Tag Archive for: real estate investors

How to calculate LTV

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Today we are going to discuss how to calculate LTV. If you’re diving into real estate or loans, you’ve probably heard the term LTV. But what does it mean, and how do you figure it out? LTV stands for Loan-to-Value ratio. It’s a simple way lenders measure the risk of giving you a loan by comparing the loan amount to the value of the property.

Here’s the formula:
LTV = (Loan Amount ÷ Property Value) × 100

For example, let’s say you want to borrow $150,000 to buy a property worth $200,000. Divide $150,000 by $200,000, and you get 0.75. Multiply that by 100, and your LTV is 75%.

Why does LTV matter? A lower LTV (like 75%) means you’re borrowing less compared to the property’s value. This makes you less risky to lenders and can help you snag better loan terms. On the flip side, a higher LTV (like 90% or more) could mean stricter requirements or higher costs.

LTV is key for deciding your down payment, too. If your lender wants a maximum LTV of 80%, you’d need to put down 20% of the property’s value upfront.

Understanding LTV helps you plan smarter. The lower the ratio, the stronger your position as a borrower. So, keep this calculation in your toolbox as you explore your financing options!

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Do you have an investment property in mind but not sure how to calculate LTV?  Contact us today to find out more!

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We also have free tools available! Download the Your Money Buckets to make sure that you have the leverage you need to succeed.

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Why Delays Cause More Stress and Less Profits

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Today we are going to discuss why delays cause more stress and less profits. As a real estate investor, your profits as well as peace of mind depend on one thing: speed. The faster you complete a project, the more money you make, and the less stress you endure. Let’s dive into how delays can derail your plans and what you can do to avoid them.

The Common Mistake: Not Being Money Ready

One of the biggest mistakes real estate investors make is starting a project without being fully money ready. Many underestimate the costs involved in finishing a property, including:

  • Purchase price
  • Rehab expenses
  • Carrying costs (insurance, taxes, HOA fees, etc.)
  • Unexpected expenses

The Fix-and-Flip Process

When flipping a property, timing is critical. Therefore, hitting the right market season, like spring or late summer, can maximize your profits. For example, missing the window to sell before Thanksgiving could mean holding the property through slower months, like December and January, where carrying costs pile up and profits shrink.

Example: The Tale of Two Investors

Investor 1: Money Ready

  • ARV: $400,000
  • Expected Profit: $60,000 (15%)
  • Timeline: 5 months

This investor had a well-prepared budget with extra funds for unexpected issues, like $7,500 in unforeseen repairs. They handled delays without disrupting the contractor schedule. As a result, they finished early, saving money on carrying costs as well as closing with a $55,000 profit.

Investor 2: Not Money Ready

  • ARV: $400,000
  • Expected Profit: $60,000 (15%)
  • Timeline: 10 months

This investor wasn’t prepared for unexpected costs and had to scramble to find $7,500 for repairs. The delay caused contractors to take other jobs, pushing the schedule back by months. As time dragged on:

  • They paid an additional $3,000 per month in taxes, insurance, as well as interest.
  • They had to lower the property price by 5% ($20,000).
  • Their lender charged a $5,000 extension fee.

In the end, profits shrank to $15,000, and stress levels skyrocketed.

Why Speed Matters

Delays snowball into higher costs and lost profits. Here’s how:

  1. Added Carrying Costs: Every extra month means more payments for taxes, insurance, and interest.
  2. Price Drops: Holding the property too long can force you to lower the price to attract buyers.
  3. Stress and Missed Opportunities: While you’re stuck on one project, others are moving ahead with the next profitable deal.

How to Stay On Track

To avoid delays and protect your profits, always have 20-40% of your total budget in available funds. This could include:

  • Personal savings
  • Lines of credit
  • Credit cards
  • Financial backers

When unexpected expenses arise, having these funds ready ensures your project stays on schedule.

Real Estate Investing Is About Speed

In conclusion, speed is the name of the game in real estate. Fast closings not only help you secure great deals, but quick project completion  can also maximizes your profits. While delays can snowball, preparation keeps you in control.

If you need help setting up your financial plan or finding the right funds, reach out. We’re here to help you succeed, make more money, and more importantly enjoy the real estate investing journey.

