Fix and flip market watch June 2022

Fix and flip market watch June 2022

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Where are the markets for fix and flips and what can we expect in the next 6 months.

I address these questions in this months market watch.

We see signs of less overbidding on homes as interest rates continue to climb.

Median price range homes that have quality of work completed are still moving in days, but larger homes especially in more rural areas are starting to sit.

There is a storm we will have to get through over the next 9 months to figure out our new markets.  After that real estate investors should start to see better deals available to them too flip.

This will weed out some investors and leave more opportunity for the ones who plan wisely.

Looking for other videos on the money side of investing?  Check out our Youtube channel via this link.

Truth about hard money loans

Is Hard Money a Trap?

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Have you heard that hard money loans are a trap?

Here’s what you should do so it doesn’t happen to you.

It’s a big misconception: hard money is a trap.

A lot of investors think if they enter a hard money loan, they’ll never escape. Hard money gets a reputation as a death sentence for your profits.

And like all loans, credit, and other money-borrowing options, if you use it wrong… it does feel like a trap!

We want you to understand what behaviors make hard money loans unprofitable. And more importantly – how to use hard money to your advantage in your real estate investments.

Hard Money Is a Temporary Solution

Here’s where hard money naysayers go wrong: hard money loans should only be a temporary solution. They are not meant to be long-term options for investors.

If you enter a hard money loan with a long-term mindset, then you’ve already fallen into the “trap.” When you treat it like a long-term loan, you’re likely to lose a lot of your profits paying it back.

Hard money is short-term. To make the most of your loan, you have to get in and out of it fast. Here are 3 vital tips to make sure that happens.

Want More Guidance for Your Hard Money Loans?

Hard money is a valuable tool for prepared real estate investors who use it appropriately as a short-term solution.

Let Hard Money Mike give you guidance to get in and get out of your investments quickly and profitably. We’re excited to set you on a path that makes you the kind of money you need to live the life you want.

Read the full article here »

Need to see if you’re paying too much for hard money? Download our HMM Loan Optimizer to quickly find the best hard money option for your project.

You can also check out these videos about hard money on our Youtube channel. Happy investing.

Credit Score Basics: How Lenders Use FICO Scores

3 Simple Ways to Boost Your Credit Score Fast

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Leveraging your real estate investments just got easier with these 3 quick ways to raise your credit score.

Maybe you’ve already noticed it.

Larger lenders are getting into the fix-and-flip hard money space. And many of these companies require credit scores as their underwriting criteria.

In this landscape, your score decides the speed and effectiveness of your journey to fix-and-flip financial freedom.

Your  score will determine your rates, leverage, and overall income from your real investments.

Good or bad, your score impacts every step of your financial process.

So how can you raise your score in a short amount of time?

How Can I Raise My Credit Score?

First of all, it’s helpful to know exactly what a credit score is, which you can read here and here. And how it impacts your real estate investments, which you can read here.

1. Add More Credit to Your Line

Ask your credit card company to raise your credit limit. For example, if you increase your limit from $1,000 to $3,000, owing $1,000 jumps from maxing out your line to only using 33% of it.

Other options that have the same effect are:
Open up new lines of credit, but don’t use them often
When you get a new card, don’t close your old one, just stop using it

Having more available credit will automatically make your accounts owed look better, and raise your score.

2. Get Authorized on Someone’s Good Credit Account

A good credit account:
Is always paid on time
Has existed for awhile
Has a low balance

Ask a parent, friend, or other trusted person if they’ll add you as an authorized user to their credit card account.

This won’t help you immediately open up credit lines with lenders, but it will raise your score.

3. Go Private

This means borrowing money from someone or somewhere to temporarily pay off your credit cards so you can apply for more credit.

Your credit score changes almost daily.

Let’s say you have three credit cards. They’ll each have different reporting schedules. If you borrow private money, you can time payments so your score is increased long enough to open new credit lines.

You can keep the debt paid for 60 days or so while you apply for loans.

