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How Your Credit Score Impacts Your Real Estate Investments

How Your Credit Score Impacts Your Real Estate Investments

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How Your Credit Score Impacts Your Real Estate Investments

Did you know your credit score impacts your wallet…and the cash flow you get from your real estate investments?

Because the better your credit score, the better, easier, and more profitable your investments will be. Because your credit score determines your interest rates, the amount of money you need to put into each deal, and what kind of loans are available. If you have a low credit score, then you can expect to:

  • Pay high interest rates.
  • Put more of your money into each deal.
  • And have fewer loan options available.

So, yeah. Your credit score matters.

But…what is a credit score?

Well, basically, it’s a number between zero and 850, and this number helps lenders decide if they can trust you with their money.

You see, financial institutions don’t know you. Unfortunately, you’re just another face in the crowd. So, in order to get to know you better, they created a scoring system that helps them understand you and your financial habits.

Again, you want to aim for a high credit score. Generally speaking, anything below 700 is going to cost you time and money, and lead to a lot of disappointment and frustration.

How does your credit score get calculated?

Well, multiple factors get considered, but the two biggest ones are your payment history and amounts owed.

First, your payment history is exactly what is sounds like. Financial institutions can see how you pay your bills, how often you pay them, how late you pay them, and if you pay them at all.

As for amounts owed, this is how you utilize your credit lines.

For example, if Jane and Joe both owe $1,000 on their credit cards, they can still have very different credit scores. Because Jane’s card is maxed out at $1,000, while Joe’s credit card is maxed out at $5,000.

So, creditors see Jane as a risk, because she’s not managing her credit very well. She’s 100% tapped out.

Joe, on the other hand, isn’t a risk, because he still has another $4,000 at his disposal. So, unlike Jane, he’s only using 20% of his available credit. And creditors like that!

That’s why, at the end of the day, Joe’s credit score will be higher than Jane’s.

So, what kind of score should you really aim for? Well, for the best loans with the best rates, you’ll want a score that’s higher than 740. Anything above 800 is considered exceptional. If you have this kind of score, then you’ll likely always hear “yes” from lenders, rather than “no.”

Now, if your score lands between 670 and 739, then you’ll still be in a good position for a decent loan with decent rates.

Anything below 670 is…not so good. But that’s okay, because there are easy ways to quickly raise your credit score.

#1: Add more credit to your credit line

Remember Jane? Well, she can go to her credit card company and ask them to raise her limit from $1,000 to $3,000. That would drastically impact her credit score, because she’ll go from using 100% of her available credit to only 33%.

#2: Get authorized on someone else’s GOOD credit account

A good credit account means it’s paid on time, it’s existed for a while, and it has a low balance. So, think about asking a parent, a friend, or someone else you trust if they’ll add you as an authorized user to their credit card account.

#3: Go private

This means borrowing money from someone or someplace so you can pay off all of your credit cards for 60 or so days. During that time, you can apply for more credit.

Basically, your credit score determines your path. If you want to pay lower rates, use less of your own money, and have more loan options, then you need to focus on raising your score.

Just remember, a high credit score will make your fix and flips, rentals, and other real estate investments a whole lot easier and way more profitable.

Happy investing!

What is BRRRR?

What is BRRRR?

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What is BRRRR?

Did you know you can buy properties with as little as zero down? It just takes an easy investment strategy many investors call BRRRR.

Although the term “BRRRR” was coined by Bigger Pockets in recent years, the investment strategy has existed for decades. Some call it zero down, some call it Quick to Buy, Quick to Refi. Whatever you want to call it, it’s all based on buying properties with as little as zero down.

So, what is BRRRR?

Well, let’s break it down piece by piece so you understand how to approach each step. That way you can generate the highest cash flow possible.

The B in BRRRR stands for “Buy.”

Now, how do you buy properties correctly when using the BRRRR method?

First, you need to buy under market properties with a short-term loan, like hard money. You shouldn’t buy retail properties that are already fixed up and ready for tenants. These are supposed to be value-add properties, meaning you add value to them. That way you immediately create equity in the project.