Watch our most recent video to find out more about: Why Delays Cause More Stress and Less Profits

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How Interest Rates Will Impact Fix and Flips in 2025

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Today we are going to discuss how interest rates will impact fix and flips in 2025!  Let’s dive into what this means for you and how to set yourself up for success.

Why Timing and Funding Matter

Timing is everything in real estate. Selling at the right time, like early spring or late summer, can maximize your profits. Missing these windows? That can add months of carrying costs, extra stress, and potentially reduced profits.

But timing isn’t the only factor—your funding strategy plays a huge role. Having the right money bucket ensures you’re ready for surprises without slowing down your project.

What Happens Without Proper Funding?

One of the most common mistakes we see is when investors aren’t money ready. Let’s look at an example:

  • Investor A had everything planned. The property was supposed to take 6 months from start to sale. But halfway through, they found $7,500 in unexpected repairs—old wiring and copper plumbing. Since they didn’t have enough reserves, they scrambled for funds.
  • This caused delays. Subcontractors moved on to other jobs, pushing the project back 4-6 weeks. By the time Investor A finished, they were 4 months behind and had to pay $12,000 in extra carrying costs. On top of that, they had to drop the price by 5%, losing $20,000.
  • In the end, their $60,000 profit shrank to just $15,000—and their stress levels went through the roof!

The Tale of Two Investors

Let’s compare Investor A with someone who was prepared.

  • Investor B also faced the $7,500 surprise but had their funding ready. They covered the cost immediately, keeping their project on schedule.
  • Investor B finished in 5 months, saving an extra month of holding costs. Despite the unexpected expense, they still walked away with $55,000 in profit.

What’s the difference? Speed and preparation. Being money ready made all the difference for Investor B.

How Interest Rates Will Impact Your Deals in 2025

Higher rates increase borrowing costs, so every delay becomes even more expensive. Here’s why:

  1. Larger Monthly Payments: Each month you hold the property costs more. Taxes, insurance, and interest can eat into profits fast.
  2. Extension Fees: Lenders often charge hefty fees if your project goes past its original term. For example, a 2% extension on a $250,000 loan adds $5,000 in unexpected costs.
  3. Price Adjustments: Slower markets due to higher rates may force you to drop prices to sell quickly.

Steps to Succeed in 2025

  1. Build Your Money Bucket: Plan to have 20-40% of your total budget in accessible funds. This includes reserves for unexpected costs, payments, and project overruns.
  2. Stick to a Fast Schedule: The faster you complete your project, the less you’ll spend on carrying costs.
  3. Partner with Reliable Lenders: Work with lenders who understand the challenges of fix-and-flip investing.

Get Help So You Don’t Make This Mistake

2025 will bring challenges for fix-and-flip investors, but preparation is key. Want help setting up your money buckets or finding the right funding options? Reach out to us!

Let’s ensure you’re ready to profit faster, stress less, and enjoy real estate investing in the coming year.

Wrap-Up

Speed and preparation are your best friends in a fix-and-flip project, especially when interest rates are high. The more prepared you are, the more successful you’ll be.

If you have questions or want to learn more, contact us today and check out our programs. We’re here to help you thrive in 2025 and beyond!

Watch our most recent video to find out more about: How Interest Rates Will Impact Fix and Flips in 2025!

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Real Estate Market: What’s Happening with Interest Rates?

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Today we are going to discuss what’s happening with interest rates. Interest rates are the heartbeat of the real estate market, and they’ve been anything but predictable lately. Whether you’re an investor eyeing DSCR loans or tackling fix-and-flip projects, understanding rate trends is key to making smart moves. Let’s dive into what’s driving these shifts, how to keep track, and what it all means for your next investment.

Why Are Rates So Unpredictable?

You may have heard about the Federal Reserve cutting interest rates. However, those cuts don’t directly lower real estate loan rates. Instead, the real estate market relies heavily on treasury yields.

  • DSCR loans align with the 5-year Treasury note.
  • Conventional loans follow the 10-year Treasury note.

This means your rates depend on how these treasuries perform, not just on what the Fed decides.

What’s Happening Right Now?

