Tag Archive for: The Cash Flow Company

DSCR Loan Explained – Easy Rental Loan for Investors

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DSCR Loan Explained – Easy Rental Loan for Investors

Are you looking for a lightning fast easy loan for your rental properties? Something that comes with affordable, long term fixed rates? Then we have your solution. We call it the Easy Rental Loan that is for investors, but other lenders in the industry call it a DSCR loan. A DSCR is also known as a debt service coverage ratio loan, measures your ability to cash flow in order to pay your monthly costs. There are two key items that you need to know about the Easy Rental Loan for Investors. Let’s take a look.

Two key items:

  1. A decent credit score
  2. A lease that covers the monthly cost of your property

The Monthly costs include:

  1. Mortgage payment
  2. Property taxes
  3. Insurance
  4. HOA fee

Benefits for investors:

If your property positively cash flows, meaning that you are making more than you spend on the property, then you can qualify for an easy rental loan. Better yet, you can still qualify for good rates and a 30 year fixed term. 

What makes it Easy:

This is an amazing product for investors. Unlike traditional lenders you don’t have to worry about submitting tax returns, being in business for two or more years, or having too many financed properties. It really doesn’t get easier than that

Contact us today!

So if you’re looking for a fast, efficient, and easy solution to fund your rental properties, then look no further. We have the easy rental loan waiting for you.

Ready to chat? Great! Our team here at The Cash Flow Company is here to help. We are eager to set you on a path that helps you make the kind of money you need to live the life you want.

Watch our most recent clip to find out more about the Easy Rental Loan.

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How to Escape Financial Struggles with Peer to Peer Lending

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How to Escape Financial Struggles with Peer to Peer Lending

What is peer to peer lending? Peer to peer lending is asking anyone that you know, or even people you don’t know, for money. While family and friends can be part of this, that is not what we are talking about. Instead we are referring to people in your community or those in the real estate community. These individuals want to make money, however, they don’t want to own properties. Roughly 98% of peer to peer money comes from these groups of people, not family and friends. So how can peer to peer lending help to escape financial struggles? Let’s take a closer look.

The struggles with budgets.

There are a lot of people right now who are struggling with their budgets. This is because everything has gone up. From taxes and insurance, to the cost of gas, budgets are being stretched more and more every day. This is where peer to peer lending can help people to escape their financial struggles. Peer lenders, who have money in their IRA, are looking for better returns. At the same time real estate investors and business owners are looking for better lending options. By working with real people again, both the borrower and lender can benefit from peer to peer lending.

Peer to peer lending can replace traditional loans.

Peer to peer is centered on finding people who are willing and want to get into a win win situation. As investors, we want to replace some or all of the funding that we normally receive from traditional lenders. These traditional lenders include banks, hard money lenders, and private lenders. By replacing all of that with a peer to peer bucket of money, you can create a faster, easier, and cheaper lending option. There is no need to be fearful! Peer to peer has been around since before banks were even established.

Creating better returns.

Those who use peer to peer lending will in turn get better returns than they would in other situations. For example, banks will normally give someone 5% and then lend out 9%. This creates a 3% to 5% profit for the bank. When you borrow directly from me, you will get cheaper money, and I will also get a better return because it is secured. A secured return is one that is secured by a piece of real estate. By taking the bank out of the middle, it makes it faster, easier, and cheaper money. Thus creating a win win situation for both the borrower and the lender.

Keep it simple and be prepared.

When we are talking about peer to peer lending we are not talking about begging people for money. We are also not saying that you need to go out and convince people. While you do have to go through a process, if it’s done correctly, then you can easily get people involved in lending you money. Once you have one peer to peer lender, you can easily jump to more by showcasing how you treat your peer lender, showing that you pay on time, and paid it back. Those who treat it like a bank loan or a real business will be able to expand their peer to peer bucket of money at a much faster pace. For those who struggle with communication, you can create a quick presentation or video to explain everything with links. Don’t make things complicated! Remember to keep it simple and always be prepared.

What do you need to do to be prepared?