Second, you need to be able to buy properties FAST. The faster you can buy, the better the deals. Because sellers want to sell fast. Even if you bid lower than three other investors, you can still get the property if you can close quickly. Because speed nearly always wins.

The first R in BRRRR stands for “Rehab.”

The properties you buy using the BRRRR method will need rehab to bring them up to rental grade. That means simple, but durable renovations. You don’t need to aim for high end finishes like granite countertops or new, expensive cabinets.

Even so, the work you do should add value to the property. That way when an appraiser shows up, they can see you’ve improved it and now it’s worth more than what you bought it for. Again, think about creating equity. Equity is key!

The second R in BRRRR stands for “Rent.”

The moment you decide you want to try the BRRRR method, you should start researching rental numbers immediately. Go onto Zillow, Craigslist, or Rents.com and find out what other people in your target neighborhoods are charging for rent. That way you’ll know if a property will produce good cash flow BEFORE you buy it.

And once you know what your numbers are, go ahead and start accepting applications for tenants. It’s okay to look for quality, trustworthy people to live in your home even before you have the home ready for them.

The third R in BRRRR stands for Refinance.

Refinancing into a cheaper, long-term loan is the next step in the BRRRR method…and it’s where you get to capture the equity you created in the “Buy” and “Rehab” steps.

How?

Well, if you did those first two steps right, then you bought an under market property and then renovated it to add value. The gap between the buy and the rehab is your equity. And you can use that equity (rather than the money in your own pocket) to pay for your new loan’s down payment. That’s how the zero down portion of this strategy works.

Finally, the fourth R in BRRRR stands for Repeat.

The whole benefit of BRRRR is that you can repeat the process over and over…and over. As long as you find good, under-market properties and create good equity, you don’t need to wait to save up for a 20% down payment. You can complete this process whenever you want and however often you want.

And, at the end of the day, always remember your lender matters. When it comes to BRRRR, you want a lender who can help you maximize your hard money loan, and help you refinance into a traditional loan FAST.

So, if you’re ready to jump in and try out the BRRRR method, our team is always here to help.

Happy investing!

What You Can Be Thankful For as a Real Estate Investor

What You Can Be Thankful For as a Real Estate Investor

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What You Can Be Thankful For as a Real Estate Investor

If you’re thinking about fixing and flipping or fixing and renting properties, then there are a few things you can look forward to being thankful for.

Money

First, the most obvious, you can make quite a bit of money in the fix and flip and fix and rental game. As long as you understand how to properly find, value, and buy properties, then you can expect some excellent pay days in your future.

Cash flow

Second, you can take the money you make and boost your cash flow. And that extra cash flow means you can start living the kind of live you’ve always dream of. That means quitting your day job, taking more vacations, saving up for a more comfortable retirement, or doing whatever  else it is that would make your life better.

Community

Third (and the least thought about) you can make an extremely positive impact on your community.

Without real estate investors, communities would slowly deteriorate and eventually fall into disarray.

Think about the HGTV show, Good Bones. A mother and daughter team up to fix homes that have aged and withered throughout their neighborhood. But, home by home, they’ve revitalized and given their community new life. They’ve given it value, once again.

That’s what all fix and flippers do.

They find neighborhoods, towns, and cities that have fallen into disrepair, and breathe fresh life into them. By doing this, they revive the economy because people want to live there again. Schools, safety, and quality of life rise drastically.

But the only way this can all happen is if real estate investors continue tackling fixer uppers.

So, as you can see, real estate investing is something you can truly be thankful for. It’s a way to boost your cash flow and help your community.

Happy investing!  And happy Thanksgiving from our team to you and your family.

We Love Small Town Fix and Flippers

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We Love Small Town Fix and Flippers

Do you flip or rent properties in a small town or a rural area?

If so, do you have a difficult time finding someone to fund your deals? Because, the truth is, a lot of hard money lenders shy away from smaller markets.

Well, guess what? We love helping small town real estate investors.

Unlike other lenders, we don’t care if loans are under $100k or if the property value is less than $100k. We can help.

Better yet, we can lend on properties without waiting for appraisals. That means we can close deals FAST. We’re talking days instead of weeks.

