Tag Archive for: real estate investing

What is Happening with Loans for Fix-and-Flips in 2022?

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Loans for fix-and-flips are changing fast. Here’s what you need to know.

There are two ways you might be thinking about loans for fix-and-flips right now.

First, maybe you have a property on the market now you’re trying to get rid of.

Second, maybe you’re planning for what’s going to happen with flips in the near future.

In about six to twelve months, the market is expected to have another shift. Prices should come down, and better properties will become available.

To be ready for those upcoming opportunities, here’s what you need to know about loans for fix-and-flips now.

Money Tightening on Loans for Fix-and-Flips

What does it mean for real estate investors when the Fed starts tightening money? Lenders start to pull back.

Lenders want to wait to figure out what will happen with the markets. Their money isn’t returned as fast as usual because investors’ properties take longer to sell. Less money becomes available overall.

This tightening of money results in many recent changes we’ve seen in loans for fix-and-flips.

Changes in LTVs

The loan-to-cost or loan-to-ARV on properties has lowered, and appraisals are being cut. The average LTV used to be 75%. Now, most lenders have pulled back to 65-70%.

Lower LTVs mean you need to bring more money into a deal. It’ll take more out-of-pocket to actually close on a property in the current market. 

With low LTVs and lenders being picky with transactions, it’s important to only take fix-and-flips you can obviously turn a profit on.

Home Value Changes

While loan-to-values are going down, credit score requirements are going up. Typically, lenders’ credit score minimums start at 620 or 640. Now, many lenders won’t take anyone with lower than a 680 or 700 score. Six months from now, that could become even tighter.

If you’ve been investing for a while, you’ll need to change how you look at leverage. For the past ten years, lenders have been seeking you. Now, you’ll have to proactively find your money. It’s more important than ever to plan your funding.

Rates on Loans for Fix-and-Flips

What do rates look like for fix-and-flip loans currently? 

You can probably guess – rates for all loans have gone up.

At The Cash Flow Company, we represent about five or six capital funds. We’re always looking for the ones with the best rates, but still – there’s nothing much available in capital funds lower than a 10-12% interest rate.

Six months ago, you could find these same loans for closer to 7-8%. This is the squeeze. This is the tightening the Fed wanted when they raised interest rates. Now it’s affecting your loans for fix-and-flips, but you can still get prepared for better opportunities.

Advice on Flips for the Next Few Months

There are a few things we recommend to set yourself up for success with flips in the next few months.

  • Smaller Projects – Smaller, lower price point homes tend to sell better in this type of market.
  • Bigger Neighborhoods – Outlier, rural properties were popular in the midst of the pandemic. But now those same properties are sticking on the market for a long time. Keep your flips inside a big, good neighborhood.
  • Aggressive Funding – Be proactive and relentless in your search for funding sources (or have someone searching on your behalf). When great new deals come, you’ll be one of the few investors who is ready.
    • Consider getting a HELOC on your home now so you have available funds when you need them.
    • Call banks and other lenders to stay updated on their requirements.
    • Find OPM lenders. Especially in an economy like this, people with money want safe, secure returns. Getting those people to fund your investments can help you take advantage of upcoming low prices.

We Can Help with Loans for Fix-and-Flips

We’re always looking for the best loans. We spend time talking to lenders on your behalf, getting loans with the best terms and requirements, that best fit the current market.

If you have or want a flip, reach out to us. We have many sources that are still looking to lend – capital funds and hard money.

You can also bring us your questions on OPM – from finding lenders, to attracting them, to closing with them.

With any of these questions or more, email us at Info@TheCashFlowCompany.com.

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How DSCR Loans Work in Today’s Real Estate Market

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Here are the basics of how DSCR loans work for your real estate investment.

Finding the right loan isn’t as easy as it used to be.

We’re getting more and more calls asking about different loans. And the most common loan investors want to know about? DSCR loans.

How are DSCR loans changing in this current market? Where will rates go? Who is still offering them? Is a DSCR loan even still a good option for investors right now?

Let’s go over those answers and see how DSCR loans work in today’s real estate market.

The Basics of How DSCR Loans Work

To begin with, the most important thing to know about DSCR loans right now is that they vary from lender to lender. You need to get to know lenders in your area.