Peer to peer lending requires less paperwork than a traditional loan. You also don’t have to worry about being denied because of your bank statements or credit scores. With the way things have changed and shifted over the years, the lending pools are shrinking as well. By taking the time to get everything secured, you will create a win win situation. Let’s take a closer look at what you need.

  1. We are going to secure this with a piece of real estate by using a deed of trust or mortgage.
  2. It’s going to be recorded by title. 
  3. Wire money directly to title for the closing.
  4. We are going to make it so secured that it will make them feel reassured.
  5. You are going to build a nice case to show them the property.
    1. Rental – Maybe it’s already fixed up and already rented. Then you can show that money is coming in.
    2. Flip- Here’s the flip and if it’s new, here’s what I’m going to do to the property. If you are experienced, then you can show what you have done in the past.
  6. When the property is refinanced or paid off, then the title company is going to pay the peer lender back directly.

Find people who are engaged or looking 

Peer to peer lenders are everywhere! Many are in their retirement age or in a retirement zone and just need more money to live. With the rapidly increasing cost of living over the past few years, many people are looking for something that will provide a better and more secure return. 

  • Self Directed IRA

This is a group of people who have their 401K or IRA in a self directed plan. A self directed plan is one they can use to invest in anything. Those with this type of plan are used to working with private places such as a business preliminary stock or deeds. 

  • Equity Trust and Direction IRA

They have meetups and groups that you can attend so that you can get connected with others in the community. An added benefit is that they have people who can take care of the paperwork for you while you decide where to invest.

Peer to peer provides flexibility

Many investors and business owners wonder what they can use peer to peer lending for and what the dollar amounts are. The flexibility of peer to peer, unlike banks, allows you to use it for small amounts, fix up costs, monthly payments, large amounts, and so much more! The beautiful thing about peer to peer is that there is always funding available from $10K to 10 million. It all depends on what you need and who you work with.

Here is a list of common uses for peer to peer funds.

  1. Gap funding 
  2. Finishing a project 
  3. Paying off a credit card
  4. Lines of credit 
  5. Developing land 
  6. Auctions 
  7. Rentals 
  8. Flips
  9. Land
  10. Construction 
  11. Anything that looks like a good deal and has security
  12. Expansion
  13. Growth

Peer to peer helps the community.

By using peer to peer lending as opposed to traditional lending, you’re putting money back into the community. By living here, working here, and investing here, you can see the benefits of your hard work. From fixing up properties to renting properties, we are going to improve the community around us. People who are lending will feel that they are helping the community, plus they can see where their money is. 

Now is the time

Now is the time to buy! There are predictions that rates will decrease in 2024.  It is important that investors set up their peer to peer bucket of money as soon as possible. Don’t waste time waiting for loan approvals from banks. Instead, think outside the box and find your peer to peer community today. Peer to peer lending makes it easier and more profitable for both the borrower and lender.  

Here at The Cash Flow Company we can help you navigate peer to peer lending. We have created systems to help navigate the process for both the borrower, as well as the lender. Contact us today to find out more.

Watch our most recent video to discover more about How to Escape Financial Struggles with Peer to Peer Lending.

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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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From Denial to Approval: Credit and Interest Explained

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From Denial to Approval: Credit and Interest Explained

Our goal today is to show how interest rates, credit scores, and LTV can affect your ability to not only qualify for a loan, but also to cash flow on the property. As a result, investors are walking a very fine line between being denied or approved for a loan. Learn how to shift from denial to approval today!

Type of property Purchase price Appraisal 

average 

rents in area 

 Amount down Financing 

30 year loan

 Fees

Taxes

Insurance

HOA

 DSCR 

(LTV) 
Rental $250k $1,950 20% 80%

($200K loan) 

 $300 75%
Credit Score DSCR rate Payment amount 

principle and interest

 Payment amount plus fees  Cash flow 

based on appraisal 
Client 1 680 9.75% $1,718 $2,018 -$68.00
Client 2 720 8.99% $1,608 $1,908 +$42.00
Client 3 780 8.75% $1,573 $1,873 +77.00

The power of credit scores.

