Tag Archive for: real estate investing

70% of REI Investors Lose Money Because of THIS

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70% of REI Investors Lose Money Because of THIS

I have been in real estate investing for 23 years. Within that time I’ve seen 70% of new investors lose money within the first year. Many of them purchase real estate courses for $10K to $30K in hopes of learning all of the tips and tricks. Blinded by the promise of instant success, many people don’t take the time to set themselves up properly. On the other hand, those who take things at a slower pace and follow a few simple steps, will have a better chance of winning. How can you avoid becoming part of the 70% of investors who lose money? Let’s take a closer look.

Simple steps to success.

First and foremost the most important thing that you need to focus on as a new real estate investor is taking simple steps. This includes looking at properties, finding people who can send properties to you, and securing the money you need. Here at The Cash Flow Company we recommend that you look at 200 properties, talk to 100 wholesalers, and talk to 100 lenders before you jump in to your first purchase. Those who are focused can get everything set up in a matter of weeks. While others may take longer to get set up because they can only set aside a few hours a day. By taking the time to consume and understand everything, you will set yourself up for success. 

Make money instead of lose money! 

Some seminars can be beneficial to real estate investing, however, that is not normally the case. Many people become wrapped up in the idea of investing without understanding all of the factors that come into play. While it’s not rocket science, you do need to work hard to set yourself up for success. Those who are new to real estate investing often get talked into taking courses. These average $10K to $30K and focus on how to fix and flip quickly and easily. Not only do you have to pay for it using credit cards, but you are encouraged to use their credit cards as well. This get rich quick method causes many to lose steam quickly because they are not talking to people in the business or looking at enough properties. While this method may work for some, it doesn’t work for most.

Take your time 

Surprisingly 70%  of REI investors lose money because they dive in before going through the simple steps. In doing so, investors often lose $20K to $30K, which in turn prevents them from purchasing their next property. Successful real estate investors ensure that they have 1 to 3 good deals before moving forward in purchasing more properties. Just to clarify, a good deal is one that makes money! Real estate investing is all about making money so that you can live the life you want!

Contact us today to learn more about the simple steps you need to take to be successful in real estate investing. 

Watch our most recent video 70% of REI Investors Lose Money Because of THIS to discover how to get on the right path to success.

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A is for Effort in 2024 Real Estate Investing

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A is for Effort in 2024 Real Estate Investing

It is going to be a different market this year compared to years past. Rates are going to flatten out and everything will be changing. Rates are expected to hover between 6% and 7% this year. Predictions are also indicating that the Fed is going to lower their rates starting in May. Until then, this first quarter is going to be a little tougher for the consumer until we see that shift in rates. It is critical that real estate investors take the time to do more research in order to find the best deal. Those who do will receive an A for effort in 2024.

Look at more homes and do more research.

If you are going to be investing in this market, then you need to be willing to look at more properties. It is important to remember that you will need a 15% to 20% discount from where you were buying it a year ago. You will need to put in a little more effort and work. Those who look at 100 homes compared to 10 homes will find good properties. By spending 2 to 3 hours a day looking at properties, you will be successful in 2024.

Go smaller

In this market there is a shortage of homes compared to the number of people looking for properties. In order to find the more affordable properties, you will have to go smaller. What do we mean by smaller? The property would be less square footage or a smaller price point. In some cases both the square footage and the price point will be significantly less than they would have been a few years ago. By expanding your search area, you will find greater affordability. This might mean that you are looking into smaller communities in other states to find the best deals. 

Contact us at The Cash Flow Company if you have any questions or would like to find out more about investing in 2024. 

Today we only reviewed 2 out of the 5 key steps. Watch our most recent video to discover more about 2024 Real Estate Investing and the 5 Key Steps to Succeed.

 

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How to Calculate Monthly Interest Payments

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How to Calculate Monthly Interest Payments

As real estate investors it is important to understand and master the 4 key real estate loan calculations. These 4 keys include how to calculate a point, simple interest, loan to ARV, and loan to value. One of the most important of these is learning how to calculate the monthly interest payments, because it will impact your monthly budget. So grab your calculator, paper, and a pen! 

How do you calculate your interest rate?