Conventional conforming loans are different – they have one main underwriting guideline all lenders follow. For DSCR loans, every lender creates their own requirements, offers, and processes.

How DSCR Loans Differ

Each lender has their own nuances. Any number of these factors can change for a DSCR loan between different lenders:

  • Ratio requirements
  • Credit score requirements
  • Terms and products (interest-only, 40-year, etc.)
  • Interest rates

Lenders will also have different restrictions for properties, based on:

  • Location
  • Unit size
  • Short-term vs traditional rentals
  • Personal name vs LLC name

To be successful with DSCR loans, you need to become a master of which lenders offer what in your area.

You have to be proactive. Lenders won’t come knocking on your door to let you know what products they have available.

How to Connect with DSCR Lenders

With more investors asking for money and less money available, many lenders are overwhelmed. The best thing you can do is be proactive, educated, and prepared with your lenders.

It’s wise to get someone who can help connect you with lenders and products. A place like The Cash Flow Company can help with this aspect of real estate funding. They can advocate for you to make sure you get the best loan for your deal.

How DSCR Loans Work – What is the “DSCR”?

“DSCR” stands for “debt service coverage ratio.” It’s a number that explains cash flow, or money coming in vs money going out.

In a real estate rental situation, there are two important numbers to figure out this ratio:

  1. Income – rent from tenants.
  2. Expenses – mortgage principal and interest, taxes, insurance, and any HOA fees.

What Debt Service Coverage Ratio Do DSCR Lenders Take?

If your income 100% covers your expenses with none left over, that’s a ratio of 1:1. Most DSCR lenders require 1:1 as a standard minimum.

DSCRs Lower Than 1:1

Some lenders will go as low as .75, which is called no ratio. That’s if your income from your rental leaves 25% of the property’s expenses left over. 

There’s one main circumstance when investors would take a loan with no ratio. If you have a fix-and-flip in a tough spot and need to refinance it into a rental for a short time, a no ratio DSCR loan could make sense.

Making $2,500 rent on a $3,000 per month property is better than spending $3,000 every month for a house that’s just sitting on the market. Some income is better than none.

DSCRs Higher Than 1:1

But the ideal use of a DSCR loan is when you have a higher ratio. This would mean your rent is higher than your expenses, and your property has positive cash flow.

Some lenders require a ratio of 1:2. This requires a much bigger gap between what your tenant pays for the property and what you pay. Hitting this ratio can be unrealistic for many markets. Rents are steadily increasing, but not by that much.

You should verify what ratio lenders use before you even consider closing on a DSCR property. Do your research, learn your lending options, and find out each DSCR lenders’ minimum requirements.

How DSCR Loans Work – How Do You Calculate the DSCR?

So now you understand what the ratio is and how lenders use it… But how do you calculate your DSCR ratio?

You need two numbers:

  1. The rent you’ll charge (income)
  2. Mortgage principal and interest, taxes, insurance, and HOA fees (expenses)

Note: utilities and property management costs are not considered expenses on a DSCR loan.

Once you add up your expenses, you have to find out if your rent covers them. To get the ratio number, you divide income by expenses.

If you don’t want to worry about doing the math yourself, you can download our free DSCR loan calculator at this link.

DSCR Loan Calculation Example

Here’s a simple example.

Let’s say you have a single-family property, and the interest and mortgage is $1,000/month. Taxes are $250, property insurance is $150, and there are no HOA fees.

Your total monthly expenses adds up to $1,400.

Now let’s say the rent you can charge based on your property’s location is $1,600.

So, you can divide $1,600 (income) by $1,400 (expenses). You get a ratio of 1.14.

A 1:1 ratio (the typical minimum) can also be called 1. So our 1.14 is higher than the minimum. With a ratio higher than one, you’ll have a much better shot at finding a DSCR lender who will work with you.

If the market in our example went up, maybe you could charge $2,000/month for rent. If your expenses were still $1,400, your ratio would be 1.42. With that ratio, you could likely get a bigger loan and lower rate.

The higher your ratio, the better your opportunities for rates and terms. The lender sees it like this: the more income coming into the property, the more guaranteed it is you’ll pay them back.

Short-Term Rental Options with DSCR Loans

It’s still possible to use DSCR loans for short-term rental units (like Airbnb or VRBO).