Your credit scores not only affect your rates, but they also will impact your cash flow on the property. Do you need to raise your credit score in order to qualify? We can help you get your credit scores back on track with our 911 loan. Contact us today to find out more. As credit scores go up, you will be able to not only capture more monthly income, but you will also create wealth.

How do rates affect cash flow?

As rates continue to rise, your payments are going to increase as well. This in turn causes your cash flow to suffer, and in most cases it will be a negative. Cash flow positive on the other hand, means that there are going to be more properties available for more investors. So keep your eye out for this change!

Rates are decreasing!

Over the past three weeks rates have been decreasing. We may be at the peak right now and many are predicting that rates are going to significantly drop in 2024. It is imperative that you stay up to date and keep track of current trends. We have created a Weekly Investor Mortgage Report for you! Reach out through our website or email to find out more.

Keep increasing your leverage!

In real estate investing leverage is the key to success. It is what makes your wealth and creates your income. By using banks, other people’s money, and filling your leverage buckets, you will set yourself up for success.  

In Conclusion.

This example paints a very clear picture showing how 3 different people compare side by side on the same property. Nowadays, investors can either be denied or approved just based on their credit score, or where the markets are. While being denied is discouraging, it is important that you understand why you didn’t qualify in order to make a change. If you want to impact where you are and where you are going in 2024, then check out our website. We have a lot of ways to positively impact your credit, as well as a weekly newsletter. We are here to help you get on the path to success. 

Watch our most recent video to find out more on How High Interest Rates Impact Real Estate Investments.

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Always Have Enough Money for Your Real Estate Investments

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Always Have Enough Money for Your Real Estate Investments

Real estate investors always need to have enough money for their investments. It is important that they see every deal or transaction as a bucket of money. If you are buying a fix and flip or a rental property, there is a bucket of money that is needed. These funds can be used to purchase the property, complete rehab projects, cover closing costs, and take care of the interest. While the majority is going to come from the lenders, the remaining portion is going to have to come from you for a down payment or to cover the interest costs. It is important that you take everything into consideration when you are setting things up in order to win in the real estate game.

What do you need to look at when setting things up?

  1. Make sure that the lenders who are lending you money will give you more at a better price.
  2. Make sure that you have your bucket of money to not only qualify for this loan or multiple loans. Determine what represents your bucket of money, and how you can set it up to play in the game.

What if you don’t have any money going in?

There are many investors who enter the game without establishing their buckets of money. For these investors, it becomes a matter of creativity and how they feel about what they’re doing. There are a lot of people who don’t have anything coming into a deal. For these individuals, they can use lines of credit, or credit cards to do down payments. 

There is always another way to find the funds you need!

One of the most important things to do when you’re starting out is to use other people’s money. Often this is from family and friends. However, it doesn’t have to be. There are a lot of people out there who are looking for better returns. Take a moment to consider if there is someone out there who you can borrow $10K from. Perhaps someone from your real estate group or even a neighbor down the street. By doing this, you can fill your bucket of money with someone else’s money in order to get the return you want. As long as you use the funds correctly, then you can in turn make the money you need in order to pay them back. 

Let’s look at the numbers.

When you are purchasing a property, you can have the bank lend you up to 80% to 90%. The remaining 10% to 20% can then be provided by someone who is looking for a better return. By paying them 10%, it will be a lot cheaper than making payments on a credit card or a loan. The person lending you the money directly will in turn get a better return than they would find elsewhere. It’s a win win on both sides.

What do you need for success?

First and foremost you need to have confidence in order to succeed! If you are going to go out and ask people for money, then you need to show them that it will be a good deal for them. You can show confidence by knowing your project and by developing a business plan that showcases your investment goals. Once they have faith that you will find good properties, fix them, sell them, and make money, then they will partner with you. If you get one person in, then it’s easier to get more later.

We can help you!