DSCR Loans: Small Dips, Then Jumps

DSCR loan rates have seen slight drops, or “micro dips”, lasting a week or two before climbing again. These rates typically start with the 5-year Treasury yield and add about 2.75%.

For example:

  • If the 5-year Treasury is 4.3%, DSCR loan rates may land around 7% for 75-80% loan-to-value (LTV) loans.

Conventional Loans: Higher Add-Ons

Conventional loans, commonly used for fix-and-flip projects, work similarly. Add about 2-3 points to the 10-year Treasury rate to estimate rates.

For example:

  • A 10-year Treasury yield of 4.41% could result in rates around 6.5% to 7.5% for borrowers.

Why Are Rates Moving This Way?

Two key factors drive rate changes:

  1. Inflation Worries
    Investors in treasuries expect higher yields when inflation feels uncertain. This increases borrowing costs for everyone.
  2. US Treasury Supply
    As the government issues more treasury bonds, buyers demand higher interest rates. The market adjusts to balance supply and demand.

What’s Next for 2024?

Experts expect rates to bounce within a predictable range:

  • DSCR Loans: Mid-6% to low-7%.
  • Conventional Loans: High-5% to mid-7%.

If you’re investing, watch for those micro dips. When they happen, it’s time to lock in a rate quickly.

How to Monitor Rates

Want to track interest rates like a pro? Here are two simple ways:

  1. Check Treasury Yields
    Search for “today’s 5-year Treasury rate” or “10-year Treasury rate” on Google. Websites like MarketWatch show up-to-date rates and trends.
  2. Sign Up for Weekly Updates
    The Cash Flow Company offers a free Mortgage Report to help investors track changes. We even notify you when rates hit your target.

Be Prepared for Rate Fluctuations

Interest rates are unpredictable, but that doesn’t mean you have to be caught off guard. By tracking trends and understanding the factors, you can make smarter decisions for your real estate investments.

Want to know when rates hit your sweet spot? Join our A-List, and we’ll notify you when they do. Sign up below to stay in the know!

Take Control of Your Investments Today.

Stay informed, act quickly, and secure the best rates for your deals. Let’s make 2024 a successful year together!

Watch our most recent video to find out more about: Real Estate Market: What’s Happening with Interest Rates?

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Improve your credit score today!

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There are 8 easy tricks that you can do to improve your credit score as a small business owner. Those who know the rules and how to play the game will be in the best position to win! Let’s take a quick look!

  1. Do Not Open New Credit!
  2. Fix Old Information On Your Credit Report
  3. Fast Inquiry Removal 
  4. Build Local Relationships
  5. Run All Transactions Through Business Accounts
  6. Pay Cards Before Statement Cycle Closing Date
  7. Establish Your Business
  8. Shop Around For The Right Lender

Make a change today to set yourself up for success! Not only is it important that you establish your business correctly from day one, but that you also work on forming positive relationships. In doing so, you will improve your credit score as well as create the leverage you need for future growth. 

Contact Us Today! 

Not sure where to start? Contact us today to find out more about credit score mistakes and how you can get back on track.

Free Tools For You! 

We also have free tools available! Download the Credit Score Checklist to see if your credit score is in the right place for your investment needs.

Learn more!

Visit our YouTube channel to learn more about real estate investing and how you can get on the fast track to success! 

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Credit Score Mistakes with DSCR loans

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DSCR loans are a game-changer for real estate investors. DSCR loans are a game-changer. However, there are 4 credit score mistakes with DSCR loans that you need to be on the look out for! This includes cash flow, LTV, approval, and options. Let’s take a quick look at each of these to see how they can impact you! 

First, Cash Flow

First and foremost in order to qualify for a DSCR loan your property needs to cash flow. The better your credit score, the better your interest rate on your loan. 

Second, Loan to Value (LTV)

Your credit score also affects how much you need to put down on a property. By having a strong credit score you will not have to put as much down compared to those with lower scores. 

Third, Approval

A higher credit score makes it easier to get a DSCR loan approved. Lenders view you as less risky, which in turn increases chances for approval.

