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Do You Want to Invest in Real Estate But Have No Cash or Bad Credit? No Problem! – Part 1 of 3

You want to be a bona fide real estate investor. You covet the money, the lifestyle and the freedom. A lack of working capital is holding you back. Or maybe your credit challenges are standing in the way of qualifying for reasonable financing terms. Don’t despair. It can be done. As a matter of fact, a great number of real estate investors almost never utilize their own cash or credit to profit from their investments, at least not in the beginning of their careers. In the following weeks, I will be discussing three ways you can invest in real estate without using your cash or credit. As you grow as a real estate investor, you will continually discover creative ways to invest in your deals. Once you have the experience, finding the money will become secondary to finding the deal. This is all part of the fun. Hard Money Lenders

Hard money lenders are a great way to fund your initial investments. Granted, they are expensive; their rates will make you cringe, their loan-to-value ratios are low, and they usually slap on a prepayment penalty. On the other hand, if you have a deal under contract with a conservative loan-to-value ratio of 65-70% that you need to close in a hurry and you don’t have stellar credit history, then a hard money lender may be perfect for you.

Before agreeing to anything in writing, be clear as to the stipulations of the proposed financing. These are important items to keep in mind:

1. Total cost of the loan

Ask the lender about their origination fees and processing fees as well as title and escrow charges. Request a good faith estimate. Hard money lenders are not regulated in the way that traditional mortgage lenders are. Expect their fees to be significantly higher, two to ten points in origination alone. Remember, all fees are negotiable.

2. Negotiate the prepayment penalty

If you are flipping, you only need a loan for a few months until resale. Request an interest guarantee in lieu of a prepayment penalty. An interest guarantee differs from a standard prepayment penalty in that the lender will collect a certain amount of interest form the funds they lend to you regardless of when the loan is paid off. A typical prepayment penalty is for one to three years; therefore, if you pay off the loan prior to the expiration of the prepayment penalty, you will be obligated to pay approximately the equivalent of six months worth of interest on your loan as a penalty.

With an interest guarantee, every time you make a payment on your loan, the interest portion will be considered as payment towards your interest guarantee. This means that if you take out a loan with an interest guarantee of six months and you sell the property within four months, you will only owe the hard money lender two months worth of interest at resale. Interest guarantees are usually a better deal.

It is common for the lender to request a six-month interest guarantee, which is the standard amount of a prepayment penalty. Just like everything else associated with real estate investing, this is completely negotiable. Request two or three months and see what happens. Do the math! Make sure that interest guarantee makes financial sense.

3. Request no out-of-pocket investment

This is exactly what it says: you do not invest anything out of pocket in order to close the loan. All you can do is ask. This will probably make the lender somewhat uncomfortable, although he or she may be inclined to forgo a cash investment since the approval of the loan is largely based on the After-Repair-Value of your property. The majority of lenders want to ensure you have enough resources to cover the cost of repairs, closing costs and holding costs. They expect borrowers to pay for loan charges at or before close of escrow.

4. Request money for repairs

It is possible to receive a draw for repairs. Most lenders will require invoices from contractors and subcontractors before the work is completed. Draws are usually disbursed once the completed work is inspected.

5. Request deferred interest

Some lenders will consider deferring interest payments until the total loan pay off. This is typically offered only with short-term loans with maturity dates of less than six months. For longer-term loans, the lender may still defer interest during the rehab period. Again, asking for what you want is a crucial part of the process.

6. Have a clearly defined exit strategy

Hard money loans are interim loans that stay in place for up to three years. They are a temporary solution to an investor’s financial predicament. The lender will want to know if you plan to keep the property for cash flow purposes or if you plan to sell before the end of the loan period. In either case, the lender will want to know how you plan to execute your course of action. Your exit strategy is very important because it informs the lender of exactly how you anticipate repaying the loan and confirms whether approving the loan will benefit everybody involved.

7. Shop around

When it comes to real estate, everything is negotiable. It is essential to comparison shop. Don’t be afraid to inform your lender that you are looking for a great deal. This may give you a stronger negotiating position. Sure, you will run across a lender or two who will slam the door in your face. Nevertheless, this is a numbers game. The more people you connect with, the better your chances of finding a good lender to work with on a regular basis. So, go out there and find the best deal you can get. Note: Another benefit to using a Hard-Money Lender is that you can use their funds for short sales as well.

Hard-Money Lenders are just one way to invest without using your own cash. Again, shopping around for a good lender and establishing a good relationship with that lender are key factors in your success as a real estate investor. Using a Hard-Money Lender is a great way to close a deal, yet there are still more options. Another option will be discussed in Part 2 of this three part series.