We have developed a good system of how to not only find other people’s money, but more importantly how to talk to them about joining you in your investment journey. Here at The Cash Flow Company, we help to find you the leverage you need, get your buckets of money set up, and ensure that the properties you find are good deals. Remember, confidence comes with a good project, finding good projects will then help you make more money. Creating leverage now will help you jump into a deal quickly while others are scrambling. 

Contact us to find out more!

Watch our most recent video to make sure that you Always Have Enough Money for Your Real Estate Investments

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Get Our Weekly Investor Mortgage Report

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Get Our Weekly Investor Mortgage Report

2024 is here! Now is the time to look at interest rate predictions and discuss the importance of the weekly investor mortgage report. I have been in finance a little over 35 years, and working with real estate investors for 24 years. While experience isn’t exactly a crystal ball, it does help guide your investment decisions, as well as identifying trends. Real estate investors saw a prediction come to life in October of 2023 when rates did improve. As we begin 2024, it is important that we follow the trends from Fannie Mae, NAR, and the Mortgage Brokers Association. Here at The Cash Flow Company we have created a Weekly Investor Mortgage Report. Let’s take a closer look at how things have changed and why you need to stay up to speed. 

How is the Fed affecting bank loans?

A lot of investors go to banks for rental loans or fix and flip loans. As rates drop, it will have a greater effect on investors because Fed funds affect prime. Fed funds are controlled by the Fed and dictate what banks can borrow from the Fed or other banks. The fed funds are currently at 5.25% to 5.5%. Banks then add 3 points to that in order to create their lending base number for short term loans or 1 to 2 year bridge loans. Some lenders even have a prime -1 or prime -2 for their real estate products, it just depends on the lender.  To clarify, prime, also known as the Wall Street Journal Prime Rate, is the most common benchmark that lenders use when setting their interest rates. 

What are basis points and how do they affect you?

There are predictions out there that the Fed might drop from 75 basis points, down to 200 basis points in the next year. What is a basis point? A basis point is the same as a percentage point. For example, for every 1% there are 100 basis points. So 50 basis points is equal to .5%. You will hear that a lot in the economic world. Just keep in mind that it’s a percentage of a point. As stated before, rates will be volatile in the upcoming year. It is important that you track the basis points along the way because they will make a big difference when you are trying to sell something. The basis point trends can be found on our weekly investor mortgage report and are available on our website. It will be updated weekly in order to make sure everyone is informed on current trends.

Keep an eye on DSCR.

Here at The Cash Flow Company we will be keeping a close eye on DSCR, as well as private mortgage loans. We will see how the rates are impacted by upcoming changes, and track the trends in our weekly mortgage reports. Just today we discovered that rates dropped .25 of a point across the DSCR lenders that we work with.Thankfully we are starting to see where rates are going back to the 7% range instead of 8%. This drop is great for investors! Every .25 of a point it drops, means there is more cash flow for you, as well as more opportunities to qualify for properties. The real estate world is going to open up again as rates keep dropping. We are working hard daily to make sure you get the best rates out there.

How will private rates be impacted?

The private money lenders borrow money from either banks or other institutions. A lot of their money is based on either the Fed funds or prime, then they add to that. The amount that they add on is the margin or profit they receive when lending out to someone else. Private rates were in the 7% range and 8% range. Today these percentages have increased to 11% and even 13% for some private lenders. This increase is affected a lot by prime, and prime is affected by the changes that the Fed makes. As rates drop, you should start to see the cost of private money loans on your flips, as well as the BRRRR’s come down as well. 

In conclusion.

2024 interest rate predictions have indicated that real estate investors will see a decrease this year! Here at The Cash Flow Company we have created a weekly mortgage report to keep you up to date on current changes and trends. While we don’t have a crystal ball to predict the future, we can utilize trends and experiences to help guide us towards success.

Email us at info@thecashflowcompany.com to receive the weekly mortgage report updates or look for it on our website at www.thecashflowcompnay.com. This will go over some economic data, the best DSCR rate, and what current rates are for conventional so you don’t run the risk of overpaying. If you are going to be a real estate investor, then you need to know where financing is going. Not only for yourself, but for potential buyers as well. We are here to help! 