And our loan requirements are intended to be small town friendly, so all we ask is that the loan:

  • Be secured in first lien position.
  • Close with and through a title company.
  • Be at or under 70% of the after-repair value (not the current value).

Most of us are from small towns, too. So, we understand how frustrating it can be to find timely funding. That’s why we love to focus on small town flippers and rental owners.

So, if you have a property and want to get it funded and closed right now, our team is here to help.

Happy investing!

Hard Money is Scary

Hard Money is Scary

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Hard Money is Scary!

So, you just found the perfect house to fix and flip, but the only way your bid will get accepted is if you can close within a week.

That means you need to team up with the much feared and misunderstood creature: Hard Money.

AHHHH!

You’ve heard many rumors of this being, like it’s a big, ol’ fat trap that’ll suck your bank account dry. But fear not! Hard money isn’t as scary as rumor has it, especially if you take three simple steps to protect yourself.

Ignore the rumors and do a little homework.

What is hard money? Really. Understanding this type of loan will save you tons of headaches in the future. Because those who have a scary run in with it do NOT use it correctly. They might treat it like a regular bank loan or accept the first hard money loan offered to them. Both spell trouble.

Understand the REAL costs and benefits.

If you only look at interest rates, then yeah, hard money is more expensive than bank loans. But bank loans come with other costs, like time, contingencies, and paperwork.

For example, if you’re competing against five other investors, you have the power to bid lower and still win. Because sellers of fixer uppers don’t want to deal with banks. Banks take too long to close and require appraisals and inspections. Therefore, cash buyers usually win even if they bid thousands of dollars lower than the next bid.

Learn the difference between hard money lenders.

Hard money lenders come in all shapes and sizes. It’s like buying new furniture. If you only go to one shop, then you get what you get. But if you go to multiple shops, then you can compare different styles, prices, and terms.

Hard money lenders are no different. If you only call one, then you get what you get. And that, again, spells trouble. You need to shop around so you can compare lenders and find out what they offer…and what they require. And if you come across a hard money lender who offers an interest rate that’s too good to be true, then be prepared to face the scary monster that you’ve heard about. Because junk fees might come spewing out of it.

Bottom line, turn on the lights. Hard money is only scary if you sit in the dark and hope for the best.

Happy investing!

Hard Money is a Scam

Hard Money is a Scam

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Hard Money is a Scam

Many years ago, a rumor spread that hard money is a scam.

It all started with a real estate investor who could not qualify for a bank loan, so they turned to a hard money lender. Unfortunately, this real estate investor didn’t understand how hard money worked. So they had a bad experience. Like, really bad.

After that, they told ALL of their friends, “Hard money is a scam.”

And then those friends told their friends the same thing, even though they themselves had never used a hard money loan.

The rumor spread quickly. For miles and miles, investors caught wind of the false news that hard money wasn’t good for them or their wallet. One by one, they turned their back on this loan option and struggled to find another. And they lost a lot of money.

All because one investor had a bad experience. A bad experience that could’ve been prevented had they done just a little bit of homework.

Because here’s the truth. Hard money is NOT a scam.

It’s actually a genuine, honest-to-good option for investors who:

  • Can’t qualify for a bank loan.
  • Need to close deals fast.
  • Want to save money by avoiding extra costs for things like appraisals and inspections.
  • Or all of the above.

So, what gives hard money such a bad rap? Well, most of the time, it’s because real estate investors jump into a hard money loan without understanding it.

So, what is hard money?

Well, it isn’t like your normal bank loan.

Bank loans are usually long-term. Like, 15-30 years. Hard money, on the other hand, is intended to be short-term, like 3-6 months. If you keep a hard money loan longer than a year, then you’re not really using it correctly. Because, yes, hard money lenders charge higher interest rates than banks. There’s no denying that. And you don’t want to pay those rates longer than you need to.

That’s why it’s so important to have a plan to flip or refinance a property before entering a hard money loan.

Another major difference between bank and hard money loans is the closing process. Bank loans take at least a month to close. They also require more paperwork and fees to make that closing happen.

Hard money loans can close in just a few days and require far less, well, requirements. You don’t need to worry about appraisals and inspections and other costs that don’t get taken into account with bank loans.