Not only does DSCR have some interest only options, but private money and hard money do as well. Today, we are looking at how to calculate the monthly interest rate on a simple mortgage. Just to clarify, monthly interest and simple interest are one in the same. So, if a lender says that you are going to be charged 11% or 12% on your loan amount, what does that mean? First and foremost, that 11% or 12% is an annual amount not a monthly amount. Let’s jump into an example to see how you calculate the interest rate.

For example:

Loan for $150,000

Lender says the interest rate is 11% (this is an annual amount)

$150,000 x .11 = $16,500  (this is the interest that is charged on an annual basis)

Now we have to divide it by 12 to determine the monthly interest cost.

$16,500 ÷ 12 = $1,375 monthly interest cost

It is important that you know how to calculate your interest rate because that is the monthly amount that is coming out of your pocket.

In conclusion

All investors should learn to master the 4 key real estate loan calculations no matter how long they have been in the game.  One of the most important is learning to calculate the interest rate. Again, this is the amount of money that will be coming out of your pocket monthly. By being prepared and knowing your numbers, the sky’s the limit to your success. To learn how to master the 3 remaining key real estate loan calculations, please visit our website.

If you have any other questions or need a run through to show how things work, please contact us today! 

Watch our most recent video to Master These 4 Key Real Estate Loan Calculations.

 

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Why You Need to Avoid Bad Properties in 2024

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Why You Need to Avoid Bad Properties in 2024

2024 is going to be a different market compared to years past. Rates are going to flatten out and everything that we have seen will be changing. Predictions indicate that the Fed is going to lower their rates to 6% or 7% starting in May. That is why real estate investors need to avoid bad properties! In an earlier post we discussed the 5 key things that real estate investors need to do in 2024 in order to succeed. Avoiding bad properties is one of the most important key things that real estate investors need to focus on. So what makes a property a bad property? Let’s take a closer look. 

What do we mean by bad properties

When the market is going, then every property sells. This includes properties on corners, busy streets, overlooking commercial properties, and even the ones that are next to big apartment complexes. These are the properties that are normally going to take a hit and sit on the market for a longer period of time. As the market changes, buyers will have more choices. They will also become more selective because of the cost. In order to be successful, real estate investors need to buy good properties that are in good areas. Take your time and do the comps in order to avoid bad properties in 2024! 

Contact us at The Cash Flow Company if you have any questions or would like to find out more about investing in 2024. 

Watch our most recent video to discover more about 2024 Real Estate Investing and the 5 Key Steps to Succeed

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What Are Points and How Do They Impact Closing Costs?

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What Are Points and How Do They Impact Closing Costs?

As a real estate investor it is important to master the 4 key real estate loan calculations.  These 4 key calculations include how to calculate a point, simple interest, loan to ARV, and loan to value. Today we are going to focus on points and discover how they can impact your closing costs. Let’s start by taking a closer look at what points are.

What is a point?

When a lender says that they are going to charge you 1 or 2 points, what exactly does that mean? A point in the lender world means percent. Therefore, 2 points for example equals 2%. To clarify, it’s 2% of your loan amount, as opposed to 2% of your purchase price. This percentage is the amount that you are paying in the origination to the lender and it is included in your closing costs. The closing costs will also include down payment, appraisal, just to name a few. Let’s jump into an example to see how to calculate point.

For example:

Loan for $150,000

They will charge you 2% 

Origination fee = $3,000

$150,000 x .02 = $3,000

You need to understand how to calculate a point because it will impact your closing cost and your overall cost of doing business. 

In conclusion

Whether you’re a new investor or an old pro, you need to master the 4 key real estate loan calculations. As an investor, these are the things that you are going to come across when you are working with lenders. By focusing on how to calculate point today, you are now able to determine the origination fee quickly and easily. To learn how to master the 3 remaining key real estate loan calculations, please visit our website.

If you have any other questions or need a run through to show how things work, please contact us today! 

Watch our most recent video to Master These 4 Key Real Estate Loan Calculations.

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The Benefits of Peer to Peer Lending

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The Benefits of Peer to Peer Lending

As a real estate investor it is important to understand not only what peer to peer lending is, but more importantly, the benefits that are available from using this type of leverage. Peer to peer lending, also known as other people’s money, is funding that is provided by family, friends, or individuals within the community to help you in your investments. Here at The Cash Flow Company, we have done about a billion dollars over the past 23 years using peer to peer lending. The majority of this money is not from family and friends, but instead from other people who are interested in making a good return. Today we are going to look at the benefits of peer to peer lending, and why it is often better than traditional loans.

