Tag Archive for: real estate funding

Take the Fast Track: #1 Lesson I’ve Learned in Real Estate Investing

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Take the Fast Track: #1 Lesson I’ve Learned in Real Estate Investing

Over the past 23 years, I’ve helped thousands of people navigate and conquer real estate investing. Looking back, there are a number of things that I would do differently to not only simplify the process but put me on the fast track as well. While there are five valuable lessons, I would like to share with you, one in particular will make a significant impact on your real estate investing venture.

How to Take the fast track

Don’t try to reinvent the wheel! Find systems and people who have worked hard and copy them. Look at what they are doing, what their systems are, and what they are looking for, as well as what they are avoiding. Discover exactly how to win by exploring what makes sense for your investments and what doesn’t. There is so much noise out there! You want to make sure that you are watching the people who are doing great and ignore those who are just talking about doing good. Here are the top three things that you need to get on the fast track!

Properties:

A valuable lesson that every fast-track investor needs to learn is how to find good properties. Find and look at as many good properties as you can.

Funding:

The most important thing as a real estate investor is leverage and using other people’s money. Funding is available through banks, lenders, or individuals.

Put together a good team:

It is vital that you partner with good contractors, knowledgeable realtors, stagers, and property managers. By putting the whole team together, they can support you by knowing what you are looking for as well as what they can or can’t do.

How can we help you?

Our goal is to make you successful! There is no need to start from scratch and struggle along the way. By researching and following what others have done, you can quickly and easily set your business up to win. 

Watch our most recent video to find out more about these 5 valuable lessons. 

Have more questions on how to get started with your business and how you can win in real estate investing? Call us today! 

 

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Benefits of DSCR Loans for Multi-Unit Properties

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Here are the requirements of a DSCR loan for a multi-unit property (plus 4 benefits of DSCR loans).

There are a few unique requirements for a DSCR loan on a commercial or multi-unit property.

  • Properties that have at least $50,000 in value or more.
  • Minimum loan size starts at $1 million to $2 million.
  • Units must be at least 75 to 90% occupied.
  • DSCR of 1.2 or higher.
  • Appraise and verify rents for each property.

This style of DSCR loan is not good for buying and fixing up value-add properties. To meet all of the requirements, the property must already be stable, rented, and bringing in rent.

4 Benefits of DSCR Loans for Commercial and Multi-Family Property

1. Portfolios

These loans not only work for commercial properties (ie, a 20-unit apartment building), but it also works for portfolios. So if you have five single-family homes you want to put under one loan, this product could also do that. The properties must appraise for $50k or higher.

2. Non-recourse

Non-recourse means you don’t have to personally sign or personally guarantee it – it all goes through your LLC. So your lender won’t come after you if something goes wrong.

3. Alternative to Banks

These DSCR-style loans are helpful while banks are tight. If you don’t want to go through the hassle of a bank (or even if you can’t qualify for a bank loan), a DSCR can be a great alternative.

4. Low Hassle

A DSCR loan won’t require your tax returns, proof of income, or any of the other paperwork that typically drags out the loan process. All you need is an LLC, a good credit score, and a qualifying property.

Read the full article here.

Watch the video here:

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Which Credit Card Is Right For You: Business vs Personal vs Corporate

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3 types of credit – and why business vs personal cards are the right option for real estate investors.

Your credit score is the driving force behind your financing. Credit score decides:

  • How many lenders will offer you money
  • Your loan-to-values
  • All terms and rates.

By raising your score, you get better financing. Better financing opens up more options for buying deals – you have more money available to you, plus more flexibility and speed in getting that money to buyers.

The business credit card is the simplest way to make that credit score jump for investors. But let’s compare it to two other major forms of credit.

Business and Corporate Credit

Business credit cards are not like corporate credit.

You can apply for a business credit card and have it back in close to a week. However, corporate credit cards are a bit harder. It involves building corporate credit and going through Dun and Bradstreet – which all takes months or years.

Business credit cards are easy, fast, and can be used every day. All you need is a business, and business name, a bank account, and a decent credit score. (Need to lower your usage to improve your score before you get a business card? Ask us about a usage loan.)

As soon as you get a business card, you can start using it to pay for contractors and supplies, which will free up your personal credit cards and raise your score.

Business Credit Card vs Personal Credit Card

One main difference between a business and personal credit card is that a personal one reports on your score and the (right) business one doesn’t.

For a personal card, you must keep your balance less than 30% of your limit. On a business card, you can max it out. In fact, credit card companies actually like when you use more of your business’s limit, and they’ll give you more credit for doing it.

