other investors who are looking for better returns.
  • Show Confidence: Most importantly, know your projects well and present them confidently to potential lenders.

Use Business Credit Cards

  • Avoid Personal Cards: In fact, business credit cards don’t impact your personal credit score.
  • Build Your Business Credit: This will surely help you get better loans, as well as better rates in the future.

Finding Great Deals

Work with Wholesalers

  • What They Do: Since wholesalers find undervalued properties, they can offer them to investors at a slight markup.
  • Build Relationships: Therefore building relationships and getting to know wholesalers will help you find good deals.

Network with Real Estate Agents

  • Investor-Friendly Agents: Actually, some agents specialize in working with investors. Begin by finding those who understand your needs.

Growing Your Empire

First 90 Days: Lay the Foundation

  • Research and Networking: Spend time not only finding finding properties, but more importantly lenders as well.
  • Set Up Systems: By setting up a system, you can ensure that you have all your business basics in place.

Ongoing: Improve and Expand

  • Consistent Effort: Regularly look at properties and evaluate deals.
  • Learn and Adapt: Each project will teach you something new, which will actually make future projects easier and more profitable.

For Example: The 2008 Crash

  • Pivot to Private Money: Following the financial crisis in 2008, banks stopped lending. Successful investors turned to private lenders.
  • Build Trust: In deed establishing good relationships with private lenders can provide a stable source of funding in the future.

Setting Yourself Up to Win

  • Think Long-Term: By setting up your business correctly from the start it makes future growth easier.
  • Be Realistic: Understand that while the process takes effort, it will easier over time as you build experience as well as a network.

Summary

  • Get Organized: From your business name to your EIN and bank accounts, make sure everything is set up properly from the very beginning.
  • Find Funding: Use a mix of business credit cards, private loans, and other funding sources.
  • Network: Build relationships with wholesalers, as well as real estate agents in order to find the best deals.
  • Stay Consistent: Regular effort and learning will lead to success and growth in your real estate empire.

To put it briefly, by following these steps and staying committed, you’ll be well on your way to building a successful real estate business. After all, the key is to set up your foundation correctly and maintain consistent effort. Do you have any question regarding where to get started or how to grow your empire? Contact us today to find out more! 

Watch our most recent video: Expert Tips for Starting and Growing Your Real Estate Empire

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Why a DSCR Loan is Perfect for Real Estate investors

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Why a DSCR Loan is Perfect for Real Estate investors

Many investors ask why a DSCR loan is perfect for real estate investing. To clarify, a DSCR loan stands for Debt Service Coverage Ratio loan and is designed specifically for real estate investors. This type of loan helps you buy rental properties, whether they are long-term or short-term rentals. However, It’s not for flips or homes you plan to live in.

Why Choose a DSCR Loan?

Choosing a DSCR loan can be a smart move for several reasons:

  1. Easy Qualification: You don’t need to worry about how long you’ve been in business or your personal income. Even if you started your business yesterday, you could qualify.
  2. Focus on Property Income: The loan qualification is based on the income generated by the property, not your personal income.
  3. 30-Year Loan Options: You get a good 30-year loan product, which can provide stability and predictability.

How Does a DSCR Loan Work?

The key to a DSCR loan is that it focuses on the property’s ability to generate enough income to cover its expenses. Here’s how it works:

  1. Property Income: The income from the rental property should at least cover the mortgage, property taxes, insurance, and any HOA or flood insurance fees.
  2. Credit Score: Your personal credit score is important. The higher your score, the better the terms and rates.
  3. Loan-to-Value Ratio (LTV): This is the amount of the loan compared to the property’s value. Lower LTV means less risk for lenders and better terms for you.

Who Can Benefit from a DSCR Loan?

DSCR loans are perfect for:

  • New Investors: If you’ve just started your real estate investment journey, you can qualify even without a long business history.
  • Tax Savvy Investors: If you write off a lot of expenses on your taxes, which can reduce your reported income, this loan can still work for you.
  • Expanding Portfolios: Investors looking to add more rental properties can benefit from the flexible qualification criteria.

Example

Imagine you are an investor who just started a year ago. You found a great rental property, but traditional lenders won’t approve your loan because you don’t have two years of business income. A DSCR loan can help. As long as the rental income covers the mortgage and other expenses, you can get the loan and grow your investment portfolio.

Get Started with a DSCR Loan Today

A DSCR loan is an excellent loan for real estate investors. Is it right for your investment needs? Contact us at The Cash Flow Company. We have the tools and expertise to help you understand your options and find the best loan for your needs.

Watch our most recent video to find out more about: Why a DSCR Loan is Perfect for Real Estate investors

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The Importance of Setting Goals Before Investing

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The Importance of Setting Goals Before Investing

Today we are going to discuss the importance of setting goals before investing. Being prepared is not only important to being successful in the BRRRR method, but in all real estate investment methods as well. Let’s break it down step-by-step.

Setting Your Goals

Every journey begins with a destination in mind. Before diving into the BRRRR method, ask yourself:

  • Why do I want to invest in real estate?
  • Where do I want to invest?
  • How many properties do I want to own?
  • How much cash flow do I want to generate?

Take a moment to think about your answers. These goals will guide your entire investment journey.

