What is a bridge loan?

Bridge loans.

 

First, they are not used to buy a bridge.

 

Bridge loans are short term loans that bridge a gap to long term financing or for another property to sell.

 

These loans are use to fill a need for a short term capital.  The bridge loan is always secured and will be paid out typically in less than a few months.

 

Bridge loans may be used to purchase a property while waiting on another property to close.  Once the property sells the bridge loan would be paid off.

 

The loan works perfect when a bank is dragging its feet to close a loan and needs another 30 to 60 days for their processing.

 

As long as there is a property with good equity available it can be used as the collateral for the bridge loan.

 

If you have questions about bridge loans we are always here to help.

 

Shoot us a question at mike@thecashflowcompany.com and we will get right back to you.

 

What is the property value?

Investor property values?

 

Real estate investing revolves around knowing your values to know your potential profits and or cash flow.

The better you know your values the more likely you are to be a successful investor.

We have several different values that are used in our industry and it is good to know what each are and how they affect your real estate investing.

Remember in any of the values you must compare like properties in like areas to get the true value.

 

Here is a quick definition of the 5 top values used in our industry.

 

As is value.

The market value the property would demand in its current condition.  No repairs, no updates and no other conditions.  You take it as it sits.

 

After repair value (ARV).

The estimated value used in fix and flips and under market rental purchases (think BRRRR).

This is the estimated future value of the property once all repairs and updates are completed.

ARV is contingent on the quality and quantity of work completed on the property.  It is not a true market value but a guess on what it will be.

 

Appraised value.

The value of the property determined by an appraiser on a certain date in time.

Appraised value is used mainly by lenders to determine the current value they can lend on.

Appraised value, on homes up to 4 units, is based on a comparison current like home sales in the area. These home sales must have closed in the last 6 months.

Appraisers will take into account the condition of the properties, the size, the location and the features of the homes.

These features typically include number of bedrooms, number of bathrooms, number of garage spaces, and any above normal views.

 

Market value.

The value the market is willing to pay for that property at this point in time.

The market value may be higher or lower than the appraised value.

Market value is based on current supply and demand of like properties.

Conditions that would cause market value and appraised value to differ are:

  1. The demand for homes is greater than current supply of homes. Large number of buyers and limited sellers.  Buyers may have to overpay for a property.
  2. A property that must sell faster than market conditions. This limits the supply of buyers able to close quickly and lowers the amount the market will pay.
  3. Quick positive migration. A big up-tick in the number of buyers moving into an area within a short amount of time.

 

Loan to value (LTV).

The percentage rate that a lender will lend up to on a property.

A lender may state they can lend up to 80% LTV on a particular property.

This means they will loan up to $80k for every $100k in appraised value.

Examples:

80% of $100k is $80k.

70% of $100k is $70k

60% of $100k is $60k

Lenders will have different loan to values based on type of loan they are offering.  Typically cash out loans and borrowers with lower credit scores will see lower loan to value options.

 

Looking for what Value-add properties are?  We have a blog on that here.

 

What is a value-add property?

In real estate investing we are focused on one type of property and that is value-add.

 

Value-add is the practice of taking a property and increasing the market value of that property by:

  1. updating it

  2. increasing the income from it

  3. changing the use of it.

Typically, you will increase the value by more than what you put into it, thus creating a profit for you.

 

This is opposite of buying a property that is at retail or turn-key.

 

Here are a few examples of value-add investments:

  1. A fix and flip investor can purchase a run-down house and complete a rehab to add value and realize a gain or profit from the sell.
  2. A real estate investor can buy a small house in a neighborhood with larger homes around it and add square footage to the property to bring it up the local market. Creating profits for the real estate investor.
  3. A land developer can take a large tract of land and subdivide it into smaller home sites. The smaller lot sales will be larger than just selling one large lot.
  4. A real estate investor may buy a 8-plex that is currently only at a fraction of the market rents and increase them. Creating more cash flow and a higher valuation of the property.

As you can see by these examples the world of value-add properties is where the profits are and where cash flow is created.

 

 

Get connected and accelerate your cash flow.

Please check out all our videos on our Youtube channel.

Join us on Facebook for daily content that can help you grow your business.

Looking for more information on real estate investing?  The Bigger Pockets site covers every subject on all types of real estate investing.

 

 

Is hard money expensive?

Is hard money expensive? and what are the rates?

 

Is hard money expensive, the quick answer is no.

 

When hard money loans are used in the transactions that best fit what they are intended for they are actually cheap.

 

In the real estate investment community when closing quick will get you the deal and at a better price, hard money loans are a great bargain.

 

Missing out on deals and discounts can be the end of your lucrative real estate investing business.

 

Hard money loans are also:

 

  1. cheaper than taking on a partner
  2. easier to qualify for…stops the delays of starting
  3. real estate investor focused, unlike most banks

 

That being said hard money is not to replace a bank loan.

 

Now, if you have 30 to 60 days to close and have a bank that works well with investors, you should be using a bank over hard money.

 

In conclusion, when hard money loans are used for the right deals for the right borrower, they put more money in your pocket.

 

At the end of the day is it not your goal as a real estate investor to put more money in your pocket now?

 

To increase your speed of investing and increase your cash flow hard money is one of the best tools.

So as we can see hard money is not expensive but really a cheap method to finance most real estate investments.

 

Typical hard money rates across the country run from the 8% to 14% depending on the loan to value, lender and the points they charge.