However, the requirements may be different for a short term-rental. You can get your DSCR loan for a short-term rental one of two ways:

  1. You’ll need to have 2+ years of experience with the property, with proof of income for that time. The rental will be treated as “no ratio,” so you’ll get higher rates and lower LTVs.
  2. They’ll go off of market rent of traditional rentals in the area. If the DSCR with that market rent qualifies, you can get a decent loan.

In either case, DSCR loans for short-term rentals don’t count the rent you receive from guests as the income. The ratio has to be calculated using regular rent rates.

Get Someone On Your Team Who Knows How DSCR Loans Work

You may be stepping into unfamiliar waters with this market, unsure of where or how to get investment loans. Yet leverage will still be vital for your real estate career.

The Cash Flow Company searches every day for the best loans for real estate investors.

If you have a DSCR loan or a deal you need a loan for, reach out to us at Info@TheCashFlowCompany.com.

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How to Maximize Your Leverage in Real Estate Investing

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Text: "How to Maximize Leverage"

Leverage is a powerful investing tool. How does it look to maximize your leverage?

A real estate investor’s goal is to maximize leverage – get the best, cheapest, easiest leverage available.

This means going an extra step:

  • Having great credit.
  • Having great income.
  • Coming to the lender prepared.
  • Having investment experience.

In a previous blog post, we broke down the difference using leverage makes for your income and net worth.

Now, let’s say you’ve done everything right, and you’ve earned yourself better leverage from your lender.

What happens when the same scenario is taken to the next level with top-tier leverage?

80% Leverage

To start, we’ll say you meet the bank’s criteria, and they agree to lend you 80% (or $80,000) on each $100,000 house you purchase.

Income with Maximized Leverage

Your down payment per property is now only $20,000, so you can afford 5 properties. But since you borrowed more money, the mortgage payment is higher, and the net rent goes down to $750/month.

Five properties with an income of $700 per month is $3,500 per month. This works out to be $42,000 per year. Annually, that’s $6,000 more than using a 75% loan, and $27,600 more than using no leverage at all.

Equity with Maximized Leverage

Lastly, let’s look at the wealth side with maxed-out leverage.

Thirty years adds $750,000 to the value of the 5 homes. All that money is added to your net worth.

As a result of the $750k of equity plus the $500k of the original purchase of the homes, your net worth increases by $1,250,000.

Once your mortgage is paid off and you own all 5 properties free and clear, you earn the full amount of rent per month. This is $1,200 × 5 properties, or $6,000 per month!

Using good leverage has the potential to make you literal millions of dollars over buying investment properties in cash.

Read the full article here.

Watch the video here:

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Why Are Bridge Loans So Popular Right Now?

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Everything you need to know about bridge loans right now in the current market.

The demand for bridge loans is up in the real estate investment community. Yet the availability of loans is decreasing every day.

Why is this? Who is still lending?  What are the current costs? And how do you find these lenders?

Let’s dive in.

Why the Real Estate Market Has Changed

Federal interest rates keep rising, tightening up money across the country for real estate investors.

The entire real estate market is feeling the squeeze of rates. Many fix-and-flips on the market now were purchased in a different market. Investors may have expected to get top-dollar for houses that now may take weeks or months to sell at all.

The Market Changes & Bridge Loans

What changes have already occurred, and what can we expect going forward for bridge loans?

In general, you can expect the following changes from real estate leverage lenders:

  • Lower LTVs – The amount of money you can get from a lender will continue to go down.
  • Cutting Appraisals – Lenders expect a 5% to 15% decrease in market prices, and appraisals will begin to reflect that.
  • Shortened Terms – The length of bridge loans or some lenders will be cut in half.
  • Credit Score – While a 620 credit score used to be the minimum, now lenders won’t consider applicants with less than a 680.
  • Pricing – Six to eight months ago, you could get a bridge loan at a 7% to 8% interest rate. Presently, they’re around 10% or 11%.

Just as you might feel some uncertainty in these economic times, lenders feel it too. Lending institutions want to keep themselves safe. Unfortunately for real estate investors, that means tight money – including bridge loans.

Why Bridge Loans are Needed

These market conditions increase the demand for bridge loans. Homes may be staying on the market longer, but lenders still need their loans paid back on time, and you still need to move on to your next project.