Fourth, Options

With a high credit score you will be able to find more lenders who are eager to offer you a DSCR loan. Those with lower credit scores will have fewer lenders who are willing to work with their scores. 

Contact Us Today! 

Is a DSCR loan right for you? Contact us today to find out more about credit score mistakes with DSCR loans.

Free Tools For You! 

We also have free tools available! Download the DSCR Quick Calculator to see if a DSCR loan is the best option for your investment properties! 

Learn more!

Visit our YouTube channel to learn more about real estate investing and how you can get on the fast track to success! 

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Why Real Estate Investors Should Compare Lenders

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Why Real Estate Investors Should Compare Lenders

Today we are going to discuss why real estate investors should compare lenders. In the same way a house, a contractor, or a realtor, loans cost money as well. For this reason, by not finding the best loan, it can impact your bottom line. So, where do you start and how can you shop around for the right one? Let’s take a closer look!

 Understanding Loan Costs.

In a nutshell, loans can be complicated. However, when you break it down, it’s all about simple math. Here’s what you need to consider:

  • Interest Rates: How much you pay to borrow the money.
  • Loan Term: The length of time you’ll be paying back the loan.
  • Fees: These include origination fees, appraisal fees, inspection fees, and more.

Each of these factors affects the total cost of your loan.

Why Use a Loan Cost Optimizer?

A Loan Cost Optimizer helps you compare different loan scenarios. After entering details about your project, you can then see which loan costs you the least. Here’s how it works:

  1. Input Different Scenarios: Enter details like loan amount, interest rate, fees, and loan term.
  2. Compare Costs: See the total cost for each scenario.
  3. Find the Best Deal: Choose the loan that saves you the most money.

Examples

Let’s look at some examples to see how this works.

Example 1: Short-Term Fix and Flip

  • Loan Term: 3 months
  • Interest Rate: 8%
  • Fees: $2,000

Total Cost: $4,000

Example 2: Long-Term Renovation

  • Loan Term: 12 months
  • Interest Rate: 6%
  • Fees: $5,000

Total Cost: $11,000

With this in mind, even though the interest rate is lower in the long-term loan, the fees in addition to the longer term make it more expensive.

Conclusion

Since every project has unique needs, it is important that you find the best loan every time. Therefore, by using a Loan Cost Optimizer you can discover how to keep your costs low, and find the best loan as well. In fact, investors who take the time to understand and compare the total costs, will not only make smarter decisions but more importantly maximize their profits !

Ready to get started? Visit our website and try our Loan Cost Optimizer today! As a matter of fact, it’s free and easy to use. You don’t have to commit to anything, instead, just see how it works and find the best loan for your next project.

Watch our most recent video to find out more about: Why Real Estate Investors Should Compare Lenders.

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#1 Trick that Successful Real Estate Investors Use

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#1 Trick that Successful Real Estate Investors Use

Today we are going to discuss the #1 trick successful investors use. Here at The Cash Flow Company, we see success from the money side because money is the key factor in real estate. The foundation of this business is leverage in order to build portfolios. What is the trick that can help you accelerate your success and take advantage of more opportunities? Let’s take a closer look!

Taking care of your leverage.

How can people take care of their leverage on certain properties or on their portfolio? Whether there are two properties or 10 properties, it is important to create leverage over someone else. This can be accomplished by picking one property and focusing on paying it down quickly. In doing so, it will free up the equity in that property, and will provide you more leverage. 

What is the benefit to paying one property off?

By paying down or off one property within your portfolio, you can then get a line of credit or a HELOC on the property. This provides the leverage you need to invest in other deals. We have seen a number of clients who are able to invest in new deals quickly because they had free cash flow. Just to clarify, we are not talking about these clients having money in their pocket. To say it another way, by either paying off a property completely or paying it down to a lower loan to value, you create more options for leverage. How can you take advantage of this additional leverage? One of the options is a HELOC. 

What is a HELOC and how can it help you?

A HELOC is a Home Equity Line of Credit. Investors can take out a HELOC on the paid off property in order to take advantage of great deals quickly and easily. These deals can come up in actions or on properties where someone needs to sell a property quickly. In many cases, you can get HELOCS at 70% to 75%, as long as the LTV is lower. Whether it’s $50K or $100K HELOC, you will have the money set aside for future investments that just make great sense. Just to clarify, you do not pay for the money from the HELOC unless you use it. These funds are just set aside in case you need them. The really good people who grow their wealth will be able to sit back and grab these deals quickly because they have the money to do so.

