Tag Archive for: traditional lending

DSCR Loans: What Type of Properties Qualify?

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DSCR Loans: What Type of Properties Qualify?

Today we are going to discuss DSCR loans and look at what type of properties qualify. DSCR loans are an excellent product because they can provide more flexibility than traditional lenders. Unlike Fannie and Freddie, or traditional lenders, DSCR loans do not have the same guidelines. Instead, DSCR loans are regulated by a few big investors and do not force people to fit into a computerized box. DSCR loans create an opportunity for investors to find the perfect loan to meet their needs. 

Unique properties require unique loans.

Many unique properties include ones that need a smaller loan, a rural loan, mixed use, or properties that are above 4 units.  Keep in mind that some lenders are not always able to meet your needs. Unlike traditional loans, DSCR lenders all follow different guidelines and requirements. While one will do a DSCR ratio of 1, another lender will require 1.1 to get their best rates. Your credit score also plays a role in loan approval. Some lenders will go down to a 620 credit score, while others will say that 680 is the lowest they will go. There are so many different options that are available to investors. Be sure to take your time to find the best option for you and your property.  

The lending box.

There is a lending box that 60% to 70% of investors fit into. This box requires them to have a 700 credit score, 75% LTV, and a 1 to 4 unit property. For these investors, it becomes a matter of price shopping to see which lender has the best price for their property. If you don’t fit into this box don’t worry! There are a multitude of loan options available that can provide the flexibility you need to succeed. Do you have a VRBO, Airbnb property, pad rental, or a rural property? Find the right loan and the right amount for your next investment project. Whether it’s $50K or $300K, DSCR lenders have the versatility that can open the door to endless possibilities.

We are here to help!

Are you in need of a DSCR loan for a unique property? Here at The Cash Flow Company we are happy to run through the numbers to see which loan is best for you. Most importantly, there is no need to run your credit! Don’t get stressed trying to fit into a lending box! Keep your options open and find the right DSCR lender today! 

Contact us today to find out more about DSCR loans! 

Watch our most recent video to find out more about: DSCR Loans: What Type of Properties Qualify?

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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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Credit Score 911 How to Qualify for a Utilization Loan

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Credit Score 911 How to Qualify for a Utilization Loan

A utilization loan, or 911 utilization loan is useful for both flippers, as well as real estate investors. Unfortunately, not everyone can qualify for a 911 loan, but it is available to those who pay their bills on time and need to quickly raise their credit score. Many of the clients we see get stuck in the trap of using their personal credit cards for business expenses. This in turn can have a significant impact on credit scores in the long run. There are three things that we look for to determine if you qualify for a utilization loan. Let’s take a closer look!

First, make sure payments are on time.

This loan is ideal for clients who spiral into personal credit card debt from using their cards for business expenses. The most important requirement to qualify is that they have been paying on time every month. If you haven’t been paying on time, then you will need to get back on track in order to be considered.

Second, have something to secure the loan with.

We are an asset-based lender and require a piece of real estate to secure the loan. We want to not only ensure that we have the security for lending, but that you also have leverage for your next step.

Third, how do you pay a usage loan back.

In using the 911 loan, you are able to increase your credit score. Which, in turn, allows you to get your next loan, qualify for a refinance, purchase your next flip property, and so much more! However, it is important that you think ahead about how to pay off this usage loan once you get back on track. This can be done by either getting cash out or using a HELOC to pay us off. 

Is a usage loan right for you?

We have a client for example with 200K in credit card debt who is paying 6-7K per month now. By doing the 911 loan, we were able to cut their debt in half to 3K per month in credit card payments. Another client was able to raise their credit score 12 points and receive a HELOC. While someone else was finally able to qualify for a SBA loan. Again, this is not a long-term loan! This is a 911 loan that will help get your credit score back on track and provide the leverage you need to be successful.

How can we help you?

Not sure if you would qualify for a credit utilization loan or where to go next? We have resources that can help guide you through the process. It only takes about 10 to 15 minutes to run through the information and see if we can help. After that, we will also help to set things up correctly to ensure you aren’t faced with these issues again. 