Using a lot of credit is actually a benefit on the business side.

Read the full article here.

Watch the video here:

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How to Use a DSCR Loan for Commercial Property

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What you need to know about the DSCR loan for commercial property or multi-family.

Maybe you have the chance to buy an apartment unit. It could have 40 units, or just five. But what if you still want the simplicity of a DSCR loan?

Most of the time, DSCR loans are only available for single-family rentals – or sometimes up to fourplexes. However, there is a product very similar to a DSCR loan that can be used for commercial property and multi-family apartment buildings.

Let’s explore how these loans differ in terms and requirements from other DSCR loans.

What Is a DSCR Loan for Commercial Property?

A DSCR loan is a product that does not rely on income from the borrower or borrowing entity. The borrower could be an individual, an LLC, or a partnership.

Regardless of who is borrowing, the lender does not require their income information.

Instead, a DSCR loan depends on the income (rent) from the property. A debt service coverage ratio is the rent divided by the expenses of a property. If the DSCR is 1, that means the income perfectly covers the expenses, breaking even.

Ratio Requirements for a DSCR Loan

A DSCR loan for commercial property will likely require at least a 1.2 DSCR. This would mean your income is 120% more than your expenses.

For instance, if your mortgage, interest, taxes, and insurance add up to $1,000 per month, your rent must be $1,200 per month to have a DSCR of 1.2.

Differences Between the Types of DSCR Loans

Let’s look at the differences between a typical DSCR and a DSCR-style product that is used for multi-family and commercial properties.

  • Loan size. The average DSCR loan is for single-family units, duplexes, and fourplexes, usually around $300k to $400k. A DSCR loan for commercial property, however, is a larger loan – typically anywhere between $1 million to $2 million.
  • LTV. For a typical DSCR loan, you could get an LTV of 80-85%. Commercial DSCR loans max out at 75%.
  • Terms. A DSCR loan for commercial property can be amortized over 30 years, or it can be interest-only. But they’re only fixed for a certain period, most commonly five, seven, or ten years.

Requirements for Commercial Property DSCR Loans

There are a few unique requirements for a DSCR loan on a commercial or multi-unit property.

  • Properties that have at least $50,000 in value or more.
  • Minimum loan size starts at $1 million to $2 million.
  • Units must be at least 75 to 90% occupied.
  • DSCR of 1.2 or higher.
  • Appraise and verify rents for each property.

This style of DSCR loan is not good for buying and fixing up value-add properties. To meet all of the requirements, the property must already be stable, rented, and bringing in rent.

4 Benefits of a DSCR Loan for Commercial and Multi-Family Property

  • Portfolios

These loans not only work for commercial properties (ie, a 20-unit apartment building), but it also works for portfolios. So if you have five single-family homes you want to put under one loan, this product could also do that. The properties must appraise for $50k or higher.

  • Non-recourse

Non-recourse means you don’t have to personally sign or personally guarantee it – it all goes through your LLC. So your lender won’t come after you if something goes wrong.

  • Alternative to Banks

These DSCR-style loans are helpful while banks are tight. If you don’t want to go through the hassle of a bank (or even if you can’t qualify for a bank loan), a DSCR can be a great alternative.

  • Low Hassle

A DSCR loan won’t require your tax returns, proof of income, or any of the other paperwork that typically drags out the loan process. All you need is an LLC, a good credit score, and a qualifying property.

More on DSCR Loans

A DSCR loan could be the right fit for your single-family, multi-family, or commercial property.

Left with questions about DSCR loans? Check out these videos.

Want more info for your deal or portfolio? Reach out at Info@TheCashFlowCompany.com.

Not sure your property’s DSCR qualifies? Use this free, simple DSCR calculator.

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5 Things To Do Before You Get a HELOC

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What should you know before you get a HELOC?

First, know where to go for HELOCs. This is typically local credit unions and large national banks.

But before you call these institutions, make sure you have these 5 things ready:

  1. How much your property is worth.
  2. How much you owe on it.
  3. Align your LTVs. So if it’s a rental property, make sure your current mortgage and your current value is 70-75% or less, or HELOCs are probably not going to be available to you.
  4. What your credit score is. Know what it is and know what it needs to be. Most places will require a minimum 680, but 700 is better. The higher your credit score, the higher your loan-to-value.
  5. What type of property it is. Especially with a rental, know its condition and whether it’s a single-family, duplex, etc.