Peer to peer is replacing banks.

We all know what is happening out there with affordability. The banks are starting to change their requirements, DSCR is getting into the 9% and 10% range, and fix and flip loans are anywhere between 11% and 13%. This lending squeeze is causing affordability, terms, and credit score requirements to all become tougher as well. Which creates the perfect opportunity to reintroduce peer to peer lending, which is something that has been around since before banking began. Peer to peer lending is taking out the banks and allowing people to begin working with humans again. 

Peer to peer gets deals done quickly.

Every good investor always has a few peer to peer lenders that they work with on a regular basis. These are individuals that the investors have built a good reputation with, and proved that they can produce quality work. By creating this foundation, it allows investors to act quickly on deals that come available instead of waiting for the bank’s approval. Peer to peer lenders also benefit because they are able to use money from their savings accounts or retirement accounts in order to get a better return that is something secured. It’s a great win-win situation for everyone!

Peer to peer keeps things simple.

We want to keep it simple and find the people that fit your needs. Not everyone needs $300K or $500K. They might just need $35K or $50K to get their business going. While they do have real estate to secure a loan, they might not have the income that the bank requires. That is where peer to peer lending comes in. Most peer to peer lenders don’t care what your income is. They want to know what the property looks like, if it will protect their money, and what you are going to pay them. Another way to look at peer to peer lending is like a personal DSCR. A DSCR doesn’t care about your income either. With the high interest rates of DSCR in this market, peer to peer lending is a comparable option for investors with rental properties.

Double your money!

Peer to peer is so important for those who are lending. They can easily make $8K on $100K. Banks on the other hand, would only have a return of $4K to $5K on the same amount if it were in a CD or savings account. Peer to peer lenders could easily double what they are making without having to worry about the inconsistency of the stock market. This is a time when things are tightening and people are having to look for new opportunities. Those who are prepared, ready, and have money, will succeed. 

Where do you start? We can help!

Every investor or business owner should look into peer to peer lending. Even if it is just for a down payment, fix up cost, or any other expense in the real estate world. Businesses could also benefit from peer to peer lending for start up costs or unexpected business expenses. It doesn’t have to be $500K, but it could be! With lending becoming tighter, banks could require an additional 10%. In that case, where would you go for the additional money? The answer is peer to peer! There are all kinds of people out there with pockets full of money. You just need to find one that has what you are needing.

If you want to find out more about peer to peer lending and how to get started reach out to us. We want to make sure that this market grows and that we get rid of some of the lenders and bankers out there. The better it grows, the bigger it grows, and the more options people will have for their future. Our target is to make it a win-win for both peer to peer borrowers and peer to peer lenders. 

Contact us today to find out more about the lowest risk lending option with the best return! 

Watch our most recent video explaining What is Peer to Peer Lending and Why You Need It

We have created an excellent resource site for you to discover more about peer to peer lending. This information can be found at www.TheNoteShop.com.

 

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Are the high interest rates worth paying right now?

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Are the high interest rates worth paying right now?

There are a number of questions that investors are faced with going into  2024. The main concern is whether or not it is worth paying the higher interest rates right now, and if it will pay off in the end. To help answer these questions, let’s take a closer look at how the market has changed, what you should avoid, and how you can succeed in the New Year.

How has the market changed?

It is the perfect time to jump in if you can buy something low. As long as you do it correctly, you should invest now while everyone is running away! Then when rates go back down, you will be able to create wealth for future investments. A few years ago many people were buying properties for $100K over asking price. In today’s market  they would be able to sell it for maybe $250K. Since they overpaid on the property a few years ago, they are now upside down on their investment. Don’t let this happen to you! As a new buyer, make sure you are purchasing it at a good number while the market is down. Over time you are going to win the game by buying at the right time.

What should you Avoid?

Getting into real estate investing now will get you on the fast track to success. If you are able to buy good properties in good markets, then you will be successful. It is important to avoid properties that are on corners or busy streets. In these times, the best properties are on a culdesac or near local parks. Real estate investors need to research current market trends before jumping in. There are some markets where cities are doing better than suburbs, while others are growing at a faster rate. Another thing to be aware of as a real estate investor is all of the negativity out there, which is driving people out of the market. Instead of following the herd, turn this negativity around so it can benefit you.

