Tag Archive for: 100% financing

Pre-Approved: Stop Losing Properties and Start Closing Deals

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Pre-Approved: Stop Losing Properties and Start Closing Deals

Here at Hard Money Mike we have seen a number of clients who are losing deals because they don’t have the financing they need. Whether you are new, or switching directions on your property type, it is crucial that you are prepared. Stop losing properties and start closing deals today! 

How to get the best deals.

In this competitive world, you need to make sure that you are prepared! Those who are not prepared will loose properties, as well as upset those they work with. Whether you are working with a wholesaler or a realtor, your performance and professionalism will greatly impact your future success. Being prepared from the very beginning will not only create good relationships, but it will also provide more opportunities to find the best deals. 

Find the right lenders.

Many new investors focus primarily on finding properties. Although it is important to find and compare properties, it is imperative that you find the right lender first. What do we mean by right lender? Every investor, property, and situation are different. Find the right lender for your needs. Especially as a new investor, finding a hard money lender will be the key to your success. Unlike traditional lenders, hard money lenders often give you more money, require less money in, and provide the flexibility you need to close deals quickly.  

Example:

Client is all in at $170K 

Property is worth $270K to $300K. 

He needs 100% financing

ARV loan  is 62%

As a hard money lender, it is the perfect situation. 

The importance of pre-approval.

Real estate investors need to make sure that they are not only pre-approved, but pre-approved with the right lender for the current deal. In doing so you will close deals quickly and strengthen relationships with realtors, wholesalers, and lenders. For those who are not using the lenders right away, it is important to keep in contact with them so that they know that you are still out there looking for properties. In regards to wholesalers and realtors, it is imperative that you create a good relationship from the very beginning. Get your funding secured today to get to the top of the best deal list. 

Is pre-approval based on a property?

Normally pre-approval means that you are approved for a certain dollar amount. However, lenders do look at the property to make sure that it fits their guidelines. For example, if someone comes in and says that they are approved for $300K, they still might have to bring in some money depending on the property. Investors also need to make sure that they have the right loan for the right property. If you are pre-approved for a DSCR, you can’t use that for a fix and flip property. By obtaining a collection of pre-approvals, it will allow you the flexibility you need. Whether it’s a fix and flip, rental, land split, construction, combination, 1 to 4 unit, or a larger complex, you have the opportunity to close a deal quickly by securing your financing first.

Embrace the learning opportunities.

By looking at your credit score and working with others in the business, you will be a step ahead. More importantly, if you secure your funding first, you are going to not only create wealth, but you are also going to establish relationships. Throughout the process it is important that you don’t get in your head. Take every experience as an opportunity to learn and grow. In doing so, you will learn what you need to do and the things you need to fix in order to be successful. It will get easier over time! Give yourself a little grace during the process.

Here at Hard Money Mike we want to help you create the wealth you want! Contact us today to find out more about pre-approvals. How hard money can help you get on the fast track to success!

Watch our most recent interview to find out more about Pre-Approved: Stop Losing Properties and Start Closing Deals.

How to Get 100% Financing For Your Investment Property

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How to Get 100% Financing For Your Investment Property

Many investors wonder how they can get 100% financing for their investment property. The answer is a cross lien. What exactly is a cross lien? A cross lien is when you use another property that you own, or one someone else that you know owns, and use it as collateral for the money that you’re looking to obtain. Today we are going to go over how you can get more money from your hard money lenders by using a cross lien. 

How can a cross lien help?

A cross lien can help you get more money for your projects and reach 100% financing. Even those with lower credit scores and little experience can use a cross lien to get the financing they need. Those with little experience experience struggle with LTV, as well as approval for Gap funding. A cross lien can also work for people who need more than 100% to purchase, rehab, or carry the property. Once the lender  has  the additional security or collateral, then they will be able to give you the money you need. To clarify, it doesn’t mean that you’re going to pay off the liens that are already on the property.

What properties are used for a cross lien?

Investment properties, land, commercial properties, and owner occupied properties are eligible for a cross lien. Anything that has equity in it can be used to create extra security for the lender. Just to clarify, equity is the difference between what you owe and what the property is worth. Typically you see 70% or less on equity. When looking at All in, meaning what you owe now and what you’re putting on the property. This needs to be at or below  80% CLTV. Just to clarify, CLTV stands for the combined loan to value that combines the 1st lien on the property plus the 2nd lien. There are exceptions, however, this is a general rule.

Let’s look at an example.

100% financing is needed for a fix and flip, however, the lender is only allowing 85% of the purchase. The borrower now needs to come up with 15%. Where do they get the extra money? The answer is a cross lien. The lender can use another property that the borrower owns in order to have the security they need to provide 100% financing. If you’re looking into using a hard money lender, then they are going to also look at your credit, as well as your  experience, before approving funding. This may result in only 80% for the purchase and 100% of the rehab. In that case you will need 20% of your own money. Again, a cross lien can help to alleviate the pressure of having to come up with additional money and it can increase your cash flow if you are doing multiple projects. 

What does a cross lien look like?

When using a cross lien for additional funding, the lender will come in and do a mortgage or deed on the property you are buying, as well as put a mortgage or deed on the other property. The other property is either a rental, piece of land, commercial, or even an owner occupied. By using two properties or more, you can get the money you want for financing.

When does the other property get released?

There are times when the property is released or the lien is taken off the 2nd before you pay off the 1st. Maybe that is because you have hit a milestone, or maybe the property that you bought is all fixed up and worth enough now to release the cross lien. Once the cross lien is paid off, then the property can be used to finance another investment.

In conclusion.

A cross lien is an excellent way to get 100% financing for your investment property. Maybe funding is a struggle because of your credit score or your experience isn’t there yet. Cross liens get something done, get something purchased, or get the financing you need to succeed. Remember the cross liens when you’re looking for finance options.

Here at Hard Money Mike we have a number of free downloads that can help you. Visit our website to find out more. 

Would you like to find out more about How to Get 100% Financing For Your Investment Property? Watch our most recent video.