Putting in the time and effort for a high credit score more than pays for itself in the leverage it gives you in real estate investments.

Three quick ways bump up your score are to:
Add more credit to your line.
Get authorized on someone else’s good credit account.
Go private – get money from somewhere else to pay off your debts long enough to apply for more credit.

For more tips on building good credit and maximizing real estate investment leverage, check out these helpful videos on our Youtube Channel.

Or you can download our Credit Score Checklist by following this link.

Need Help with Your Credit?  Contact us today for our list of preferred credit boosting companies.

Happy investing.

Credit score and funding a flip

Basics About Your Credit Score

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What a credit score is and why you should care (if you care about your investments).

There’s a magical triple-digit number that seems to decide your fate in this world.

It can determine what car you drive, where you live, and how much money you can have at your disposal. And in some cases, it can make or break your success as a real estate investor.

It’s your credit score.

But it’s not as magical as it seems. There’s a logic to your credit score, and you have the power to change it.

So let’s break it down.

What is a Credit Score?

A credit score is a way for lenders to determine your “creditworthiness.” In other words, your “you-can-trust-me-to-pay-back-your-money”-ness.

Because you know whether someone can trust you with their money. But financial institutions don’t know you like you do.

Lenders need a way to decide if you’re safe to lend to. So your score tells them the story of your financial habits.

Read the full article here »

Need More Information?

Your credit score is incredibly important to keep on your radar. Especially when you’re investing in real estate.

It’s not a made up number that has no effect on your life. But it’s also not as difficult to understand as it may seem at first.

For more tips on building good credit and maximizing real estate investment leverage, check out these helpful videos on our Youtube Channel. You can also download our Credit Score Checklist at this link. Happy investing.

Reach Your Cash Flow Goals

The Way to Get Cash Flow for Your Real Estate Investments that You’ve Never Thought About

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How can OPM benefit your real estate investments? Here are the basics to get you started.

OPM. Other People’s REAL Money.

Not money from a broker or mortgage company or hard money lender. Money from real people to fund your flips and make your investments faster, easier, and more profitable.

OPM vs Private Money

What’s the difference between private money and Other People’s Money? Aren’t they the same thing? Yes and no. They’re related, but there are a few key differences.

Private money is often called “hard money.” It involves going through a broker or a company like Hard Money Mike that lends you private money.

OPM does the same thing, but it’s strictly peer-to-peer, person-to-person. It is private money because it’s a loan outside of a bank. It’s not hard money because you’re not going through a formal company or filling out applications.

What is OPM?

OPM is simple: one person has money and needs a smart place to put it, and one person has a promising property investment but no money to put into it. They form a peer-to-peer transaction.

Both people have the chance to benefit more than they would if they went through a bank. The person with the money gets a simple investment with typically a much higher return than the banks would pay. And the person who needs the money can get it cheaper, faster, and keep it more fluid. Both can end up more profitable and successful.

Taking the OPM route may feel non-traditional from a modern perspective, but historically, it’s the way things have always gotten done. One person has something, another person needs it, so they create a deal where they both benefit.

The Flipper’s Perspective

If you’re the flipper and you have an established relationship using OPM, funding purchases becomes simple. You find a property, and all you need to do is contact your OPM lender and give them details.

“I found a great property, but I need $100,000. We close in a week. Here’s the title company’s information. Please send the money, and we’ll get this taken care of.”

No applications, no appraisals, no middleman. It’s an easier way to borrow money, and usually less expensive than more traditional loans.

The Lender’s Perspective

If you’re the one with the money, you’re probably already looking for a smart place to put it.

Loaning the money to a flipper or other real estate investor will typically give you a better interest rate than a bond, CD, or other interaction with a bank.

How to Make It Work

It’s extremely important that OPM deals are set up to be win-win for both sides. The main reason people avoid OPM is the fear of deals going bad. This system breaks down if one side or the other feels the deal becomes unfair or unsafe.

Let’s talk about how to create a win-win environment.