Many of our customers want to know what the rates would be for their situation, credit, or properties. We can put together a personal report for you. This can then be used for your portfolio, or for when you are buying a property. Contact us today to find out more!

Watch our most recent video to find out more about 2024 Interest Rate Predictions and the Investor Mortgage Report

 

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The Lender Pie: 3 Key Loan Qualifications in Real Estate

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The Lender Pie: 3 Key Loan Qualifications in Real Estate

The biggest hurdle that many investors face is learning the lending side of real estate. Today we are going to go over the lender pie and how it affects you as an investor. For over 23 years I have been working with investors. Many of them are just starting out and learning how to build both income and wealth. Wealth in real estate investing is achieved by using other people’s money for leverage. It is important that you understand the leverage side, what it looks like, and how you can make it work for you. This will in turn allow you to better understand how to play the game and win in real estate. Let’s take a look at the three things that lenders are looking for when making their decision for approval.

All lenders are looking for three things that make up their decision if they are going to lend to you. This includes your credit score, LTV, and your income.

1. LTV 

LTV stands for the loan to value. It is determined by evaluating how much money you have in a property, how much equity you have, and what is your piece of this property. LTV is one of the biggest factors that lenders look at when determining if they are going to lend to you, how much they will lend, and what it is going to cost.  

2. Income and Reserves

Income and reserves can either come from you or from the property. If you’re looking at a DSCR or fix and flip, and you are going to sell it, then it is the income that the lenders will evaluate. Reserves include the amount of money you have put away in case something comes up. In regards to rental properties, it is how many months of reserves you have in case the property goes unrented for 3 to 6 months. If you’re a flipper, the reserves can help you make payments over the next 6 to 9 months until your property is sold.  

3. Credit score 

Lenders will evaluate your credit score and how you have paid people in the past before considering loan approval. Lending is primarily based on algorithms, and your credit score is a big determining factor. 

Which factor is the most important to lenders? 

The answer is that It’s always a mix between the credit score, LTV, and income. This is because everyone’s pie is just a little bit different when lenders are looking. Let’s take a look at a few examples and how one piece of the pie can impact the other two. 

Example 1: LTV

First let’s start by looking at LTV. The more money you have into the property the lower the LTV. This lower LTV allows the lender to be more flexible when it comes to your income requirements, or even your credit score. An example of this would be an individual who has owned a rental for a long time and is refinancing it with a 60% LTV. When your LTV is lower, they can overlook and maybe stretch the DTI or even lower the credit score requirements. On the other hand, if you have a property and you are into it for 90%, the lender will then be very diligent in making sure that you hit both the income and credit requirements. Remember if your LTV or credit score is not the perfect piece of the pie, then you may have to compensate for that with a higher rate. We want to make sure that you understand this so that you pay the least amount when you’re investing. Investing is all about creating more wealth and income by paying less on the money that you are borrowing.

Example 2: Income 

The question is, does your personal income make the payments, or can it make the payments on this new debt? The more income you have to cover the expenses, the more lenders can look at a higher LTV or they could even lower credit limitations. On the other side of it, if you have more reserves, the lenders can look at giving you a higher LTV. Just to clarify, reserves include 401K, IRA, stocks, bonds, and savings. Reserves are anything that is liquid. Let’s say your expenses are $1000 a month. This includes your mortgage, HOA, flood insurance, taxes, and insurance payment. If this property is bringing in $300K, the lenders will be a little more flexible on your credit and LTV because they know that this property is able to sustain. However, if the expenses are $1000 and you’re only bringing in $1100, then there is less of a cushion. The lender will see the income as being less sufficient to take any hits or damage if the property goes vacant for a month or the market shifts. They may want a lower LTV or require a higher credit score to help balance things out. 