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Easy Money Loans – Simple Cash At A Substantial Charge

Easy Money Loans – Simple Cash At A Substantial Charge
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Easy Money Loans – Simple Cash At A Substantial Charge

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Posted: Dec 07, 2010 |Comments: 0
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Every time you are undergoing a economic crisis, simple money loans can help you in easing your troubles. Quick money loans are short-term funding options that debtors can borrow to meet their sudden expenditures. These loans are quickly offered these days. Any person that is over 18 a long time of age along with a US citizen qualifies for that loan if he has a regular cash flow as well as a checking account. The credit score history with the borrower just isn’t a deterrent to finding the loan.

Debtors can apply for that mortgage on the web alone. The loan company verifies the application based around the facts provided from the software. He does not need giving any extra proofs for disbursing the mortgage. The software process and eligibility criteria are so easy that this loan is rightly known as easy money loans. The moment accredited, this cash is directly made accessible within the borrower’s account. The whole method of verification and approval of the loan comes about in less than 24 hours. Therefore, these loans are also known as the fast cash loans. Repayment can also be simplified by directly debiting the borrower’s account on due date is possible. Due date is usually the subsequent payday given that these which means they’re sophisticated in opposition to the subsequent paycheck from the borrower.

However, the quick cash loans seem to become straightforward and quick you will discover number of points that each borrower should be aware of ahead of he applies for the loan. This can aid him make the right selection.

Points To be Noted

Since effortless money loans are very popular with quick time period debtors there are several lenders out there providing easy cash loans. The borrower therefore includes a extensive selection just before him. He should as a result settle for a loan company right after thorough investigation. He can assess the delivers of numerous lenders on the internet and decide on the lender giving him the very best deal.
The cash advance payday loans feature a higher rate of interest as compared for the standard secured loans. This really is attributed towards the fact that these loans are unsecured and short termed. Hence, the borrower ought to very carefully evaluate the urgency of his necessities and wait for the next shell out check to invest if it is doable.
The borrower must undergo the guidelines, laws and tariffs of the loan company prior to he applies for that quickly money mortgage.
Rolling more than the mortgage attracts a penalty. The borrower must consider to pay back the financial debt on the due date itself. Else, the cost of the loan escalates. The borrower will then find it tough to repay the mortgage.
If these factors are heeded to, then effortless cash loans would be the best choice for assembly emergency cash exigencies.

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Eight Tips For Building a Successful Cash Flow Business

If you want to successfully work in the cash flow business, you are going to have to effectively prepare yourself otherwise you could see your business struggle or even fail. You will need to prepare for success or you may find your business stagnating. Here are eight tips for finding success in the cash flow business.

Build a knowledge base

The first thing you will want to do before starting in the note business is to gain a basic knowledge of the cash flow industry. Learn your craft and build a foundation from which you will work from.

Find a coach

Perhaps the most important step to find success is to find a great coach. If you don’t have someone to guide and advise you, you will be forced to survive by trial and error alone. There is no need to reinvent the wheel – you are better listening to someone who has been through the battles and has a wealth of knowledge from which you can learn.

Balance your budget and your time

Many small businesses struggle and never grow, and one of the primary reasons for this is a lack of planning. A successful cash flow business should have a budget that is adhered to, and a plan of action that takes both time and monetary constraints into account.

Market your business

Successfully working with cash flows is more than just knowing the business – it is about getting out and marketing your business. There are many ways to market, but not doing so will almost certainly lead to failure. Learn ways to market, and then implement them!

Implement your plan

Creating the greatest marketing plan in the world is useless if you do not also implement that plan and put the wheels in motion. Many new business owners enjoy the planning stage more than following through with those plans. Planning can be fun. Actually doing things equates to work that you may not like, but you need to not only do, but do it well and with enthusiasm.

Maintain consistency and repetition

Putting the plan into action is critical, but sustained success will only come with consistency and repetition. If you do not look to build upon your past endeavors and continue to reinvest time into marketing, you will see your new opportunities fading. Obviously you need to always create more opportunities, not lessen them!

Review and adjust

Don’t be satisfied simply marketing and continuing the same patterns as an automaton. Review your efforts. What works, and what doesn’t? What can you improve upon, what can you do to maximize your efforts? It is just as important to constantly adjust your efforts as it is to get started in the first place.

Improvise and adapt

The cash flow industry is not a static thing, and you will need to be prepared to take advantage of any changes that occur in the marketplace. There will always be opportunity– the question is how do you find it? First, never stop learning! Never stop adjusting your business to the changing innovations in the industry and in marketing your business. The most successful cash flow professionals know that what they don’t know could be just as critical as that which they do know. Therefore, it is important to listen to new information, new knowledge and new potential opportunities.

114 comments - What do you think? Posted by Robert - May 22, 2010 at 9:52 am

Categories: cash flow notes Tags: Building, Business, Cash, Eight, Flow, Successful, Tips

Posts Tagged ‘Cash’

Do You Want to Invest in Real Estate But Have No Cash or Bad Credit? No Problem! – Part 1 of 3

Easy Money Loans – Simple Cash At A Substantial Charge

Eight Tips For Building a Successful Cash Flow Business

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