That’s why they’re perfect for fix and flips, rentals, and other value-add properties. You can find a great property, bid on it, and buy it FAST.

Basically, hard money is an excellent tool to help investors compete in a very competitive real estate business.

It’s not a scam.

And anyone who claims it to be scam has either never used it because they listened to the false rumors that spread many years ago. Or they’ve used it, but they didn’t use it right.

To learn how to use hard money right, check out some of our other videos on our Youtube channel.

Our team strives to help investors understand hard money so they can buy the properties they want, when they want…and without hurting their cash flow.

Happy investing!

Introducing Flip-It, Pro-Fit, a Contractor Partnership Program

Introducing Flip It, Pro-Fit, a Contractor Partnership Program

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Introducing Flip It, Pro-Fit, a Contractor Partnership Program

Today, we’d like to introduce our new contractor partnership program. Because we want you to make more money doing the work you love.

And with our Flip It, Pro-Fit Contractor Partnership Program, you can.

This special program is designed for any contractor who’d like to stop doing work for flippers, and start doing work for themselves…but who might want help on the business side.

That’s why it’s a partnership. Our company will handle all of the funding and paperwork, while you’ll handle all of the renovations.

Basically, we fund. You flip.

It’s as easy as that!

And, no. Right now, we do NOT charge commitment fees or anything else like that. This is truly a partnership program.

And when you partner with us, you can expect:

  • Less paperwork
  • More Money
  • No payments
  • And help creating a “bank worthy” portfolio.

Best yet, we’ll find the properties for you.

All you need to qualify for the Flip-It, Pro-Fit program is:

  • 3-5 years of experience as a contractor
  • A crew or team
  • Properties that sell for $250K or less AFTER they’re repaired
  • And a no BS attitude!

If you love fix and flips, but you don’t like seeing someone else get all the profits for your hard work, then here’s your chance to take control.

With the Flip-It, Pro-Fit program, you can keep doing the work you love, but make A LOT more money.

Ready to chat? Our team is always here to answer your questions and get your cash flow moving in the right direction.

 

What is a value add property

What is a Value Add Property?

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If you’re a real estate investor, then it’s likely you’ve heard the term value-add property.

But what IS a value-add property?

Well, first of all, a value-add property means exactly like what it sounds like: a property that has value added to it.

Well, you add value to it by repairing it.

Think about a fix and flip or a fix and hold (aka, a rental property).

What is a Value Add Property

When you come across these pieces of real estate, you’ll quickly discover they’re not in marketable, sellable condition. They need work.

Some need A LOT of work.

So, let’s break things down a bit more.

Step one:

You buy a property that’s in some kind of disrepair…or simply outdated.

Then you spend some money to fix it up. This can be a lot of money because you have to do things like repair the roof, replace the plumbing, demo the kitchen, and other hefty tasks.

Or you only need to spend a little to tidy things up and make it appealing to future buyers or tenants. That includes replacing old carpet, adding fresh paint, and providing other cosmetic work.

Either way, you’re adding VALUE to the property.

Step two:

Once you do that, you can turn around and sell it for a profit or rent it for positive monthly cash flow.

And that’s basically it. It’s a fairly simple term to understand.

What you need to understand even more is how to evaluate a property to ensure you’re able to add value AND make a profit.

Need help with that? No problem. You can check out our other videos on our YouTube channel to learn more. Or you can directly reach out to our team for guidance and tips.

Because we’re always eager to set you on a path that helps you make the kind of money you need, to live the life you want.

Happy investing!

Flip-It, Prof-It Contractor Partnership Program

Weekly Chat: Flip-It, Pro-Fit Contractor Partnership Program

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Weekly Chat: Flip-It, Pro-Fit Contractor Partnership Program

Are you a contractor? Good, because we want you to make more money doing what you love.

That’s why we’ve created the Flip-It, Pro-Fit Contractor Partnership Program.

Join us (online) next week to learn more about this special program that’s ONLY for contractors.

Flip-It, Pro-Fit Contractor Partnership Program

We fund. You flip.

The Flip-It, Prof-It program is easy. We’re looking to partner with contractors who want to stop doing work for flippers and start doing work for themselves. 

