October 17, 2018

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The Power of Leverage in Real Estate Investing

The Power of Leverage in Real Estate Investing

 

A great article in Forbes.com by Alex Hemani

 

The Power Of Leverage

Many people understand the power of leverage in principle, but are a little unclear about how it plays out in practice. Consider this example: An investor has $50,000 to put toward single-family rental real estate. There are a number of options for how to use this capital, including:

• Option 1: Buy a $50,000 property for cash. This approach produces no leverage.

• Option 2: Put the $50,000 toward the purchase of a $100,000 property, using financing like a bank mortgage loan to cover the other $50,000. This produces 50% leverage.

• Option 3: Put the $50,000 toward the purchase of two $100,000 properties, again using financing to cover the remainder of the purchase price. This produces 75% leverage, and spreads your potential gains and risks over two properties.

 

Click here for the full article

 

October 15, 2018

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Hard Money Mike Quote of the Week Oct 15 2018

Hard Money Mike Quote of the Week Oct 15 2018

The smart real estate investor and lender spends time learning and studying the market and the business.

 

Hard Money Mike 3 Oct 2018

October 12, 2018

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Fix and Flip Property Esko, MN

Fix and Flip Property Esko, MN

Fix and Flip Property Esko, MN – Total Funded – $140,000

Another project is underway! Some of the renovations planned for this 3 bed, 2 bath property include replacing the siding and roof, updating the bathrooms and floors, and upgrading the electric system. Upon completion, the after value repair (ARV) is estimated to be $200,000.

Come back later to check out the after photos!

For more info and news on Hard Money Mike  – CLICK HERE

October 10, 2018

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The Fix and Flip Portfolio for Increased Profits Step 4

Creating a Portfolio: Step 4 – Business Goals and Structure

 

Your business goals and structure are second most important part of your portfolio, as it gives investors and lenders an idea of the “rules” you live by that shape your every decision. Because so much money is at stake in the real estate industry, your goals and mission statement needs to be unique, infallible and trustworthy. That said, the rules for devising a real estate investment goals and mission statement are more or less the same as the those that guide other industry professionals.

 

Determine Your Why

 

Simon Sinek once said that customers buy whya company does something and not what. This has proven to be true on countless occasions, but the most successful example is, of course, Apple. In the world of real estate, however, there are several companies that have flourished under their why. One of those companies is Keller Williams, whose mission statement is “To build careers worth having, businesses worth owning, and lives worth living.”Come up with a powerful why and people will be drawn to you.

 

 

Don’t Negate the Practicalities

 

Again, for lenders, it all comes down to the money. Money is a practical matter, and as such, you need to prove that you have a practical mindset, and not just a whimsical one. Some questions lenders will want answered before funding you regard the following:

 

  • Your business structure
  • Your business location
  • Your business goals (How many homes do you plan on flipping with the loan?)
  • Your business partners (if applicable)
  • Your past projects

 

Help us help you answer these questions. Send over information regarding at least six of your most recent projects, including all the information mentioned in steps one through four for each.

 

Contact Us Today

 

Now that you know what you need to do to build a professional real estate portfolio, contact us to get started. Call us at 303-539-3000.

October 8, 2018

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Hard Money Mike Quote of the Week Oct 8 2018

Hard Money Mike Quote of the Week Oct 8 2018

Smart real estate investing is still one of the safest places to invest your time and money.

 

Hard Money Mike 2 Oct 2018

October 5, 2018

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Fix And Hold Property Colorado Springs, CO

Fix and Hold Property Colorado Springs, CO

Fix and Flip Property Colorado Springs, CO – Total Funded – $236,000

Built in 1899, this 4-unit property is will be updated from a Class C to a Class B apartment. The owner is also considering updating the attic into a 1/1 unit, creating a second story. Once the renovation is complete, the property will be rented out and overseen by a professional management company.

Check back soon for the after photos!

For more info and news on Hard Money Mike  – CLICK HERE

October 3, 2018

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The Fix and Flip Portfolio for Increased Profits Step 3

Creating a Portfolio: Step 3 – Your Team

 

Every business is only as good as its team. If you hope to obtain funding for your next project, you need to show lenders and investors that you’re backed by a worthy team of realtors, contractors, attorneys and more.