Priorities for Each Side

Each party has to keep the other party’s interests in mind.

For the flipper, OPM needs to be easy, reliable, and quick. The flipper’s responsibility is to make a good and profitable deal with the other person’s money. If you do that, your OPM lender will always be there to help with your next deal. However, the second you “play games” with their money, the relationship ends, and you lose that source of fast, simple funding.

For the OPM lender, deals need to be secure and detailed. As long as their money is taken seriously, they will be there for the flipper. If you’re the OPM lender, you have to always fund a deal when you’ve agreed to. Don’t leave the flipper high and dry at the closing table.

Setting Up a Proper OPM Relationship

Using OPM may “feel” more casual, but it’s absolutely vital that you get everything in writing. Visit a lawyer, and lay out all aspects of the deal. Everyone will come out more successful if you’re diligent with this step.

Some of the things you’ll want to set up in writing are the following:

  • What is the repayment schedule?
  • What are the interest rates?
  • How long is the loan?
  • What’s the plan with the property?

The clearer, more open, and more detailed you can be with each other, the better the deal and your relationship will be.

The goal is for OPM to be mutually advantageous. People who have money want to find deals that will earn them interest. Flippers need money that flows better and is faster to qualify for. OPM is valuable, so take the time to set it up right.

Want More Details on Setting Up OPM?

Hard Money Mike doesn’t need to be involved with your OPM deals to offer help. We have resources to help you learn how to best set up OPM deals:

  • What should closing look like?
  • What are proper terms?
  • What documents will you need?

We want to keep things flowing in the real estate community.

You can check out more great info on OPM on our Youtube channel, or download our OPM Checklist. Happy investing.

How to invest in real estate with $0

No money to put down on your first investment?

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Money shouldn’t stop you. Use these 3 tips to get started.

You don’t have enough savings. After all, flipping is how you want to start making money, right? And you want to begin that real estate investment journey now.

But if you don’t have the money to begin with… how are you even supposed to start?

We see people do it every day. Here are the 3 main ways people have made successful real estate careers with zero money down.

What Are Other Ways to Start with No Money?

Clients come to us wanting to get into real estate but think they need money in the bank. That’s not always the case.

Here are the 3 key ways we see people start their investments with no money:

  1. If you already have a mortgage, get a HELOC.
  2. Start with money from family, a friend, or an outside partner.
  3. Use a 0% credit card to fund the costs of your investment.

Read the full blog here »

These aren’t the only ways we’ve seen people succeed with a new real estate career. Want even more ways to get into flipping and property investment with zero down? Download our free checklist, or check out these videos on our Youtube channel. Happy investing.

Credit score mix

The Must-Know Basics About Your Credit Score

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What a credit score is and why you should care (if you care about your investments).

There’s a magical triple-digit number that seems to decide your fate in this world.

It can determine what car you drive, where you live, and how much money you can have at your disposal.

And in some cases, it can make or break your success as a real estate investor.

It’s your credit score.

But it’s not as magical as it seems. There’s a logic to your score, and you have the power to change it.

So let’s break it down.

What is a Credit Score?

A credit score is a way for lenders to determine your “creditworthiness.” In other words, your “you-can-trust-me-to-pay-back-your-money”-ness.

Because you know whether someone can trust you with their money. But financial institutions don’t know you like you do.

Lenders need a way to decide if you’re safe to lend to. So your score tells them the story of your financial habits.

How Is My Credit Score Calculated?

There are a couple different types of credit scores, but the numbers we’ll use here reflect FICO scores (the most widely used credit score for most lenders).

Credit scores range between 0 and 850. More than 740 is great, and a score of less than 700 begins to limit your options.

This number is calculated by looking at five main pieces of information:

  • Credit mix
  • New Credit
  • Credit History
  • Payment history
  • Amounts owed

Credit Mix

Close to 10% of your score is based on the mix of credit you already have.

Do you have seven credit cards?

Or zero?

Do you have a car payment, a mortgage, student loans, personal loans?