A final tip on HELOCs: each bank or company will give you a HELOC on between one and three of your properties. So if you want a HELOC on five, ten, or twenty properties, you’ll have to set up accounts at different banks.

As an alternative, you could also look into lines of credit, which span multiple properties.

Help to Get a HELOC (and More)

We want to make it easier for you to get the best, cheapest leverage possible for your investments.

If you have any questions or have a loan you’d like us to price out, reach out to us at Info@TheCashFlowCompany.com. If you just want more information on real estate investing, you should check out the videos on our YouTube channel.

Read the full article here.

Watch the video here:

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The Benefits of a Business Credit Card for Real Estate Investing

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The real estate investor’s credit score solution: the benefits of a business credit card.

Business credit cards are a no-brainer alternative to using your personal cards for your real estate investments.

Most real estate investors use a credit card to pay for the expenses involved in fixing up properties. Doing this, however, raises your balance, which increases your usage. Usage makes up 30% of your credit score, so keeping high balances on your personal card can significantly lower your score.

Weigh the Credit Benefits of a Business Card

It’s important to get all investing expenses off your credit. It not only impacts your business, but it impacts your personal life, too. When you need a personal mortgage, or a new car, or a boat… Your lender will check your credit, and they’ll see the bad score if your usage is out of whack from your business.

A business credit card solves your credit problems in two ways:

  • It helps your credit score. Moving these balances onto a business card takes them off your personal credit. Business credit won’t impact your personal score. This will allow you to get better outside funding.
  • It’s a form of fast, easy, cheap funding. It still allows you the convenience of a credit card – and sometimes at a better rate.

The “best” business credit card for a real estate investor is one that does not show up on your personal report.

Making Real Estate Investing Easier and More Profitable

Our primary focus is making investing easier on the funding side. There are many ways to fill your “money buckets,” whether it’s business credit cards, HELOCs, real people’s money, or loans.

We want to help you with all of it. Reach out at Info@TheCashFlowCompany.com for more step-by-step help on business credit cards and other valuable funding sources.

Read the full article here.

Watch the video here:

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How a Business Credit Card Can Change a Real Estate Investor’s Career

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A business credit card for real estate investing: do you really need it?

There are two major things a real estate investor needs: easy, fast, and cheap funding and a good credit score to secure that funding.

Using a business credit card as a real estate investor can be the answer to both of these problems. Let’s go over exactly how a business card could change your career.

The Credit Benefits of Using a Business Credit Card

So, why business credit cards? They’re a no-brainer alternative to using your personal cards for your real estate investments.

Most real estate investors use a credit card to pay for the expenses involved in fixing up properties. Doing this, however, raises your balance, which increases your usage. Usage makes up 30% of your credit score, so keeping high balances on your personal card can significantly lower your score.

It’s important to get all investing expenses off your credit. It not only impacts your business, but it impacts your personal life, too. When you need a personal mortgage, or a new car, or a boat… Your lender will check your credit, and they’ll see the bad score if your usage is out of whack from your business.

A business credit card solves your credit problems in two ways:

  • It helps your credit score. Moving these balances onto a business card takes them off your personal credit. Business credit won’t impact your personal score. This will allow you to get better outside funding.
  • It’s a form of fast, easy, cheap funding. It still allows you the convenience of a credit card – and sometimes at a better rate.

The “best” business credit card for a real estate investor is one that does not show up on your personal report.

The Importance of Credit Score in Financing

In all financing, your credit score is the main driving force. Credit score decides:

  • How many lenders will offer you money
  • Your loan-to-values
  • All terms and rates.

By raising your score, you get better financing. Better financing opens up more options for buying deals – you have more money available to you, plus more flexibility and speed in getting that money to buyers.

The business credit card is the simplest way to make that credit score jump for investors.

Business Credit Card vs Corporate Credit

Business credit cards are not like corporate credit.

You can apply for a business credit card and have it back in close to a week. Corporate credit cards are a bit harder. It involves building corporate credit and going through Dun and Bradstreet – which all takes months or years.

Business credit cards are easy, fast, and can be used every day. All you need is a business, and business name, a bank account, and a decent credit score. (Need to lower your usage to improve your score before you get a business card? Ask us about a usage loan.)

As soon as you get a business card, you can start using it to pay for contractors and supplies, which will free up your personal credit cards and raise your score.

Business Credit Card vs Personal Credit Card

One main difference between a business and personal credit card is that a personal one reports on your score and the (right) business one doesn’t.