Now is the time to set yourself up well financially. Due to tightened conditions now, the market 6 months from now will have a lot of great deals for investors. Bridge loans can help you get ready.

With a bridge loan, you can free up the capital you have in houses on the market. Plus, you can improve your relationship with lenders by paying off your flip loan.

You can put your flipped house into a short-term bridge loan for 2 to 3 years. In the meantime, you could rent out the property, or just use the loan to pay off the lender while waiting for a buyer.

Using bridge loans in this way keeps you from foreclosure or other negative effects on your credit.

Who Does Bridge Loans Right Now?

The following places are still lending:

  • Small to mid-size banks
  • Lenders that work with capital funds or hedge funds
  • Small lenders, like The Cash Flow Company
  • Some hard money lenders

The catch is they’ve all tightened their funds.

You can get a bridge loan from these places. You’ll just get lower LTVs, higher rates, and need a better credit score.

In this market, it’s important to reach out to any lender who can help you. Nothing will fall into your lap – you’ll have to actively search to find a loan product to fit your bridge needs.

You can also work with a place like The Cash Flow Company, who always searches for the best real estate loans available.

What Is the Cost of Bridge Loans Right Now?

There are 3 main types of bridge loan lenders: banks, capital funds/hedge funds, and local hard money lenders. 

But the market has changed. Here’s a glimpse into what you can expect for the next few months:

Rates

Banks – Interest rates average around 6% to 6.5% for banks.

Capital Funds – Expect 10% to 12% interest rates for hedge fund bridge loans right now.

Hard Money – Hard money interest rates are about the same as cap funds, around 10% to 12%, but with a bit more flexibility.

Points

Banks – Banks have the cheapest money, at 1 to 1.5 points. Smaller banks tend to charge more in origination fees than national banks.

Capital Funds – Cap funds charge around 2 to 3 points.

Hard Money – You can expect 2 to 4 points on a hard money bridge loan transaction.

LTVs

Banks – Depending on your relationship with the bank, you can get up to  65% to 70% LTV on a bridge loan.

Capital Funds – You can get 65% LTV on a refinance or bridge loan with a hedge fund.

Hard Money – Hard money has the most LTV flexibility, like putting a cross-lien on other properties. Typical LTV range is 70% to 75%.

Terms of Bridge Loans

Banks – For bridge loans, banks have the most flexible, longest terms, from 1 to 3 years.

Capital Funds – For cap funds, 3-year bridge loans are now two. Two-year bridge loans are now one.

Hard Money – Bridge loans from hard money have the shortest terms – as short as 1 month, and typically no longer than 1 year.

Closing Times

Banks – Banks’ lead time for a bridge loan is typically 3 to 6 weeks. But lately, we’ve seen loans take up to a couple months in the current market.

Capital Funds – The standard closing time for cap funds is 2 to 3 weeks.

Hard Money – Hard money can close fastest – which is very important for a bridge loan. Depending on your relationship with the lender, the loan can take a week or less.

Location

Banks – Banks have a footprint they’ll lend within, which is typically very local.

Capital Funds – Hedge funds lend nationwide. They’re the best option for multi-state bridge loans.

Hard Money – Hard money lenders are flexible. But, they tend to lend locally, or in other areas they’re familiar with.

Valuation

Banks – Banks require an appraisal for all loans over $250,000. (And some loans under that amount).

Capital Funds – Hedge funds always require an appraisal.

Hard Money – There is no appraisal in the hard money loan process. That’s why they can close so much faster than everyone else.

Overview

Banks – Will be your cheapest but slowest options. They have high requirements.

Capital Funds – Middle of the road for cost and speed, but helpful if you need loans within multiple urban areas.

Hard Money – The most expensive option for bridge loans, but also the most flexible and the fastest.

How Do You Find Bridge Loan Lenders?

For bridge loans right now in these changing times, you need to be proactive.

Where to Search for Bridge Loan Lenders

Check with local real estate communities (REITs in your area, biggerpockets.com, etc). Once you get some lender names, call around. Overall, it may take some effort to find lenders.

Or you can offload the research onto us.

We search every day for the best bridge loans in the real estate world.

Email us with a question about a deal or a bridge loan need, and we’ll find a way to help: Info@TheCashFlowCompany.com.