Before reaching out, there are a few things you can do to see if this is the right move for you and your business. 

  1. Go to MyCredit, MyFico or another credit website to run a simulator. This will show how your credit score is impacted once you pay off certain debt.
  2. Look at your payments and leverage. Are you paying everything on time, and do you have a real estate property that can be used to secure the loan?
  3. How can you get out of it in less than 12 months? You need to have a way to pay off the 911 loan in a short period of time. 

These are good loans for real estate investors who are trying to get credit card payments paid down. So many people go into credit card debt, and it can take a year or two to recover by paying them off as they build. It’s easier however, to pay 8-10% interest on a HELOC then 29% interest on a credit card. 

Watch our most recent video or contact us today to see if you qualify for this quick fix, so you can enjoy investing in the future! 

Go to our website to fill out an app and set up an appointment to discuss more. The more information you can give us, the more we can do to get you back on track! 

 

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Why real estate investors need to understand escrow?

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Why real estate investors need to understand escrow?

Real estate investors need to understand escrow for their business to be successful. Escrow is a portion of the loan that a lending company puts aside for repairs on the property. As a real estate investor, you need to understand the rules and regulations of the lender in regards of Escrow, in order to save both time and money.  When investors understand escrow, and what they are responsible for, it can ease their frustration, prevent a finance wall, and establish a foundation for cash flow.

1.Understand the rules of escrow

As a real estate investor, you need to understand escrow by researching the rules and regulations for your lender. Any misunderstandings can very easily stall or even jeopardize a project. Investors also need to construct their budget beforehand, to ensure that they stay within it during the process. There is no flexibility after the amount is approved by the lender. Without the ability to expand the Escrow, any additional expenses will come out of your pocket instead.  

2.Begin repairs to receive escrow

Lenders allocate a set amount to not only purchase a property, but also to fix it up in order to get it market ready. The only way to access Escrow funds when buying a fix and flip, or an undervalued rental property, is to submit proof. These can be in the form of receipts, photos, and other documentation sent to your lender to show that repairs are underway. 

3. Optimize profits by using escrow correctly

When real estate investors understand escrow, they can optimize profits and avoid missing the market when it’s “hot.” This is achieved by taking into account all repair costs, having the money set aside to complete repairs, and completing the work quickly. Remember the longer you’re on hold, the more it will cost you, plus it will delay paying contractors. By understanding the importance of cost and timeline, it will result in a larger profit. 

So, what are the other Major Roadblocks that cause burn out, financial hemorrhaging, and unfortunately defeat? 

Watch our latest interview to discover more about the 5 Major Roadblocks

Want more information on real estate investment roadblocks or have any other questions? Contact us today!

 

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Investor Mortgage Report 6.9.2020

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What We Know:

The markets are stabilizing, and underwriting term times are back in pre-Covid standards.

With rates for single-family investor properties on conforming loans hovering around the low 3’s, it might be time to look at locking in and increasing your cash flow.

What This Means for You:

As an investor, there is money in the money—Your money!

Your credit score is the key to keeping more of your money. No matter your income situation, the better your score, the cheaper the money. Cheaper money equals more cash in your pocket.

Investor Credit Score impact

Last week, we showed you how much money can be saved with a good credit score. Now, it’s time to go over how to increase that score quickly.

How to raise your score and increase your cash and cash flow

Want to save money as an investor? It might be time to crunch the numbers

Do you want to keep money in your life or keep supporting a banker’s life? We’re pretty sure we know the answer to that particular question.

They say that Vegas was not built on the gambler’s winnings. The same can be said about banks. Banks keep popping up everywhere, even when most banking has gone online.

 

Why is that? Because they know there’s money in your money.

 

So how can you better prepare your credit score for an investor loan?