For a personal card, you must keep your balance less than 30% of your limit. On a business card, you can max it out. In fact, credit card companies actually like when you use more of your business’s limit, and they’ll give you more credit for doing it.

Using a lot of credit is actually a benefit on the business side.

Making Real Estate Investing Easier and More Profitable

Our primary focus is making investing easier on the funding side. There are many ways to fill your “money buckets,” whether it’s business credit cards, HELOCs, real people’s money, or loans.

We want to help you with all of it. Reach out at Info@TheCashFlowCompany.com for more step-by-step help on business credit cards and other valuable funding sources.

You can also check out our YouTube channel for more info on real estate investing and funding.

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How to Use a HELOC like Cash to Buy a Property

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If you want to buy properties quickly… here’s how to use a HELOC.

A HELOC allows you to buy properties with cash, without having the actual cash. So how does this work to buy properties with a HELOC?

Once you’ve set up a HELOC, you could go into the bank at any time and ask them to draw the money out or wire it.

Within hours of finding a property, it’s possible to go under contract, set up a closing, fund it, and own it. Once you own the property, you can always refinance later into a more traditional loan to pay back what you took from your HELOC.

This allows you to compete with cash buyers because this is exactly how they do it. Using a HELOC in this way gives you the power to get in front of the line.

How to Use Small HELOCs

HELOCs are a valuable tool in any investors’ toolbelt. It’s one of the easiest ways to ensure no good deal will get away from you.

Even if your HELOC isn’t big enough to fund the purchase of the whole property, you could still use it as a down payment. This way, you might not need to wait for lender approval to close.

Even if it’s not purchasing the whole property, maybe it’s putting the money down. So you don’t have to wait for your lender. You don’t have to figure out if they’re going to approve you or not.

How to Use Big HELOCs

If you want more HELOC power behind your investing punch, there are a few things to keep in mind.

First, if you own multiple properties, you can put HELOCs on each of them. More lines of credit equals more cash available to you.

Second, you want to ensure you’re getting the best HELOCs. What makes HELOCs the best for real estate investors who compete with cash buyers? There’s one thing: high loan-to-values.

You’ll want to shop around to get the maximum amount you can from these lines of credit. Money is power in real estate investing, so choosing the HELOC with an extra point in fees shouldn’t distract you from your highest LTV option.

The best lenders will be able to give you 70-75% LTVs on your rental properties and 80-85% on your owner-occupied home.

Where to Find the Best HELOC

So where do you find the best HELOC? It’s something you’ll have to do a little research on.

If you don’t want to do your own research, we do it every month. We call all the banks and credit unions in our markets to find out who has the best loan to values, lowest rates, and easiest qualifications. Reach out at Info@TheCashFlowCompany.com if you want this list!

Read the full article here.

Watch the video here:

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5 Differences Between a HELOC and a Bank Line of Credit

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HELOC and a bank line of credit… which is better for your investments?

So what’s the difference between a true bank line of credit for your business and a HELOC?

Let’s go over 5 key differences you should know.

1. Qualifying for a HELOC or Bank Line of Credit

Typically with a bank line of credit, which is a line of credit on one or multiple properties, you could have one line of credit that covers all of your properties or just part of them. You have that flexibility. But, in order to qualify, you also have to provide all the paperwork, taxes, and everything a bank usually requires.

For a HELOC, qualifying is usually just as simple as getting an estimate or value on your property, and having a good credit score. There is often minimal paperwork and little concern about your income.

2. Applying

One major benefit of a HELOC is once you get one, they’re good for a set draw period. That period is usually 5 or 10 years. So once you get it, you have it at your disposal for that timeframe. You can use it over and over.

A bank line of credit that goes through your business is less set-it-and-forget-it. Some banks will want to look at your financials every year, and some every two years. You’ll have to re-qualify every couple of years.

With a bank line of credit, you have to bring in your paperwork every few years, so you have to be sure your business stays profitable. They also re-evaluate the property’s value, which can be pro or con depending on the market.

3. LTVs on a HELOC or Bank Line of Credit

What are they going to lend you? A HELOC on a non-owner-occupied property usually maxes out at 70% of your equity. In owner-occupied, that could be up to 80%.

Depending on your credit and your properties, a bank line of credit will probably have a maximum LTV of 75% average overall on the properties.

The LTVs on these two lines of credit aren’t that different. It’s more important that, whichever option you go with, you shop around to maximize your loan-to-value.

4. Costs

Typically, a HELOC costs a few hundred dollars to open up. So each property you put a HELOC on will have its own fees (the couple hundred bucks) and requirements every time. But remember, this lasts for 5-10 years, or until whenever you refinance it.