Typically, the more diverse your lines of credit are, the better it is for your score.

New Credit

Around 10% is based on “new credit,” or how often you get credit inquiries or open a new line of credit.

New credit can temporarily lower your score. So for example, if you buy a new car, you’ll probably have trouble securing a loan for a property right away.

Length of Credit History

About 15% of your score is calculated based on how long you’ve had your lines of credit.

If you opened your first line of credit less than 5 years ago, you’ll have a lower score than someone whose credit is 40 years old.

Amounts Owed

These last two categories are the most important. They make up two-thirds of your credit score.

About 30% of your score is determined by something called amounts owed. Amounts owed is about your debt. More specifically, it’s about how much of your available credit you’re using.

For example, let’s say your credit card has a max of $1,000. You buy a new set of tires and brakes, so now you owe $1,000 on your card. You’re using 100% of your $1,000 limit – you’re maxed out.

The story creditors see when they look at you is that you’re not managing your credit well. They’ll assume you won’t manage other loans well either, so you get a lower score.

But let’s look at another situation.

Say you got a different credit card with a max of $5,000. That same borrowed $1,000 has a way different effect on your credit score. You’re only using 20% of your credit line, and you’re leaving 80% at your disposal. Creditors like that story. So you get a higher score.

Payment History

The biggest amount of your score, up to 35%, is based on your payment history.

Payment history is exactly what it sounds like:

  • How are you paying your bills?
  • Do you always pay on time?
  • Have you had any bankruptcies?

Financial institutions can see this information, and it’s the top factor they consider. At the end of the day, lenders want to know: Will you pay them back? On time?

Need More Information?

Your score is incredibly important to keep on your radar. Especially when you’re investing in real estate.

It’s not a made up number that has no effect on your life. But it’s also not as difficult to understand as it may seem at first.

For more tips on building good credit and maximizing real estate investment leverage, check out these helpful videos on our Youtube Channel.

You can also download our Credit Score Checklist at this link.

Happy investing.

Is hard money a trap

Is Hard Money a Trap? How to Set Yourself Up for Success

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Have you heard that hard money loans are a trap? Here’s what you should do so it doesn’t happen to you.

It’s a big misconception: hard money is a trap.

A lot of investors think if they enter a hard money loan, they’ll never escape. Hard money gets a reputation as a death sentence for your profits.

And like all loans, credit, and other money-borrowing options, if you use it wrong… it does feel like a trap!

We want you to understand what behaviors make hard money loans unprofitable. And more importantly – how to use hard money to your advantage in your real estate investments.

Hard Money Is a Temporary Solution

Here’s where hard money naysayers go wrong: hard money loans should only be a temporary solution. They are not meant to be long-term options for investors.

If you enter a hard money loan with a long-term mindset, then you’ve already fallen into the “trap.” When you treat it like a long-term loan, you’re likely to lose a lot of your profits paying it back.

Hard money is short-term. To make the most of your loan, you have to get in and out of it fast. Here are 3 vital tips to make sure that happens.

  1. Go Into the Loan with a Plan to Exit

    Never walk into a hard money loan with no plan to get out. This plan will look different depending on your end-goal for your property.

    If you’re doing a fix-and-flip, make sure to have the bulk of your construction work scheduled before setting up the hard money loan. You’ll need to get the work done and sell as soon as possible before the loan begins to eat into your profits.

    If you’re fixing and holding (renting), make sure to line up a long-term loan alongside your hard money loan. Start the refinance process before you’ve completed the rehab of your property. The longer you have to wait for refinancing, the longer it takes to pay back your hard money loan (and the less profit you’ll get from your work).

    The wrong lender might take advantage of your lack of knowledge and preparation. But if you work with the right lender, like Hard Money Mike, you’ll get personalized help to make a plan, set up the right long-term loan, and get out with your profit.

  2. Focus on Your Credit Score

    It’s important to get a good refinance loan to help you pay off your hard-money loan when the project is over. To make sure you’ll get that good loan set up on time, you’ll need to have a good credit score.

