During our next Money Chat, lending expert Mike Bonn will discuss “How to Fund a Flip.”
If you’ve always wanted to get into the fix and flip game, but don’t know where to start when it comes to buying properties, then this Money Chat is perfect for you!
You can join other like-minded real estate investors and ask all of your questions to a lending expert.
Want to join Mike’s Money Chat? Then register for FREE here.
Mike will answer common questions like:
What are my funding options?
What is hard money?
How do I qualify? What credit score do I need? Income? Experience?
By the end of the Money Chat, you should have a much better grasp of how to get going in real estate investing.
Can’t make it? No problem. We’re running the Money Chat twice next week to make sure you have an opportunity to listen, learn, and ask all of your questions on how to fund a flip (and any other value-add property). And if you miss next week’s chat, no sweat. We’ll be hosting many more in the future.
Mike and the rest of the Hard Money Mike/Cash Flow Mortgage Company team looks forward to seeing you on Tuesday or Thursday (or both).
If you have any questions about our weekly Money Chats, then our team is here to answer them any time.
Happy investing!
https://hardmoneymike.com/wp-content/uploads/2021/08/Webinar-Property-Promos.png788940Jenna Weldonhttps://hardmoneymike.com/wp-content/uploads/2019/06/hard-money-mike-logo.pngJenna Weldon2021-08-25 15:07:192021-08-26 08:05:38Next Money Chat: How to Fund a Flip
What is the Difference Between Wholesale and Wholetail?
The difference between wholesale and wholetail is actually pretty easy to understand. It all comes down to your buyer, and what needs to be done to sell the property to that buyer.
What is Wholesaling?
With wholesaling, you need to find a heavily discounted property and sell it to someone who is also looking for a discounted property. So, usually a fix and flipper.
Unlike wholetailing, you don’t need to do ANYTHING with a wholesale property. Because you won’t own it for more than a couple of days or weeks. All you need to do is assign the contract to your buyer; or complete a double closing (buy the property, turn around, and sell it the same day).
You’re in and out FAST.
But you might not make as much as you’d make with a wholetail deal. Why? Well, let’s take a closer look at wholetailing.
What is Wholetailing?
Unlike wholesaling, you have more types of buyers with wholetailing.
Fix and flipper. Just like with wholesaling, fix and flippers aren’t going to pay very much because they have to go in and completely renovate the property. They’re looking to make money, so they’re not going to pay more than what you would’ve paid, minus the assignment fee.
Landlord. This buyer will pay a little more than a fix and flipper because they still have to go in and fix the property up so it’s rent-ready. But their renovations won’t be as extreme as a fix and flippers, so the purchase price can be higher.
Retail consumer. These buyers are on the MLS, and they’re looking for a good deal. But they’re not looking to make a profit like a fix and flipper or landlord, so you can charge a higher purchase price. Therefore, they’re the most profitable.
Now, with retail consumers, the purchase price probably won’t be as high as comparable homes in the same neighborhood because the property will still need work. But it’s in lendable condition, so you can still make a good profit. For example, if the going rate in the neighborhood is $300,000, then you can probably charge between $250,000 to $260,000.
Other Differences
Wholetailing also differs from wholesaling because you might own the property for 3 months or longer. Why? Because if you sell to a retail buyer, that buyer might need to get an FHA loan, and FHA loans (aka, bank loans) require certain “seasoning” (meaning you have to own the property for a certain length of time before you sell it). And when you own a property for more than a few days, you’ll need to think about taking good care of it.
No, that doesn’t mean you have to fix it, but you will need to keep it in good, livable, lendable condition. So getting a vacant home insurance policy to protect it against things like fires would be a good idea. Another good idea is putting the utilities in your name to keep the heat and plumbing on, especially during the winter months when pipes freeze and burst.
Yikes!
So, there you have it. Like we said, the difference between wholesale and wholetail is pretty easy. Just think about the type of buyer and what that buyer is planning to do with the property.
Ready to talk about your cash flow options? Great, our team is here to help.
Happy investing!
https://hardmoneymike.com/wp-content/uploads/2021/08/JENNAS-YouTube-Thumbnails.png7201280Jenna Weldonhttps://hardmoneymike.com/wp-content/uploads/2019/06/hard-money-mike-logo.pngJenna Weldon2021-08-24 09:34:532021-08-11 14:59:19What is the Difference Between Wholesale and Wholetail?
How to Buy a Value-Add Property with No Money Down in 4 Steps
Do you know how to buy a value-add property with no money down?
Because, believe it or not, it only takes 4 steps.
Let’s take a closer look at these 4 steps:
#1: Buying discounted properties
It’s pretty rare to find a discounted property on the MLS. You’d have far better luck finding cheap deals through a wholesaler or investor-friendly realtor. And buying a discounted property is very important to making a profit. If you pay full retail value…well, you’ll make far less. In fact, you might not make any money at all.
#2: Setting up a loan properly.
When you want to buy a value-add property like a rental, then you should consider our 2-Step Process. Because it’ll save you a lot of time, money, and stress.
What is the 2-Step Process?