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How to 5X Your Real Estate Investments

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Text: "How to 5X Your Real Estate Investments"

Leverage can 5x your real estate investments. Let’s look at how.

Should a real estate investor ever avoid leverage? Should they always use cash when possible?

Short answer: nope.

Using leverage can help you 5x your real estate investments. Let’s take a simple example to show how it works.

Cash vs Leverage

First off, we’re going to use simple numbers in this example.

Of course, home costs and rent costs will change in different markets and different areas. But we’ll run with these numbers – even if they aren’t 100% accurate, they’ll paint a good picture of the math that backs up leverage.

Let’s say you have $100,000 at your disposal that you want to invest in real estate.

Income Real Estate Investing with NO Leverage

To begin with, you could take all the money and buy one property valued at $100,000 outright. You’d invest the full $100k, own the house free and clear, and receive $1,200 of net rent income per month.

This adds up to $14,400 per year you’d earn from a house you fully own.

Income Real Estate Investing WITH Leverage

Now let’s see how it plays out when you involve a lender rather than buying outright.

You could offer to put down $25,000, and the lender might agree to loan you the other $75,000. That $75,000 covered by the lender would be your leverage.

And now, instead of pouring all your money into one property… you only have to put in $25,000.

Take your $100,000 and divide it by 25,000. That’s 4 properties you could buy with leverage. For the same out-of-pocket amount as buying 1 property outright.

However, because you’re now paying a mortgage on these rental properties, your monthly net rent goes down.

Your income is now $750 per property. Multiplied by 4 properties. So this brings in $3,000 per month, or $36,000 per year.

You have the potential to make an additional $21,600 per year – just from using leverage.

No matter what amount you start with (in this case, $100,000), using leverage brings in more income.

How Does Leverage Change Your Net Worth?

Monthly rent income isn’t the only way a rental property makes you money. It will also increase in value.

When a home appreciates, it increases your total net worth. The average yearly appreciation rate for real estate across the country is 5%.

It’s clear that leverage impacts income, but what about wealth?

Let’s throw this 5% number into our equation and see what happens with leverage.

Net Worth No Leverage

If a property was purchased for $100,000, that one home would increase in value by an average of $5,000 per year.

So, the one home you bought outright would give you $150,000 in equity after 30 years.

You bought it for $100,000. After 30 years, you’re adding $150,000. So that’s a net value of $250,000.

Net Worth with Leverage

Next, let’s see the equity of the 4 properties purchased with leverage.

Multiply your 4 properties by the $5,000 in value they each increase every year. Your portfolio will appreciate $20,000 per year.

Over a 30-year span, your 4 properties would add $600,000 to your net worth. Add the original values of the homes (4 × $100,000), and your net worth increases by $1,000,000.

A million using leverage definitely beats the $250k you got from buying 1 home outright.

Read the full article here.

Watch the video here:

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The Most Important Step in Real Estate Investing: Leverage

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How to turn $100,000 into $1.25 million by real estate investing with leverage.

A real estate investor’s most valuable tool is leverage.

Without it, you can’t buy, can’t hold, and can’t profit from your properties.

To prove our point that leverage is the most important step in real estate investing, let’s ask the question:

If you had the free capital to spend, would you make more money by buying a home outright or by using debt (leverage)?

Let’s break down a simple transaction to answer this question.

How Far Can You Get with $100,000?

First off, we’re going to use simple numbers in this example.

Of course, home costs and rent costs will change in different markets and different areas. But we’ll run with these numbers – even if they aren’t 100% accurate, they’ll paint a good picture of the math that backs up leverage.

Let’s say you have $100,000 at your disposal that you want to invest in real estate.

Income Real Estate Investing with NO Leverage

To begin with, you could take all the money and buy one property valued at $100,000 outright. You’d invest the full $100k, own the house free and clear, and receive $1,200 of net rent income per month.

This adds up to $14,400 per year you’d earn from a house you fully own.

Income Real Estate Investing WITH Leverage

Now let’s see how it plays out when you involve a lender rather than buying outright.

You could offer to put down $25,000, and the lender might agree to loan you the other $75,000. That $75,000 covered by the lender would be your leverage.

And now, instead of pouring all your money into one property… you only have to put in $25,000.

Take your $100,000 and divide it by 25,000. That’s 4 properties you could buy with leverage. For the same out-of-pocket amount as buying 1 property outright.