Example 3: Credit score 

Your credit score is the most important factor in being approved or denied for a loan. If you have a good property, but a bad credit score in the 500’s, it won’t matter for most lenders. To clarify, a good property could be one that is 50% or 60% LTV. However, most lenders won’t even look at you. This is due to the fact that all lenders have guidelines and have to take into consideration certain things. If you have a 600 or even 620 credit score, then you are going to be limited. Your credit score is vital to your success. The higher credit score will get you more money, a higher LTV, and it will provide more flexibility on income requirements. It is imperative for new investors to get their credit score as high as possible because it will lower the interest rates, the lower the mortgage payment, and decrease the amount of income you will need.

In conclusion

These examples create a great picture of what real estate investors need to understand about leverage. Again, leverage is how you create wealth and income. Remember that it is not just one piece of the pie that is taken into consideration in the lending process. Instead, a lender is going to look at every piece and make sure that your pie is where it needs to be for approval. While LTV and income are more difficult to change, your credit score is a place where you can make the biggest impact. Be on the lookout for future videos that focus on credit and easy ways to raise your scores.

Our goal is to make sure that you are as successful as possible. Contact us to find out more about the lending pie and how you can raise your credit scores. 

Watch our most recent video about The Lender Pie: 3 Key Loan Qualifications in Real Estate to find out more.

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How Much Money Do You Need for Peer to Peer Lending?

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How Much Money Do You Need for Peer to Peer Lending?

What is peer to peer lending and how much money do you need to get started? 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. To clarify, the majority of this money is not from family and friends, but instead from others interested in making a good return. Peer to peer lending is an excellent alternative to banks because there is little to nothing that you are required to pay. Let’s take a closer look at this excellent lending option and how it can help you with your financial needs. 

Who makes up the peer to peer lending community?

Peer to peer means that working with other people in the community who have just as big of a need as you do. In fact, these individuals might be in your church or individuals who are in retirement and need some extra income. They might have some money in a 401K, IRA, or extra savings that they would rather lend to you. Whether it’s 6%, 7%, or even 8% secured, it can help you with closing costs, while helping them get a better return on their money. 

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, and 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. 

Start the process and do it right.

If you are a good keeper of other people’s money, then it will expand. You have to start the process, do it correctly, and come up with a good package to present to them. What should you include in your package or portfolio? Let’s take a look.

  • What the property looks like
  • Estimate of what the rent will be
  • Include comps and additional research
  • Proper documentation 
  • Your plans for the property (rent or keep)
  • How the investment will be secured

Don’t take the cheapest path.

People try to take the cheap way out by not wanting to pay for the title, or record a deed because it’s going to cost money. The truth is, that all of those things are going to happen if you use a traditional lender. However, banks are going to charge more with higher interest rates. The better you make your peer to peer lender feel on the first few deals, the better the process will be in the future. It is imperative that you treat them like a real lender so that everything is official and secure. If it is done correctly, it will build a bridge that may bring more friends later on. Just to clarify, more friends does not mean adding more people onto a single note. Instead, these additional peer to peer lenders can be used separately for future investment opportunities. 

Something for everyone.

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.

Make the move today!

Peer to peer lending is an excellent alternative to banks for both investors and business owners! In many instances, there is little to nothing that you are required to pay in order to utilize these funds. 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. This will result in more money going into peoples accounts! The better it grows, the bigger it grows, and the more options people will have for their future. Ultimately our goal 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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Breaking Down the Numbers: How Rates Impact Your Cash Flow

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Breaking Down the Numbers: How Rates Impact Your Cash Flow

Today we are going to break down the numbers in order to paint a picture of how rates impact your cash flow. Specifically, we want to illustrate how rates, credit scores, and LTV can affect your ability to cash flow on a property. While we are aware that the Fed is impacting us, it is important that we see what that looks like on paper. The example we are reviewing today will provide an excellent visual of how everything plays a role in the real estate game. DSCR is the product we are using today because it is one of the most popular out there.