Searching for Properties

Now, let’s start our search. Look for under-market properties through:

  • Wholesalers
  • Investor-friendly Realtors
  • Real estate professionals who specialize in off-market deals

These properties are not listed on the MLS and usually require quick action.

Getting Long-term Loan Approval

Before buying, secure a pre-approval from a long-term lender. This step ensures you know the maximum loan amount you qualify for, which is crucial for the refinancing stage later on.

Buying with a Short-term Loan

Next, use a short-term loan, like a hard money loan, to purchase the property. These loans are essential for fast closings, often within days or weeks.

In Sum

It is imperative that you set your goals, search for the right properties, secure financing, and repeat the process in order to be successful. Need help getting things set up correctly? Contact us today!  

Would you like to find out more about the BRRRR method? Watch our most recent video: The Importance of Setting Goals Before Investing

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3 Factors to Think About When Considering a DSCR Loan

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3 Factors to Think About When Considering a DSCR Loan

What is a DSCR Loan?

There are 3 factors to think about when considering a DSCR loan that we are going to discuss further today. First and foremost, a DSCR loan stands for Debt Service Coverage Ratio loan and is an excellent loan for real estate investment. It’s designed specifically for real estate investors. This type of loan helps you buy rental properties, whether they are long-term or short-term rentals. However, it’s not for flips or homes you plan to live in.

Why Choose a DSCR Loan?

Choosing a DSCR loan can be a smart move for several reasons:

  1. Easy Qualification: You don’t need to worry about how long you’ve been in business or your personal income. Even if you started your business yesterday, you could qualify.
  2. Focus on Property Income: The loan qualification is based on the income generated by the property, not your personal income.
  3. 30-Year Loan Options: You get a good 30-year loan product, which can provide stability and predictability.

Important Considerations

Before jumping into a DSCR loan, consider these factors:

  1. Prepayment Penalties: These loans often come with penalties if you pay them off early. Make sure to understand these terms before committing.
  2. Higher Interest Rates: DSCR loans can have slightly higher interest rates compared to traditional loans. This is because they are easier to qualify for.
  3. Not for Flips or Personal Use: These loans are strictly for rental properties, not for homes you plan to flip or live in.

Is a DSCR Loan Right for You?

If you’re a real estate investor looking for a flexible loan option that doesn’t rely heavily on your personal income, a DSCR loan could be the perfect fit. It’s especially useful if you’re new to the business or if you maximize your tax deductions. Always run the numbers and shop around for the best terms.

Get Started with a DSCR Loan Today

A DSCR loan is an excellent loan for real estate investors. Is it right for your investment needs? Contact us at The Cash Flow Company. We have the tools and expertise to help you understand your options and find the best loan for your needs.

Watch our most recent video to find out more about: 3 Factors to Think About When Considering a DSCR Loan

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BRRRR: How to Buy Rental Properties Quickly and Easily

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BRRRR: How to Buy Rental Properties Quickly and Easily

Today we are going to discuss the BRRRR method and how it can help you buy rental properties quickly and easily. If you’re new to real estate investing, BRRRR stands for Buy, Rehab, Rent, Refinance, and Repeat. It’s a popular strategy used by many investors to build a rental property portfolio with minimal upfront costs. So, let’s break it down step-by-step.

Setting Your Goals

Every journey begins with a destination in mind. Therefore, before diving into the BRRRR method, ask yourself:

  • Why do I want to invest in real estate?
  • Where do I want to invest?
  • How many properties do I want to own?
  • How much cash flow do I want to generate?

Take a moment to think about your answers. After all, these goals will guide your entire investment journey.

Searching for Properties

Now, let’s start our search. Look for under-market properties, which are often found through:

  • Wholesalers
  • Investor-friendly Realtors
  • Real estate professionals who specialize in off-market deals

These properties are not listed on the MLS and usually require quick action.

Getting Long-term Loan Approval

Before buying, secure a pre-approval from a long-term lender. This step ensures you know the maximum loan amount you qualify for, which is crucial for the refinancing stage later on.

Buying with a Short-term Loan

Next, use a short term loan, like a hard money loan, to purchase the property. These loans are essential for fast closings, often within days or weeks.

Rehabbing the Property

Once you own the property, it’s time to rehab it. Focus on making necessary repairs to meet the After Repair Value (ARV). Remember, this is a rental property, so avoid high-end finishes. Instead, just make it appealing and functional.

Renting the Property

After the rehab, find a reliable tenant. Therefore, renting the property begins your journey to generating monthly cash flow.

Refinancing

Finally, refinance your short-term loan into a long-term mortgage. This step reduces your monthly payments and locks in a lower interest rate. Having pre-approval helps speed up this process, saving you money.

Repeating the Process

Congratulations! You’ve reached the wealth-building stage. Now, repeat the BRRRR method to continue growing your rental portfolio. Each cycle brings you closer to your financial goals.

Need help getting things set up correctly? Contact us today!  

By following the BRRRR method, you can build a robust rental property portfolio with little to no money out of pocket. So, set your goals, search for the right properties, secure financing, and repeat the process. Happy investing!

Would you like to find out more about the BRRRR method? Watch our most recent video that will further discuss how to buy rentals quickly and easily.

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