In order to make your portfolio as strong as it can be, we ask that you send over the contact information of the following individuals, as well as information on what role they will play in your upcoming project:

 

  • Realtor: Your realtor is responsible for finding you project-worthy homes. If you hope to obtain funding for, say, a year’s worth of flips, you need to reassure lenders that you have an experienced realtor on retainer who is always working for you.

 

  • Wholesaler: Many flippers like to work with wholesalers along with realtors. If you’re one of them, gather the information you need about your wholesaler to prove to lenders that he or she is legitimate and can supply your home needs.

 

  • Advisor: Give lenders peace of mind and work with an advisor who is equipped to help you make sound business decisions.

 

  • General Contractor: You may have the vision, but your general contractor is responsible for bringing it to life. Make sure that you are able to present the lender with the contractor’s license number, certifications and, if applicable, company information.

 

  • Insurance Agent: Lenders won’t loan money to potential real estate investors who don’t have the right coverage. Present a certificate of insurance along with your insurance agent’s contact information.

 

  • Title Company: Give investors peace of mind that your transactions are legitimate. Work with a reputable title company in the area.

 

  • Vendors: Provide investors with a list of reputable vendors who have a track record for getting things done in a timely, cost-effective and sufficient manner.

 

  • Others: If you work with a specific interior designer, real estate stager, painting contractor, roofer or any other expert, provide his or her contact information as well.

 

You are only as good as your team. Give lenders and investors an idea of what type of team you have and provide us with information about each of the aforementioned individuals. Contact Hard Money Mike today to get started at 303.539.3000.

October 1, 2018

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Hard Money Mike Quote of the Week Oct 1 2018

Hard Money Mike Quote of the Week Oct 1 2018

We all have great ideals but ideals alone do not result in income until they are implemented.

 

Hard Money Quote of the Week 1 Oct 2018

September 28, 2018

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Flip Property Columbus, OH

Fix and Flip Property Columbus, OH

Fix and Flip Property Columbus, OH – Total Funded – $124,000

This fixer upper is about to get a major facelift! Some of the renovations will include fresh paint, a new roof, and a full landscape makeover. Even the kitchen and bathrooms will be receive new cabinets, countertops, and sinks. Upon completion, the after value repair (ARV) is estimated to be $205,000.

Come back later to check out the after photos!

For more info and news on Hard Money Mike  – CLICK HERE

September 26, 2018

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The Fix and Flip Portfolio for Increased Profits Step 2

Creating a Portfolio: Step 2 – Financials

 

Ultimately  bankers, lenders and private lenders are concerned with one thing: money. It’s not enough to tell investors or lenders that you can turn a profit—you need to prove it by presenting lenders with all the financial information they need to make an informed decision. While you could present the financials separate from your portfolio, our team here at Hard Money Mike has found that including financials as part of the portfolio is met with higher approval rates. Help us tell a story with your financials – use this guide to get started.

 

Keep Financial Records of the Job

 

Lenders and investors want to see that you’re good with money and that you know how to allocate your budget wisely. Your portfolio should illustrate the costs of each project you want to highlight. Some financial records you should present to investors include the following:

 

  • HUD Statements – Before and After: HUD statements provide an itemized list of all charges imposed upon a borrower and seller of a real estate transaction.
  • Detailed breakdown of the Repairs Total: If possible, provide a detailed breakdown of all project expenses. This should include everything from the cost of the home to the price of the final light fixture installed.
  • Estimated Interest To Be Paid on Loans: Wise real estate investors take interest into consideration. Show lenders and investors that you’re one of them and include the cost of interest in your breakdown.

 

Summarize the Total Cost of the Job

 

While a detailed breakdown of expenses is necessary, lenders aren’t going to want to have to sift through each item to find, say, the total cost of renovation. Provide a brief synopsis of your expenses. In this synopsis, include the following:

 

  • Amount of Purchase
  • Total Amount Financed, With Interest
  • Total Cost of Repairs
  • Amount the Home Sold For
  • Total Profit

 

In order to borrow money, you need to prove that you’re good with money. Prove this by presenting a detailed overview of your financials along with before and after photos, references and a detailed business plan. Hard Money Mike at 303.539.3000 for assistance in creating a professional portfolio that will impress bankers and investors.