Number of Real Estate Investors is Shrinking 

There has been a whole generation of real estate investors who have gone through good times with money, banks, and lenders in the past. This was when everyone was trying to give you more money for your investments. However, the Fed is now trying to slow that down. The huge pool has gotten a little bit smaller for those who are trying to qualify for loans. This lending squeeze has resulted in many real estate investors getting out because they don’t have the credit score or income to succeed in this market. In 2024 there will be less real estate investors, less money available for funding projects, but more deals available for the driven investor.

In Conclusion

Now is the time you should invest in real estate properties! By strategically selecting properties, investors have the opportunity to grow their wealth when rates drop. Don’t let the high interest rates prevent you from investing now. Those who take the plunge will not only take advantage of lower rates later by refinancing, but they will also be ahead of other investors who are just coming into the game. There is a lot of money to be made in real estate. Invest today to succeed in the New Year!

Watch our most recent video to find out more about investing in today’s market.

We can help you get set up to win in 2024! Contact us today!

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Why You Need More Money to Invest in 2024

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Why You Need More Money to Invest in 2024

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

Changes In Lending

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

Fill Your Buckets Now

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

Save Today So You Can Invest Tomorrow

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

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

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

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

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How can a newbie invest in today’s real estate market?

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How can a Newbie Invest in Today’s Real Estate Market?

As a newbie real estate investor it can be incredibly daunting. The question on everyone’s mind is whether or not they should take the plunge and invest in 2024 with the high interest rates. There are a few things that new investors need to consider before they invest in this market. This includes shopping wisely, evaluating repair costs, and current interest rates. By taking all of these things into consideration, new real estate investors will be set up to win in 2024.

First, Focus on the Lower End of the Market 

Since interest rates are high, you should probably focus on the lower end of the market. This includes homes that are in the $300K range and below. Affordability is a factor when you’re flipping, because someone has to be able to afford to buy the property once repairs are completed. Thankfully, we have a good inventory shortage as investors, which in turn is creating a greater demand. Therefore, if you have a good price point and a good product, then it’s going to sell quickly. 

Second, Create a Product that People will want to Buy

Especially since you will be the one fixing up the property, it is important that you create a property people will want to buy. As real estate investors, it is crucial that you complete repairs both quickly and correctly in order to maximize your investment. By creating a nice fixed up property in this market, you will have an advantage over those who are not putting in the effort. 

Third, Consider the Impact that Interest Rates will have on your investment.

Interest rates will be a major factor when purchasing a property in this current market. However, if you can find a rental property that can break even, or better yet one that can make a little money, you should invest now to generate cash flow quickly. Interest rates should go down in the next 18 months to 2 years. When they do, you will be able to refinance and come out ahead of everyone who has been sitting on the sidelines.

In Conclusion

Take the plunge and invest in real estate in 2024! By strategically selecting properties and doing the research, a newbie can not only invest in real estate, but they have the opportunity to grow their wealth when rates drop. New investors need to set themselves up for success. In doing so, you will have the potential to increase cash flow and set yourself up to win.

Watch our most recent video to find out more about investing in today’s market.

We can help you get set up to win in 2024! Contact us today!

 

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Don’t Let Bad Credit Scores Rob You!

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Your credit score is powerful. But bad credit scores can take you from making it big to losing a lot of money.

Especially in the real estate industry, credit scores play a huge role in the success of your investing. We see many investors (especially ones who are new to the game) struggle with some common issues:

  • Forgetting to pay bills on time
  • Overusing credit cards
  • Not using enough credit

Cultivating and maintaining a healthy score is a fine balance between creating debt and paying bills.

What Can I Do About Bad Credit Scores?

This is where companies like us or Hard Money Mike come in.

If your score has dropped because of late payments, the best way to fix that is simply time. However, if it’s low from over-usage, you have some options!

Usage Loans

So long as you are paying your bills on time and have a small amount of debt that keeps your credit score active, you can fairly easily raise your credit score with a usage loan.

We offer emergency usage loans here at The Cash Flow Company to raise your score FAST.</span>

Business Credit Cards

If you’re using personal credit cards for business-level investing, it’s time to re-evaluate. 

Real estate investing simply requires more usage than personal credit cards are designed to reward. Business cards, on the other hand, typically like higher usage.

If this is new to you, we have many resources to help you find the right business card for you.

 

Read the full article here.

Watch the full video here:

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