However, because you’re now paying a mortgage on these rental properties, your monthly net rent goes down.

Your income is now $750 per property. Multiplied by 4 properties. So this brings in $3,000 per month, or $36,000 per year.

You have the potential to make an additional $21,600 per year – just from using leverage.

No matter what amount you start with (in this case, $100,000), using leverage brings in more income.

How Does Leverage Change Your Net Worth?

Monthly rent income isn’t the only way a rental property makes you money. It will also increase in value.

When a home appreciates, it increases your total net worth. The average yearly appreciation rate for real estate across the country is 5%.

It’s clear that leverage impacts income, but what about wealth?

Let’s throw this 5% number into our equation and see what happens with leverage.

Net Worth No Leverage

If a property was purchased for $100,000, that one home would increase in value by an average of $5,000 per year.

So, the one home you bought outright would give you $150,000 in equity after 30 years.

You bought it for $100,000. After 30 years, you’re adding $150,000. So that’s a net value of $250,000.

Net Worth with Leverage

Next, let’s see the equity of the 4 properties purchased with leverage.

Multiply your 4 properties by the $5,000 in value they each increase every year. Your portfolio will appreciate $20,000 per year.

Over a 30-year span, your 4 properties would add $600,000 to your net worth. Add the original values of the homes (4 × $100,000), and your net worth increases by $1,000,000.

A million using leverage definitely beats the $250k you got from buying 1 home outright.

What If You Maximize Your Real Estate Investing Leverage?

A real estate investor’s goal is to maximize leverage – get the best, cheapest, easiest leverage available.

This means going an extra step:

  • Having great credit.
  • Having great income.
  • Coming to the lender prepared.
  • Having investment experience.

Let’s say you’ve done everything right, and you’ve earned yourself better leverage from your lender.

What happens when the same scenario is taken to the next level with top-tier leverage?

80% Leverage

You meet the bank’s criteria, and they agree to lend you 80% (or $80,000) on each $100,000 house you purchase.

Income with Maximized Leverage

Your down payment per property is now only $20,000, so you can afford 5 properties. But since you borrowed more money, the mortgage payment is higher, and the net rent goes down to $750/month.

Five properties with an income of $700 per month is $3,500 per month. This works out to be $42,000 per year. Annually, that’s $6,000 more than using a 75% loan, and $27,600 more than using no leverage at all.

Equity with Maximized Leverage

Lastly, let’s look at the wealth side with maxed-out leverage.

Thirty years adds $750,000 to the value of the 5 homes. All that money is added to your net worth.

As a result of the $750k of equity plus the $500k of the original purchase of the homes, your net worth is increased $1,250,000.

Once your mortgage is paid off and you own all 5 properties free and clear, you earn the full amount of rent per month. This is $1,200 × 5 properties, or $6,000 per month!

Using good leverage has the potential to make you literal millions of dollars over buying investment properties in cash.

How to Start Maximizing Your Leverage as a Real Estate Investor

Our goal is to help you understand and use the power of leverage. We scour the markets looking for debt with the best terms – the lowest down payments, the lowest credit requirements, and the lowest rates.

If you’re looking to maximize your leverage, email us at Info@TheCashFlowCompany.com. We’ll help you with questions and deals, and get you headed in the right direction.

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Investing in Real Estate with Zero Down

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How to Buy a Property with ZERO Money Down

Is investing in Real Estate with Zero Down for real?

No money to put down on your first investment?

Use these 3 tips to get started.

You don’t have enough savings. After all, flipping is how you want to start making money, right? And you want to begin that real estate investment journey now.

But if you don’t have the money to begin with… how are you even supposed to start?

We see people do it every day. Here are the 3 main ways people have made successful real estate careers with zero money down.

 

How to Buy a Property with ZERO Money Down

  1. Get a HELOC

    If you already own a house, the first tactic you should use to get money for real estate is to get a HELOC.

    HELOC stands for “home equity line of credit.” It’s basically a second mortgage that works like a line of credit that you can use and pay off over and over again. You’re able to use it for multiple properties.

    You could get a HELOC from credit unions or banks. We usually send our clients to credit unions because they tend to have better options for HELOCs. A credit union will likely give you:

    • A longer term
    • Fixed rates
    • A little more money

    If you already own a home, go to a local credit union and ask them about a HELOC first.