Type of property Purchase price Appraisal 

average 

rents in area 

 Amount down Financing 

30 year loan

 Fees

Taxes

Insurance

HOA

 DSCR 

(LTV) 
Rental $250k $1,950 20% 80%

($200K loan) 

 $300 75%
Credit Score DSCR rate Payment amount 

principle and interest

 Payment amount plus fees  Cash flow 

based on appraisal 
Client 1 680 9.75% $1,718 $2,018 -$68.00
Client 2 720 8.99% $1,608 $1,908 +$42.00
Client 3 780 8.75% $1,573 $1,873 +77.00

What about Conventional and Fix and Flips?

This example is also representative of a conventional, and fix and flips as well. In a nutshell, the more you pay on interest, the less properties you can handle. 

What is the appraisal?

An appraisal determines the average of rents in the neighborhood and uses this amount in the underwriting. The amount can change depending on if you have a couple years of history with rents that exceed the determined amount. The increasing rates are making it extremely difficult for properties to hit the expected rent amount.

What is the DSCR rate?

DSCR rates are determined based on your LTV. A credit score below 680 typically lowers the LTV from 80% to 75%. Therefore, you would need to put in more money up front on each purchase. If you’re looking at a DSCR with a credit score of 679, you will either be declined or it will flip you into a non ratio DSCR. Which means that your rates are going to be higher. Is a DSCR loan right for you? Visit our website to find out more.

How do rates affect cash flow?

As rates continue to rise, your payments are going to increase as well. This in turn causes your cash flow to suffer, and in most cases it will be a negative. Cash flow positive on the other hand, means that there are going to be more properties available for more investors. So keep your eye out for this change!

In Conclusion.

It is vital that you understand how rates, credit scores, and LTV can all affect your ability to cash flow on a property. Today we painted a picture that provided a side by side comparison of 3 different people. This allowed us to illustrate how all of these components work together and impact the overall cash flow. Let today’s example empower you to take a closer look at your numbers in order to create more cash flow in 2024!

Check out our website to find ways to positively impact your credit, as well as a weekly newsletter. We are here to help you get on the path to success. 

Watch our most recent video to find out more on How High Interest Rates Impact Real Estate Investments.

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Leveraging Bargain Properties for Maximum Gains

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Leveraging Bargain Properties for Maximum Gains

Real estate is all about creating leverage. Another way to create that leverage is to buy undervalued properties. What exactly is an undervalued property? It is a property that is being sold for less than it is worth. These are the properties that provide an opportunity for you to receive 100% financing and steady income for the rest of your life. Let’s take a look at a few examples of how an undervalued property can help you to succeed. 

Hoarders helper

Just the other day a friend of mine helped someone move out of a hoarder house that was under foreclosure. The homeowners no longer wanted the property, and they just couldn’t get everything done in time. My friend was able to come in and give them some money to take care of things, allowing the homeowners to get out of the property.. My friend was able to get the house at 70% of the value and put in 10%. In doing so, he created 20% net worth for himself. With the condo appraisal for $250K, he created $50K in wealth within just one weekend. 

Starting with nothing

Another local guy we know sold his car in order to get his first real estate deal. Fast forward 4 years, he has built three 6 unit apartment buildings with cash. These properties are owned free and clear, which is creating a steady income for him for the rest of his life. He achieved this success by being very diligent with both his process and his numbers. This is a prime example of how people who put their mind into something, can in turn create the wealth that they want. 

Lenders like undervalued properties

Lenders consider undervalued properties to be safe. This is because they are such a good deal compared to other properties on the market. Therefore, real estate investors can often get 100% financing on a property that is under market value. There are a lot of properties that are well under market value out there and many of them need some work. By taking the time and fixing them up correctly, you could guarantee a future profit for your investment.

Buy undervalued properties for maxim gains

Real estate is all about leverage. By leveraging bargain properties, you will in turn have maximum gains on your investment. It doesn’t take a PhD or a masters, it just takes some Doers! These are people who want to get out there and just do it. Investors who go through the correct steps can in turn make great returns within a short period of time. Some people want to make $50K to 80K in a year and have 6 months off. That is the beauty of investing and leveraging correctly. 

Watch our most recent video to find out more about Leveraging Bargain Properties for Maximum Gains.

Contact us to find out more about the importance of leverage and how to fill up your money buckets.

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