Well, it’s strategic funding method. The first step is buying a property with a hard money loan. The second step is turning around and quickly refinancing with a long-term loan. When you do this, you’re able to qualify for the highest loan amount possible. Plus, you have a much better chance of getting out of a hard money loan fast and into a cheaper traditional loan.
#3: Use rate and term, NOT cash out.
Take a deep breath.
And don’t panic, because we’re not going to dive deep into these hefty mortgage terms. But we are going to highlight the significant differences.
It can be really tempting to set up your loans as cash outs, because you get money at closing. But did you know when you use a cash out loan, you end up:
Paying higher costs
Taking longer to refinance out of hard money loans (which come with pricy rates)
Qualifying for lower loan amounts
Doesn’t sound so good anymore, does it?
So, let’s talk about the benefits of a rate and term refinance instead. With a rate and term, you:
Spend less money upfront
Refinance faster out of hard money loans. Like, months faster than a cash out refinance.
Enjoy lower rates
Better yet, when you use a rate and term refinance, your cash flow will multiply because you get to do more with your money when you pay less for your loans.
This is actually a simple process if you work with someone who can help you with both your hard money and long-term loans, like our sister company the Cash Flow Mortgage Company.
#4: Put $0 down by finding the right lender
The last and most important step is to find a lender who can handle 2-Step loans.
The truth is, there aren’t many real estate lenders out there who are qualified to provide both hard money and conventional loans. That’s why we do.
So if you’re ready to take your real estate investments to the next level and put less money down on your deals, then reach out to our team. We’re always eager to set you on a path the helps you make the kind of money you need to live the life you want.
Happy investing.
https://hardmoneymike.com/wp-content/uploads/2021/08/Copy-of-Copy-of-JENNAS-Blog-Photos-13.png6001800Jenna Weldonhttps://hardmoneymike.com/wp-content/uploads/2019/06/hard-money-mike-logo.pngJenna Weldon2021-08-13 13:00:162021-08-26 13:58:46How to Buy a Value-Add Property with No Money Down in 4 Steps
The Truth About Hard Money: 3 Steps to Make Hard Money Cheaper
Have you ever wondered you can make hard money cheaper? Or have you always assumed there’s no such thing as “cheap” hard money?
Well, it’s time to explore the truth about this investor-friendly lending option. Because one of the biggest misconceptions about hard money is it’s took expensive.
Spoiler alert…This assumption is false!
Here’s the truth. Getting a hard money loan doesn’t mean automatically paying 12% interest or higher. Actually, if you take these 3 steps, you can pay a lot less for it.
Experience is everything
That’s right. If you can prove you have real estate experience, a lender will feel a lot more confident giving you money. And when a lender feels confident about a client, they will offer lower rates.
How can you present your experience to a hard money lender? Well, the best method is to create a real estate portfolio. This portfolio should include things like:
Before and after pictures
Budgets
Profits earned
Put SOME money down
If you’re willing to put money down at closing, then a lender will see you’re serious about your deal and lower the cost of your loan. Because it helps lower their risk.
How much of a down payment should you make, you ask? The ideal amount would be 10% or more, but even 5% would ease the cost of your loan.
Manage your credit score
We know you’ve heard it once, but it bears repeating. Your credit score matters, especially when it comes to qualifying for a competitive loan. Because the higher your score, the lower your interest rates.
But, let’s say your credit score is lower than 670. Well, don’t get flustered, because you can quickly raise it if you follow some of our credit boosting tips, including these 3:
Keep your credit card in your wallet and, instead, focus on paying it down (or off). This method is simple, but effective. Just remember when you whittle your credit card balance down to $0, keep your card. Do NOT close your account. Closing an account that’s in good standing is anti-productive in keeping your score healthy.
Keep your card balance low. By that we mean only use 30% of your total maximum credit line. So if you have a $1,000 maximum, don’t let your balance rise above $300. Pay it down every week or month to keep it under the 30% range. The credit bureau likes to see that.
Pay your bills and pay them on time. Again, simple, but effective. If you make your payments on time for the next 12 months, your score WILL go up.
Look, hard money can be pricy, but you can make it cheaper by following these 3 easy steps. In fact, we promise if you adhere to these steps, you will greatly reduce the cost of your next hard money loan.
Want more truths about hard money? Then stay tuned for our next video where we discuss the myth of getting trapped in a hard money loan.
Ready to chat about your hard money and other lending options? Our team is always here to help.
https://hardmoneymike.com/wp-content/uploads/2021/08/Copy-of-Copy-of-JENNAS-Blog-Photos-14.png6001800Jenna Weldonhttps://hardmoneymike.com/wp-content/uploads/2019/06/hard-money-mike-logo.pngJenna Weldon2021-08-13 12:00:372022-01-19 11:31:13The Truth About Hard Money: 3 Steps to Make Hard Money Cheaper
Do you know how to buy a fix and flip? Because if you’re new to investing in real estate, there’s a chance you’re not sure where to begin this process.
You might think, “Well, I’ll just get a loan.” But do you know what “getting a loan” really means?