  2. Start a Partnership

    But what if you don’t have a house, so you can’t get a HELOC? A partnership might be your next best option. There are two routes you can go.

    Family or Friends

    You can ask a family member or friend to be a money partner. They can provide you with the cash to use for a property’s down payment, or for the repairs of your flip.

    The close and personal aspect of partnering with someone you know can be the best option for some people. In other cases, it’s nice to partner with a person or entity who’s not so personal.

    Outside Partner

    You could also look for an outside partner.

    For example, Hard Money Mike partners with people who find good deals but don’t have the money to make that first purchase. We help them finance the whole amount so they can get into their first two or three deals. After letting us help fund their first three deals, most people come out with enough money to do their own down payment and repair costs on their next property, with no partner.

    Beginning investors can make their business independent quickly when they seek out the right partner to get them started.

  3. Use a credit card (Investing in Real Estate with Zero Down)

    Many people hesitate to use a credit card to fund their investments – for good reason. But when done right, a 0% credit card can be the simplest way to start investing with no money down.

    What are the wrong ways to use a credit card for a fix-and-flip?

    • Getting a credit card with a high APR.
    • Using the card to go out and have fun.
    • Not paying back the charges you put on the card.

    If you’re smart, it can be easy to use a credit card the right way. Start with a 0% APR card. Understand that it’s a tool for your business, so treat it that way. Only use the card for repairs, contractors, and other costs associated with your flip.

    Take out the money, sell the property, then clear the card back to zero before moving onto your next project. Don’t let the debt accumulate. Don’t keep a balance from deal to deal. This is where credit card use falls through for most investors. They don’t use the money from the sale to fully pay off the card, and it gets out of hand fast.

    But if you do it right, a credit card works as a great way to help beginners get the funds needed to start in real estate.

What Are Other Ways to Investing in Real Estate with Zero Down?

Clients come to us wanting to get into real estate but think they need money in the bank. That’s not always the case.

Here are the 3 key ways we see people start their investments with no money:

  1. If you already have a mortgage, get a HELOC.
  2. Start with money from family, a friend, or an outside partner.
  3. Use a 0% credit card to fund the costs of your investment.

These aren’t the only ways we’ve seen people succeed with a new real estate career.

Find out more on how to leverage up your real estate investments on our Youtube channel.

The Cash Flow Company can help you with all real estate investor loans.

We also can help you find and set up real private money from those around your area.

We scour 100’s of loan programs across the country every month locating the best investor friendly loans.

Investing in Real Estate with Zero Down

 

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How to Launch Your Retirement Through Private Lending

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How to Launch Your Retirement Through Private Lending

How to Launch Your Retirement Through Private Lending

Launch your retirement!

The most common ways to save for retirement are the stock market, 401Ks, and other retirement savings accounts. They’re common journeys most people take when they start putting money away for their future.

But did you know there’s another frontier to explore when it comes to preparing for retirement?

Although it’s a frontier that’s been around for centuries, and it’s a frontier that’s helped many, it’s not exactly a frontier people think to explore.

But this frontier can lead to lucrative cash flow and a safe, comfortable, and happy future.

We’re talking about private lending.

https://youtu.be/3shyEuw1zSI

Private lending can launch your retirement savings into a whole new universe. Compared to the stock market, which is volatile, and retirement savings accounts, which are questionable, private lending is consistent, easy, and safe. And, most importantly, profitable.

What is private lending?

Simply put, you become a bank for someone who needs cash. And, in the real estate world, that someone is a fix and flipper, rental owner, or another property investor.

These real estate investors can’t always rely on a traditional bank for funding.  Either because they can’t meet a bank’s strict qualifications, or because they need to buy a property super fast…and banks don’t close deals super fast.

So, they turn to private lenders. Private lenders, like you, lend them the money they need and charge them interest for it.

The amount of interest you charge is up to you. Most private lenders make between 5% and 12%. You can’t make that kind of interest by letting your money sit in a bank. And you can’t know for sure you’ll make it through the stock market.

So, how do you become a private lender? Well, there are a couple of ways to get going.

The easiest way is through companies like ours. We connect private lenders with real estate investors, and help with all the paperwork and other steps that secure your money.