The cost for a bank line of credit will be somewhere between one and one and a half percent. They may need some appraisals to approve it. And remember – since it’s only a 1-2 year limit on bank lines of credit, these charges will happen at least every 2 years.

5. Source

Now, the biggest benefit of a bank line of credit: it’s in one source.

For HELOCs, you have a small amount available on each property. So if you need a large amount, you’ll have to go to each bank or credit union and pull out the amounts. You’ll have different accounts at different banks that you’ll have to manage the payments on. You may have two HELOCs, or you might have 10 – and you might have to put all 10 together to get enough funds for what you need.

Read the full article here.

Watch the video here:

https://youtu.be/BXvXb0BpyPo

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The Secret Method to Compete with Cash Buyers

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Setting up this simple funding source helps you compete with cash buyers in your market.

Cash buyers always swoop up the best deals. Why? Wholesalers and realtors contact them first because they know they’ll get a fast, simple close with these people.

How can you even begin to compete with cash buyers in the real estate investing market? HELOCs are a secret weapon that not enough investors are tapping into.

A HELOC allows you to play the same game. Let’s go over the details.

How to Use a HELOC like Cash to Compete with Cash Buyers

A HELOC allows you to buy properties with cash, without having the actual cash. So how does this work to buy properties with a HELOC? 

Once you’ve set up a HELOC, you could go into the bank at any time and ask them to draw the money out or wire it.

Within hours of finding a property, it’s possible to go under contract, set up a closing, fund it, and own it. Once you own the property, you can always refinance later into a more traditional loan to pay back what you took from your HELOC.

This allows you to compete with cash buyers because this is exactly how they do it. Using a HELOC in this way gives you the power to get in front of the line.

Small HELOCs

HELOCs are a valuable tool in any investor’s toolbelt. It’s one of the easiest ways to ensure no good deal will get away from you.

Even if your HELOC isn’t big enough to fund the purchase of the whole property, you could still use it as a down payment. This way, you might not need to wait for lender approval to close. 

Even if it’s not purchasing the whole property, maybe it’s putting the money down. So you don’t have to wait for your lender. You don’t have to figure out if they’re going to approve you or not. 

Big HELOCs

If you want more HELOC power behind your investing punch, there are a few things to keep in mind.

First, if you own multiple properties, you can put HELOCs on each of them. More lines of credit equal more cash available to you.

Second, you want to ensure you’re getting the best HELOCs. What makes HELOCs the best for real estate investors who compete with cash buyers? There’s one thing: high loan-to-values.

You’ll want to shop around to get the maximum amount you can from these lines of credit. Money is power in real estate investing, so choosing the HELOC with an extra point in fees shouldn’t distract you from your highest LTV option.

The best lenders will be able to give you 70-75% LTVs on your rental properties and 80-85% on your owner-occupied home.

Where to Find the Best HELOC to Compete with Cash Buyers

So where do you find the best HELOC? It’s something you’ll have to do a little research on.

If you don’t want to do your own research, we do it every month. We call all the banks and credit unions in our markets to find out who has the best loan to values, lowest rates, and easiest qualifications. Reach out at Info@TheCashFlowCompany.com if you want this list!

5 Things To Do Before You Get a HELOC

So if you want to compete with the cash buyers, how do you start with getting a HELOC?

First, know where to go for HELOCs. This is typically local credit unions and large national banks.

But before you call these institutions, make sure you have these 5 things ready:

  • How much your property is worth.
  • How much you owe on it.
  • Align your LTVs. So if it’s a rental property, make sure your current mortgage and your current value is 70-75% or less, or HELOCs are probably not going to be available to you.
  • What your credit score is. Know what it is and know what it needs to be. Most places will require a minimum 680, but 700 is better. The higher your credit score, the higher your loan-to-value.
  • What type of property it is. Especially with a rental, know its condition and whether it’s a single-family, duplex, etc.

A final tip on HELOCs: each bank or company will give you a HELOC on between one and three of your properties. So if you want a HELOC on five, ten, or twenty properties, you’ll have to set up accounts at different banks.

As an alternative, you could also look into lines of credit, which span multiple properties.

Help on HELOCs and More

We want to make it easier for you to get the best, cheapest leverage possible for your investments.

If you have any questions or have a loan you’d like us to price out, reach out to us at Info@TheCashFlowCompany.com. If you just want more information on real estate investing, you should check out the videos on our YouTube channel.

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