Hard Money Mike has been assisting real estate investors for over 20 years.  Looking for any form of financing we are here to assist.  Contact us for hard money, traditional lending and setting up bank lines of credit.  Email us any questions today at mike@thecashflowcompany.com.

 

Get connected and accelerate your cash flow.

Please check out all our videos on our Youtube channel.

Join us on Facebook for daily content that can help you grow your business.

Looking for more information on real estate investing?  The Bigger Pockets site covers every subject on all types of real estate investing.

 

 

5 Paths to Financing Your Loan

Did you know you have more than one option when it comes to financing your property investments?

As you can see, there are 5 paths to take with financing your properties:

  1. Standard/Traditional
  2. Non-Standard
  3. Local Banks
  4. EZ Loan
  5. Limited Credit or Experience Loans (also known as Non-QM)

So, which loan type is best for your project so you can boost your cash flow and reach your goals faster? Find out here on our sister site, Investor Real Estate Loans.

What’s Your 2-Year Plan?

Close your eyes. Clear your mind. Take a deep breath.

Now, let’s pretend we’re talking to each other two years from now. What happened during that time period that made you proud and put a smile on your face? How does your cash flow look? What kind of work schedule do you have? How does life look for you and your family?

When it comes to investing, we have discovered that thinking ahead two years leads to the most success. Why two years? Well, it’s short enough to imagine without being overwhelming, and it’s long enough to create tangible, positive change in your life.

Coming up with a plan is as easy as one, two, three:

Step 1: Imagine where you want to be in two years.

Step 2: Evaluate where you’re starting at today.

Step 3: Create a plan that connects your current reality to your future dreams.

How do you formulate an actual plan? Well, that’s what our team is here to help you do. It’s just a matter of picking up the phone and giving us a call to chat.

One conversation can change your future…and your life!

What is hard money?

What is hard money? Funding your flip.

What is hard money?

What is hard money for real estate investing?

 

Hard money is the main type of financing for fix and flips and discounted rental property purchases. AKA, value-add properties.

Hard money loans are based mainly on the property and the loan-to-value (LTV) of the property.  These loans are typically secured by a 1st lien on the piece of real estate being flipped or rented.

 

These loans are also referred to as:

The top 3 benefits of using hard money include:

  • FAST closings. This allows real estate investors to bid more aggressively on the value-add properties they desire compared to those who use traditional closing timeframes (30+ days). Faster closings with fewer hurdles means sellers are more likely to give a discount on their property.
  • Up to 100% financing. This gives real estate investors the ability to spread their money out and purchase more discounted properties.
  • Ability to buy properties as is. Most traditional lenders do NOT like properties that aren’t move-in ready. These type of loans on the other hand, are custom-built for fixer uppers.

In a nutshell, hard money loans are perfect for real estate investors who like to focus on value-add properties…and creating positive cash flow!

 

Hard Money Mike has been assisting real estate investors for over 20 years.  Looking for any form of financing we are here to assist.  Contact us for hard money, traditional lending and setting up bank lines of credit.  Email us any questions today at mike@thecashflowcompany.com.

 

Get connected and accelerate your cash flow.

Please check out all our videos on our Youtube channel.

Join us on Facebook for daily content that can help you grow your business.

Looking for more information on real estate investing?  The Bigger Pockets site covers every subject on all types of real estate investing.

 

 

What is your credit score costing you?

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? How about 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 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

How Hard Money Mike Does Business: FAST!

Hard Money Mike does business differently than most others in the industry. Our #1 goal is to HELP YOU.

Truly. It’s as simple as that.

We want to BOOST your cashflow, find the very best products for your specific projects, and place you in a solid financial position.

We also strive to move at the speed of light.

What does that mean, exactly? Well, it means we can close most deals in DAYS, not weeks. Our team works efficiently and effectively to dot all I’s and cross all T’s to ensure you sign the dotted line as soon as possible.

No more sweating bullets as you wait weeks (or even months) to close a deal. With us, you can often close within a week!

Quick to Buy, Quick to Refi – A New Rental Investment Strategy

Quick to Buy, Quick to Refi, a new 2-step loan strategy, helps you maximize your loan amounts while limiting the amount of cash you put into a project. It also helps you rapidly finish your projects and buy again, and again, and again.

What does that all mean? It means you no longer need to worry about missing out on great deals and getting stuck in expensive hard money loans.

The Quick to Buy, Quick to Refi strategy all starts with properly setting up your short AND long-term loans.

Now, even though your short-term loan will come first (to quickly buy an under market property from a wholesaler), a key step is to FIRST get pre-qualified for the long-term loan. Why? To ensure you’re able to maximize both loan amounts. If you can qualify for a larger loan upfront, then it’s likely your short-term lender will match that amount.

It also means you’re already going through the process for securing a long-term loan as you begin renovating a property with a short-term loan. Think, “Two birds, one stone.” By the time you finish renovations, you’re ready to refinance into a long-term loan.

But, hold on. You also need to know about the types of refinances. There are two you need to know about: “rate and term” and “cash out”. And yes, it matters you know the differences.

Ready to find out what about those differences? Then check out the whole video here and start capturing free equity, boosting your cash flow, and investing in more properties.

Want more videos with more tips to maximize your cash flow? Then check out our new video page, or subscribe to our new YouTube channel! Be sure to also check out all of our invest tools.