We’ll handle all the funding and paperwork, and you’ll handle the renovations.

It’s as simple as that. 

Hit the easy button.

When you partner with us, you don’t need to sweat the “business” side of the deal. Instead, you can do your work and enjoy:

  • Less paperwork
  • More Money
  • No payments
  • Help creating a “bank worthy” portfolio

In a nutshell, you do not need to worry about the business side of the deal. We’ll take care of that while you take care of the house.

Some basic qualifications.

  • 3-5 years experience as a contractor
  • A crew/team
  • Properties that sell for $250K or less AFTER they’re repaired
  • A no BS attitude!

If you can say yes to those, then tune into our free chat to learn more about the Flip-It, Pro-Fit Contractor Partnership Program?

You may register for FREE here.

Again, here’s when and where the chat will take place:

When: Wednesday, September 29th, 6 PM MST

Where: Virtual nationwide.

Register for free at https://my.demio.com/ref/lw8s3Krd8n4vKXqo

Mike and the rest of the Hard Money Mike team looks forward to seeing you on Wednesday! Because we want you to make the kind of money you need to live the life you want.

If you have any questions about the program, our team is here to answer them any time.

Happy investing!

How to Find a Good Contractor

How Your Contractor Can Make or Break Your Deal

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How Your Contractor Can Make or Break Your Deal

Having a good contractor can make or break your deal.

But how can you find a quality contractor with a good reputation to complete your fix and flip, rental, or other value-add property?

Get Referrals

One of the easiest ways to find a good contractor is to ask friends and other investors for referrals.

Word of mouth is a powerful thing in this business. If someone had a good experience with a lender, title company, or, well, contractor, then it’s worth investigating.

When you ask friends and other investors about their contractor, make sure to ask them if they were happy with their contractor’s:

  • Work
  • Reliability
  • Communication
  • Overall experience

Interview

Once you collect a list of potential contractors, then it’s time to interview them.

Yes, interview.

Because, again, choosing the right contractor to help you fix up a property can be the difference between making a big or small profit.

Or no profit at all.

So, what kind of questions should you ask during each interview? Well, here are some of the most important ones to consider:

  • How many employees do you have?
  • How long have you been in business?
  • Do you have a referral list with current and past customers? Make sure to get phone numbers so you can verify this list.
  • Are you insured? With this one, remember to ask for a copy of their policy binder page showing their name and coverage. They should have General Liability and Worker’s Comp.
  • Who will be doing the work? Will there be any subcontracting, or will you and your team do all the work?
  • Has your company ever been sued or had a lawsuit against it?
  • Have you ever sued a client or filed a lien against a property?
  • Have you ever declared bankruptcy or had a company under a different name?
  • If the project falls behind schedule, what happens?
  • Has your company ever had a serious accident on the job?
  • Who will be at my house and when? Be sure to ask if background checks have been completed, and if there’s a set schedule.
  • May I have a written contract? You’ll want your attorney to review it before signing. Make sure the contract spells out timeframes, as well as how and when the contractor gets paid.

We suggest making a list of all the questions you’d like to ask ahead of time. That way you won’t forget anything during the conversation.

Red Flags

Once you find your ideal contractor, it’s important to stay alert and watch for red flags.

For example, if your contractor demands 25%-50% upfront, find someone else. Because a good contractor should have enough reserves to cover minor expenses to get the job started, except for materials. As for those, you should order everything and have it delivered to your property.

If your contractor has a problem with this, find a different one. Or tell them to purchase the materials themselves (pre-approved by you, of course). You can always compensate them when the job’s done.

They should also have pre-set dates for payments and money for materials.

Above all else, never assume anything. Get everything in writing. It’s your only resource if you need it later.

At the end of the day, it’s all about having a contractor that will respect you and your property. They should:

  • Be trustworthy and treat you fairly
  • Complete the job on time
  • Meet your budget
  • And provide quality work

This might seem like a lot of work to do before the real work begins, but trust us, it’s worth it! If you take the time to find the right property, the right lender, and the right contractor, then your flip or rental project will be a lot easier.

And the payoff will be much greater.

Ready to chat? Great! Our team is always here to help.

Happy investing!