  1. Plan before you apply by checking your score online.
  2. Stop applying for ANY credit at least 60 days before a loan application.
  3. Raise your score with one or two of these simple methods:
    • Use private money when you can and keep it off your credit. If you can borrow from a private individual or entity that doesn’t report on credit to pay off/down your credit, do it BEFORE your next statement date.
    • Don’t close paid off accounts.
    • Pay down your credit cards before due dates. This will take extra cash now, but it will save you tens of millions in the future.
    • Keep balances below 30% of outstanding balances on revolving accounts like credit cards.
    • Dispute any item that should not be on your report.

This list does not include paying your accounts on time. That’s a no-brainer. You should always pay on time. There’s typically no quick fix for late payments.

Stay tuned, because next up, we’ll be covering how to check your credit on your own! In the meantime, if you have questions about your score, what it’s costing you, or what a better score could save you, reach out! We’re always happy to go over the numbers with you!

*All non-commercial and construction loans offered by TNS Loans NMLS #1719349

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What’s the Cost of Your Credit Score?

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a less than perfect credit score is eating away at your profit.

How much money might a lackluster credit score be costing you over the life of your investment business?

the impact of your credit score

You probably hear a lot of talk in the mortgage industry about your credit score and the effect it can have on your interest rates, but do you really have an idea of how much it’s affecting your bottom dollar?

Do you know how to determine your Return on Credit (ROC)?

Can you crunch the numbers to figure out how much your score is helping your cash-flow (or how much money it’s sucking out every month?)

These calculations can get complicated, but the takeaway here is that a less-than-stellar score can really be costing your tens of thousands of dollars over the lifetime of your loan. And when your loan is on an investment property, (or several,) you may as well be lighting your profits on fire.

a less than perfect credit score is eating away at your profit.

We want to help! Contact our team so we can help you see where you’re currently at, and where you could be going instead.

Let’s get you to your goals faster by trimming some of the fat from your financing!

Hard Money Mike is a lender based in Colorado offering services in several states. We lend money for all varieties of commercial-based properties. So whether you’re trying to finance a fix-and-flip, vacant land, whole-tailing, or looking for a builder bridge loan, we’ve got you covered.

Call Mike Bonn at: 303-539-3000 or email Mike@HardMoneyMike.com

*All non-commercial and construction loans offered by TNS Loans NMLS #1719349

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Investor Mortgage Report 5.26.20

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Mortgage industry is showing signs of recovery.

The Mortgage Market is Showing Signs of Being on the Mend.

What We Know:

The mortgage market is finally showing signs that it is starting to recover and heal. As states begin to lift travel and business closure restrictions and reopen for commerce, lenders appear to be relaxing some of their restrictions in-kind.  Last week, we welcomed back a few lenders offering loans outside the standard conventional box.

This week, we see even more positive progress, such as lenders expanding the LTVs up to 70% on their investor cash flow loans (based on credit score and lease.)

We are noticing the lending requirements are a little more restrictive than before Covid-19, but at least additional options are making a comeback. Hopefully, this upward trend will continue over the following weeks.

What You Can Expect:

A return to business-as-usual won’t happen overnight, of course. The lower credit scores and higher LTVs will more than likely take some additional time to return to their pre-COVID closure state. Lenders will want more data on the unemployment and rental payment front before expanding.

Real estate investors may have to be more patient for normalcy to return to their lending markets.

Rates in the standard-conforming market are coming down.  For investors, 30-year rates are in the mid 3’s for purchases and no cash-out refinances.  Cash-out refinances are still a big challenge for investors, and will more than likely continue to be so for the next few months.

Expect to find the expanded requirements (up to 6 months reserves for each property) to be in place with underwriters through the end of the year.

*All non-commercial and construction loans offered by TNS Loans NMLS #1719349

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Investor Mortgage Report 5.19.20

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Non-Conventional Mortgage Loans Are Making a Comeback…

Non-conventional loans are closing again

Non-conventional mortgage loans are getting funded again.

What We Know:

Finally, we’re seeing an influx of non-conventional mortgage loans being funded. Hopefully, this positive change is bringing some relief to both investors and their buyers who don’t fit neatly into the conventional mortgage lending box.
 
Mortgage loans in this lending bucket typically do not require tax returns but rely on bank statements or leases for income.
 