That’s why today we’re going to take a look at the different real estate lenders you can rely on—and which ones you might have to rely on until you boost your credit score, build a real estate portfolio, or complete one of the other qualifications that some lenders require.
To begin, there are 5 popular real estate lenders. Each one has various pros and cons, so let’s start with the most simple and basic lenders.
Friend or Family Member
The upside to asking a friend or family member for a loan is, well, you’re asking a friend or family member for a loan. You know them, and you probably know them very well…well enough to ask them for money. The only qualification you really need is a decent relationship.
The downside is, well, you know them. They’re your friend, your dad, your sister, or someone else you have deep roots with. That makes the entire loan process way more personal, which means there’s a lot of potential for drama—both now and in the future.
Business Partner
Instead of going through a family member or friend, you can get a business partner. A business partner can lend you the money to buy a value-add property with very few if any qualifications. The big pro here is they take on most—if not all—of the financial risks. It’s their money, not yours.
On the flip side, it’s their money, not yours. That means some business partners get greedy. Rather than splitting profits fairly, they demand the lion’s share. To them, it might not matter if you were the one who did all the actual work. They took the risk, so they should get a bigger reward at the end of the day.
Hard Money
If you have some basic qualifications, you can skip the first two lenders we’ve talked about and get a loan through a hard money lender. Hard money loans (aka, Fix and Flip loans) are great when you need to close a real estate deal FAST. We’re talking days instead of weeks or months.
Unfortunately, hard money can be expensive. Rates tend to be higher than other lenders. But every hard money lender varies, so it’s absolutely worth shopping around. Plus, hard money loans aren’t intended to be long term, so the high cost can actually save you a lot of pain AND money in the long run.
Banks are the most traditional lender out there. In fact, most real estate investors look to this type of lender before they consider any other. And, why not? Banks usually have the lowest rates available.
Unfortunately, banks also have the strictest requirements, and if you don’t meet those requirements, you’ll get rejected. Worse, the application process is a lot more in-depth, which means closing can take A LOT longer. Which means that perfect investment property you wanted gets snatched up by someone using a faster lender.
OPM
Aka, “Other People’s Money.” This is exactly how it sounds. You use other people’s money to buy a property. This is different than asking a family member, friend, or business partner for financial help because there are more boundaries. With OPM, a lender charges interest. That’s it. There aren’t points or profits involved. It’s simple and easy.
The only downside of OPM is finding those who are willing to lend their money to you. But that’s where gaining experience and knowledge in real estate investing helps. The more you know, the more you can prove you’re worth the investment.
So, there you have it. Those are the 5 ways to buy a fix and flip property. Each one has its pros and cons, but each one is a viable option. It just depends on YOU and your financial situation.
Bad credit? No credit? You might have to start with a family member, friend, or business partner
Great credit? Solid income? Extensive real estate portfolio? You probably can jump straight to hard money or a bank loan. Or, better yet, OPM.
Each investor has a different path.
Ready to find out what your path is? Great! Our team is here to help. We’re excited to set you on a path that helps you make the kind of money you need…to live the life you want.
Happy investing!
https://hardmoneymike.com/wp-content/uploads/2021/08/Copy-of-Copy-of-JENNAS-Blog-Photos-15.png6001800Jenna Weldonhttps://hardmoneymike.com/wp-content/uploads/2019/06/hard-money-mike-logo.pngJenna Weldon2021-08-13 11:00:522022-01-19 11:27:46How To Buy a Fix and Flip: The First Key Steps
It’s Friday, and that means it’s time for some fun with a little flipping humor.
So, this past week, it’s probably fair to say that many of us learned a valuable life lesson, right? Even if it was just a small one.
Well, one of those lessons might’ve been the discover that sometimes it’s better to do a job yourself.
For example…
As funny and ridiculous as this is, it’s probably cringe-worthy for some of you. Because we’ve all had our fair share of “what the heck?” moments with contractors.
But we hope those laughable (and, uh, very frustrating) moments are in the past for you. And that you’ve found a trustworthy, reliable, skilled contractor to help you complete your fix and flips, rentals, or other value-add properties. Or you’ve simply learned to do the work yourself.
Because nobody wants a door that has the handle on the hinge-side (doh!).
Wishing you all a great, relaxing, and satisfying weekend. If you’re ready to start next week off with a bang, give our team a call. We’re always here to help you succeed in real estate investing and generate positive cash flow.
Builder needed a short-term bridge loan on a finished property to start a new build down the street.
This loan allowed the builder to keep his projects moving and have the next property ready for the spring market.
Hard Money Mike is a lender based in Colorado, lending money on all types of commercial based properties: fix and flip, land, whole tailing, and builder bridge loans.
Investor Real Estate Loans funds investor loans in single family and commercial buildings.
https://hardmoneymike.com/wp-content/uploads/2020/08/Main-Logo-scaled.jpg3232560Jenna Weldonhttps://hardmoneymike.com/wp-content/uploads/2019/06/hard-money-mike-logo.pngJenna Weldon2021-07-29 08:00:362021-07-13 14:33:23Experts Talk #1 Thing That Every Investor/Wholesaler Should Know
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