Let’s look at the numbers!

5 properties

Each  Total for 5 properties
Property Value  $200K $1,000,000
LTV (loan to value) 75% $150K $750K
Equity  $50K $250K

In the world of leverage, an LTV of 75% does not free up any equity. This is due to the fact that investors are paying down each property equally as opposed to paying a little more towards a single property. For example, if there was a deal available for $150K, you would not have enough equity available to purchase the property. Just to clarify, lenders will not lend over 75% on an investment property. How can you set yourself up for success and use the equity in your properties? The answer is by focusing on paying one property down faster. In doing so, you will in turn free up the equity and create more leverage. Remember, those who will accelerate in this business are those who create financial flexibility. 

Contact us today! 

Use your equity to your advantage! Do you need some guidance on where to get started? Here at The Cash Flow Company we can help you get on the path to success! Contact us today to find out more about the #1 Trick that Successful Real Estate Investors Use. 

Watch our most recent video to learn more about #1 Trick that Successful Real Estate Investors Use

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A Key Lesson In Real Estate Investing: Times Versus Time

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A Key Lesson In Real Estate Investing: Times Versus Time

Throughout the years I have been able to help thousands of clients become successful in real estate investing. Looking back over my journey, there are several things that I would do differently. While there are a number of lessons I would like to share with you, I feel that Times vs Time is the most imperative to your success.

What is Times VS Time?

The question that all investors ask is, how long does it take to be successful? Success is heavily reliant on the number of times you practice the steps before you become confident in the process. The more practice you have looking properties, comparing properties, and contacting lenders, the more knowledgeable and confident you will become.

It takes 100 times to walk through these steps before an investor becomes confident in the process. Some investors can achieve this in a week, while others may take 6 months to 6 years. Again, it’s not the amount of time it takes to be successful, it’s the number of times you practice.

How can investors set up for success

It is vital that you create a process that works for you and your business. In doing so, you are then able to follow the same steps each time. As a result, it further builds the confidence you need to succeed. There are five lessons in total including: Take the fast track, Set your business up to win, Create simple processes, and Scale with flexibility. There is a bonus one as well, which is Do whatever it takes!  

 

Watch our most recent video to find out more about these 5 valuable lessons that will put you on the fast track to success. 

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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How a Bank Collapse Impacts Real Estate Investors

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How a Bank Collapse Impacts Real Estate Investors

Without a doubt, banks are experiencing a significant decrease of money flowing into the lending pool. But, how does this impact investors? There are three main ways a bank collapse could impact real estate investors today. What are they? Let’s dive in and discover more!

Banks are Lending Less

Nowadays, banks are being forced to swim upstream in search of the “best of the best clients.” But what makes a perfect client? Well, it’s those who have more cash in the bank, more revenue, and higher credit scores.

Investors Book of Debt

To put it briefly, savings accounts and CD’s that were booked years ago at low percentages are experiencing a dramatic increase. What started at a monthly profit of 3% to 4%, has become a deficit of 5% to 5.25%. For this reason, investors are now upside-down on their assets.

Book of Business

Now, the notes that banks wrote 3 to 5 years ago, are now coming due. What started at 3%- 4% interest rates, has skyrocketed to 8%-10%. As you can see, lending is no longer in the forefront of banks’ minds in the traditional sense. 

How Investors are Managing the Lending Squeeze

So, what can real estate investors do? To start, they can prepare by making sure they have cash, high credit scores, and keeping up on projects. At this point and time, money and credit are going to be your keys to success. They are what will ensure you are in the game as rates continue to rise.  

Undoubtedly, there’s a bank collapse on the horizon. But as long as you’re aware of the situation and are willing to put in some work, you’ll be okay. Plus, we can guide you through a bank collapse by helping you improve your credit sores, increase your cash flow, and explore alternative lending options. Contact us today! 

Do you need more resources on how to navigate a bank collapse? Watch our most recent video to learn more!

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