Even though some are back, requirements for securing these loans have increased and are a little harder to obtain.  The majority of the lenders have a starting point of a max 65% LTV and a credit score of 700+.  The good news is the rates have not skyrocketed. There are now lenders lending who had previously been turning away would-be investors.
Light at the end of the lending tunnel

There’s a light at the end of the lending tunnel again.

 

The Takeaway:

We are on the road to lending opening back up. The economic restrictions and resulting uncertainty appear to be lessening. Apparently, to the point where lenders are feeling confident enough to begin closing riskier deals again.
Make no mistake, it will be a slow process. But there appears to be a light at the end of the COVID lending tunnel. Stay tuned as we provide continuing outlook updates over the course of the coming weeks.
In the meantime, if you’d like to review your financing options for investment properties, feel free to reach out! We’re always happy to run your numbers with you.
*All non-commercial and construction loans offered by TNS Loans NMLS #1719349
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Why You Shouldn’t Let the Banks Hold Your Wallet

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95% of investors are controlled by the banks. The other 5% control their own destiny.

Which group do you want to be in? 

 

History is repeating itself.  Banks and lenders are closed up and running away from loans for the investment community.  They’re backing out of deals just minutes from the closing of a loan, without the courtesy of so much as a “Sorry.”

Right now, the majority of real estate investors (95%) rely on banks and traditional lenders as a means to fund their deals. That means when the banks decide to stop lending money, they stop you from succeeding.

 

Let’s change that!

 

Now, more than ever is the perfect time to take back control of your financial future.

 

How? By partnering up with people who have money ready to invest! Mom, your bestie, neighbor, gym buddy—anyone with cash to invest has the ability to help fund your investment deals. It doesn’t HAVE to be a bank or traditional lender. 

Be a power player and join the 5% who don’t sweat economic disasters.

 

Want to dip your toes into the world of OPM (Other People’s Money) funding, but not sure where to start? Sign up for our Into to OPM Webinar! We’ll be going over the basics and answering your most pressing questions about how to secure financial freedom for your investment business, EVEN when the banks are saying “No.” 

 

Sign Up Here >>>

 

Just remember: Keep it legal, keep it safe, keep it honest.

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Investor Mortgage Report 4.28.2020

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States are slowly opening back up into an uncharted post-COVID19 closure world, but how does this affect the lending markets?

 

Some states have started to allow the gradual re-opening of businesses as stay-at-home orders begin to relax around the country.  What effect will this have on mortgages, rates, and availability of lending to investors?

 

What We Know:

Here’s what we think is reasonable to expect as we return to our new version of “normal”:

 

As businesses start opening up, there will be an influx of people employed and able to make their rent and mortgage payments.

 

The majority of the traditional lenders left investors out to dry over concerns of rents being paid. Government officials haven’t helped the matter with proposals to postpone or forego rent payments.  If tenant rents are not paid, how will investors react? Will they still be able to make their payments?  Will it affect those with larger portfolios to a greater degree than those with smaller ones?

 

These serious (and unanswered) questions are the main reason we have little to no funding options at the moment.

 

The only way we put these concerns to rest is by people going back to work (if they’re able.)  Feeling out the new “normal” flow of payments will help bring certainty to the lenders so that they can decide whether to open lending back up (at a limited pace and with tighter guidelines,) or keep it as-is (little to no options.)

 

The fate of the traditional lending world will hinge on payments: Those made by renters as they return to the workforce, and subsequently, those made by their landlords.

 

What You Can Do:

Be optimistic for more certainty over the coming weeks. As individual states’ economies reopen, let’s remain hopeful that jobs are still there, people want to go back to work, and that they are able to keep up with their payments.

Lastly, also let’s encourage government officials to stop putting out the idea that renters can “forgo” their rents.  This helps no one currently holding a mortgage (unless you want votes.)

 

Want to stay in the loop with the latest assessments of the lending climate, and ideas on how to keep your real estate investments funded in these trying times?

Sign up for our weekly industry newsletter and upcoming OPM webinar series here >>>

 

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