Or, if you’d rather explore the private lending frontier on your own, then you can work directly with real estate investors. This is best known in the business as OPM (Other People’s Money). OPM puts you directly in the pilot’s seat, and you get to decide your path…and the risks that come with it.

Private lending is definitely a worthwhile adventure! If you’re ready to learn more about it and launch your retirement, then our team is always here to help.

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What is a Private Note?

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What is a Private Note?

What is a Private Note?

You have a variety of options when it comes to making money for retirement.

The most obvious and popular ways are retirement saving accounts and the stock market. But retirement saving accounts can be questionable, and the stock market constantly fluctuates up and down.

But, fear not. Did you know there’s another, more secure way to save up for your future?

We’re talking about investing in private notes. They’re an easy, lucrative method to boosting your cash flow…and your retirement funds.

https://youtu.be/sTh8QI07gpQ

You see, when people think about investing in real estate, they assume they have to fix and flip or rent properties. But private notes allow you to make money in real estate without ever picking up a hammer.

Basically, you become a bank for a fix and flipper or a rental owner.

But what is a private note?

Well, in a nutshell, it’s an IOU.

Essentially, a private note is an agreement between you and your borrower, and it outlines things like:

  • How much money you’ll lend.
  • The amount of interest you’ll charge.
  • The length of time you’ll let your borrower use your money.
  • And the date you expect them to pay you back in full.

And if you’re thinking, “Well, what if they can’t pay me back?”, then don’t worry.  Your money is secured by the property. So, as long as you do your homework and make sure it’s a worthwhile investment, then your money is safe and sound.

Now, how do you actually create a private note?

Well, the easiest way is to work with a company like ours. In addition to creating a secure private note on your behalf, we help with all the other steps to private lending. Those include:

  • Finding real estate investors who need funding.
  • Interviewing them and reviewing their portfolio to determine how much you can trust them with your money.
  • Analyzing properties to make sure they’re worth the investment.
  • Handling escrow draws.
  • And overseeing the life of the loan, including all payments, extensions, and modifications.

Of course, if you’d rather handle all of those steps by yourself, then you can simply hire an attorney to create your private note.

Bottom line, private notes are an excellent way to prepare for retirement, especially if you want to invest in real estate without breaking a sweat.

Ready to talk about investing your money in private notes and securing your future? Great! Our team is always here to chat.

Happy investing!

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Why You Can Be Thankful as a Private Lender

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Why You Can Be Thankful as a Private Lender

Why You Can Be Thankful as a Private Lender

If you’re thinking about becoming a private lender, then there are a few things you can look forward to being thankful for.

https://youtu.be/n–wIaxOQt8

Make Money

First, the most obvious, can make money in an easy, secured way. You don’t have to pick up hammer, worry about contractors, or stress out about getting a big project done in a short amount of time. All you have to do is find people who like fixing and flipping and lend them the money to do all of that hard work.

Boost Retirement Savings

Second, you can take the money you make and boost your retirement savings. You don’t have to worry about unpredictable fluctuations in the stock market or depend on low interest rates at the bank. You can make consistent, solid income with a safe and secured investment.

Positive Impact

Third, and the least thought about, you can make an extremely positive impact on your community.

Without your ability to lend money to fix and flippers, rental owners, and other real estate investors, communities would slowly deteriorate and eventually fall into disarray.

Think about the HGTV show, Good Bones. A mother and daughter team up to fix homes that have aged and withered throughout their neighborhood. But, home by home, they’ve revitalized and given their community new life. They given it value, once again.

That’s what all fix and flippers do.

They find neighborhoods, towns, and cities that have fallen into disrepair, and breath fresh life into them. By doing this, they revive the economy because people want to live there again. Schools, safety, and quality of life rise drastically.

But the only way this all can happen is if fix and flippers can find money to do their work. And many of them can’t walk into a bank and get a loan, either because they can’t meet the bank’s strict requirements, or because they need to buy a property FAST. We’re talking about closing homes within days, not months. Banks can’t do that.

So, they need private funding from people like you. People who have money they want to invest.

So, why not invest it in your local community…or a community of your choosing? Say, the hometown you grew up in? Perhaps it’s seen better days and needs some new life before it fades and falls off the map completely?

Private lending is something you can truly be thankful for. So why not give it a try if you’re looking to invest in real estate the easy way?

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