    With a score above 670, you’ll have an easier time getting a good loan from a financial institution. If your credit score is below 640, don’t even take out a hard money loan until you raise your score. No lenders can help you refinance with a score that low.

    If you need tips on raising your score quickly, check out this post.

  3. Don’t Delay Construction

    This is where many investors go wrong.

    They close the deal with a hard money loan. Then they… don’t start work. Or, they start, but hit road bumps they didn’t predict that cause major delays.

    Plan the rehab of your project beforehand. Get your equipment, permits, and contractors in place as soon as possible. Have everything scheduled. Look for problem areas in advance.

    The faster the work is done, the faster you can sell or rent. Which means the faster you can get out of your hard money loan, and the more money you make from your investment.

Want More Guidance for Your Hard Money Loans?

Hard money is a valuable tool for prepared real estate investors who use it appropriately as a short-term solution.

Let Hard Money Mike give you guidance to get in and get out of your investments quickly and profitably. We’re excited to set you on a path that makes you the kind of money you need to live the life you want.

Need to see if you’re paying too much for hard money? Download our HMM Loan Optimizer to quickly find the best hard money option for your project.

You can also check out these videos about hard money on our Youtube channel.

Happy investing.

Make money with your credit

Making money with your credit score.

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So, what’s the big deal about credit scores?

Well, think of it like a baseball game.

You can hit it out of the park and claim victory…or strike out and lose.

When you win the credit score game, you win countless opportunities.

These include affordable rates, more loan options, and, in the end, hundreds of thousands of dollars. In this video, we discuss 3 EASY ways to boost your credit score…and your cash flow!

How to Make Money with Your Credit Score Need a tool to generate positive cash flow? Download our FREE Loan Optimizer!

Learn more about how credit can fuel your investments on our YouTube Playlist.

WHO WE ARE ======================== Hard money loans are a necessity for most real estate investors. Mike Bonn and his team make them easy! For 21+ years, Hard Money Mike has provided topnotch lending services to real estate investors across the United States. We offer the best options in private lending for fix and flips, rentals, and other value-add properties. Plus, we can fund bridge loans in 10 days or less! If you’re looking for quality, FAST loans with the highest loan-to-values and best rates, then our team is ready to help. No experience required!

Making money with your credit score.

What is real OPM

How can OPM benefit your real estate investments?

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Here are the basics to get you started.

OPM. Other People’s Money.

Not money from a broker or mortgage company or hard money lender. Money from real people to fund your flips and make your investments faster, easier, and more profitable.

OPM vs Private Money

What’s the difference between private money and Other People’s Money? Aren’t they the same thing? Yes and no. They’re related, but there are a few key differences.

Private money is often called “hard money.” It involves going through a broker or a company like Hard Money Mike that lends you private money.

OPM does the same thing, but it’s strictly peer-to-peer, person-to-person. It is private money because it’s a loan outside of a bank. It’s not hard money because you’re not going through a formal company or filling out applications.

What is OPM?

OPM is simple: one person has money and needs a smart place to put it, and one person has a promising property investment but no money to put into it. They form a peer-to-peer transaction.

Both people have the chance to benefit more than they would if they went through a bank. The person with the money gets a simple investment with typically a much higher return than the banks would pay. And the person who needs the money can get it cheaper, faster, and keep it more fluid. Both can end up more profitable and successful.

Taking the OPM route may feel non-traditional from a modern perspective, but historically, it’s the way things have always gotten done. One person has something, another person needs it, so they create a deal where they both benefit.

Want More Details on Setting Up OPM?

Hard Money Mike doesn’t need to be involved with your OPM deals to offer help. We have resources to help you learn how to best set up OPM deals:

  • What should closing look like?
  • What are proper terms?
  • What documents will you need?

Read the full article here »

We want to keep things flowing in the real estate community.

You can check out more great info on OPM on our Youtube channel, or download our OPM Checklist.

Happy investing.