Tag Archive for: Real estate investing

Text: "Making Money in Real Estate in 2022." Mike Bonn with dollar bills in the background.

How to Make Money Real Estate Investing in 2022

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You’re here to make money. How do you make money real estate investing in 2022?

The real estate market has changed. The economy has changed. The money side of flipping has changed. If you’re a newer real estate investor, you might be feeling hesitant right now.

We’ve been through over twenty years of markets. We’ve seen many markets that look similar to ours in 2022.

Take our word for it: here’s what will make you money this year in your real estate investment career.

4 Real Estate Basics That Can Make You Money in 2022

The best real estate investments are the evergreen basics. Here are 4 consistent ways of creating cashflow — if you do it right based on your market.

1) Flips

Buying, fixing, and then selling properties is a common investment strategy. But to make money on fix-and-flips in 2022, you’ll have to focus carefully on the numbers. Flips make money in one lump sum, not in a steady cash flow over time. So in tougher markets, it’s important to make that large sum count.

This year especially, we recommend staying in the medium to lower price range for your flips. We’re still seeing people selling well in the medium price range. Larger properties, however, are feeling a lot of pressure in this market.

For flips, focus on the numbers and stick to medium price ranges. (More on this later in the article).

2) BRRRR

Buying and fixing up rental properties is another of the best real estate investments. But BRRRR is taking a bit of a hit right now due to interest rates. Interest rates have more than doubled since the beginning of 2022, which will seriously impact your cash flow.

You can still make money from BRRRR properties this year, but you’ll have to be extra careful with numbers. Know your credit score, know your interest rates, and know the rent prices for your area.

3) Subject Tos

A “subject to” is when you buy someone’s property, take over their mortgage, and make all payments, but you don’t assume the loan. The property is in your name and you have ownership, but it stays financed by the seller. 

Subject tos will be great opportunities in 2022. You can walk into a property where the rate on the mortgage is still 2.5% – 3%, potentially with renters in place. This will bring a much higher cash flow than if you started from scratch on the open market, where interest rates are almost double that.

Using subject tos is a great way to grow a big portfolio using someone else’s financing. (You’ll see more about subject tos in 2022 later in the article).

4) Notes

Another great tactic for real estate investors this year is to use your money in deeds of trust or other private lending.

Rates have gone up, but banks still haven’t really raised CD rates. If you have some money sitting in an account, notes are a good way to get a higher return. You can lend to other investors through gap funding or a more long-term agreement. Notes are becoming big in real estate again, especially with the market in 2022.

Passive Ways to Make Money in Real Estate in 2022

Maybe you feel like you want to use 2022 as an opportunity to tap out of the active flipping game. But, you also don’t want to lose the chance for real estate cash flow. We’ve got three good passive real estate investing options for you.

1) Subject Tos with Rentals

Subject to rentals will be a pretty safe bet for passive real estate income this year. With a subject to, the loan is still under the original financier’s name. You’re just making payments, so the mortgage won’t cloud up your credit.

It’s relatively easy to add 5 – 10 properties to your rental portfolio without adding more debt to your name. If you put these rentals in with a property management company, you can still make a good amount of passive cash flow.

2) Private Notes

Deeds of trust or private lending is a reliable, secured, passive way to put money to work in real estate. With notes, you lend your money to friends or other people in the markets who are looking for funding – and you don’t have to worry about doing any of the work on the property.

Instead of making 1-2% with a bank’s CD rate, you could double or triple that by lending privately. We’ve helped thousands of people successfully lend this way, so contact us for more information.

3) REITs (Real Estate Investment Trusts)

Real Estate Investment Trusts work a bit like a mutual fund. You pool your money with a bunch of other people, and the company uses that money to buy real estate. You’re just one of many investors, and everyone earns a return on the properties. 

There are public REITs and private REITs. With public, you can trade on the open market. With private, you have a little more restriction; once you get in, you stay in.

REITs are a great option if you want to invest in real estate but want someone else to manage it. If you’re looking for passive real estate income, research REITs in your area.

Commercial Real Estate Investing in 2022

2022 may be the year you want to venture into commercial real estate. Apartments buildings with over five units, retail space, office buildings, and industrial areas all fall under commercial real estate.

How do you invest in commercial real estate?

One option for commercial real estate investing is to hold or flip just as you would any single-family home. We’ve also seen a lot of people find success with another option recently: buying bigger industrial properties, flipping them, and splitting them up into separate properties to sell.

Cap Rates in Commercial Real Estate

An important number to consider in commercial real estate is the cap rate. All commercial properties come with a cap rate, which is the return you can expect on your investment. 

For example, if you put $100,000 into a property with a 4% cap rate, you can expect a return of $4,000; this is probably an area that pays lower rent. But a $100,000 investment on an 8% cap rate will have an $8,000 return, so the property will have higher cash flow.

Generally, the higher the cap rate, the lower the value because it may be considered a riskier investment. The lower the cap rate, the higher the value because more people are more willing to put more money in. 

People take lower cap rates over higher ones because they believe a lower cap rate market is more stable. It’s like when you put money into a CD – the appeal is the stability, despite the lower rate. People who look for higher cap rates prioritize return over long-term growth or stability.

Cap rates differ city-to-city and within cities. If you’re interested in commercial properties, you can talk to a commercial broker in your area to understand local cap rates.

Two Biggest Opportunities for Real Estate Investing in 2022: Fix-and-Flips and Subject Tos

How you’ll choose to make money in 2022 will depend on you, your market, and your current financial situation. 

But we expect that the two best real estate investment methods this year will be flipping and subject tos. Here’s how you can make money using these investment strategies:

How to Flip for Profit

At the beginning of 2022, flipped homes would sell in a matter of hours, rather than weeks or months. The fix-and-flip experience will be a little different in the remainder of 2022. But flipping is still a great opportunity to make a profit in real estate.

What Properties Will Flip for Profit?

Your best bet for income in real estate flipping will be sticking to medium price point properties.

Some areas – for example, City center of Denver — are still doing great in higher price ranges. People are still selling $1 – 2 million dollar properties with no issues. But in smaller communities, there are fewer people who can afford $600,000 – $900,000 properties.

With rising interest rates, people who were looking in those higher price ranges now need to look a little lower. Medium property prices are also always competing with rent.

Even though interest rates have gone up 5 – 6%, a $150,000 – $250,000 house will still be in a competitive market with rent. As long as they can afford it, people will always steer toward buying a home rather than renting. 

Rent prices aren’t going anywhere but up. We may see changes in the renting sphere as congress discusses hedge funds and other big investors driving rent prices up. But for you now, rising rents could push more people to consider home ownership in the low-to-mid price range.

Flipping Expectations for 2022

When you look at your market, know that 3-bedroom, 2-bath, and garage homes will always be reliable as a seller. People will always be searching for those types of properties for their families.

You’ll find buyers in this range, but be sure to adjust your expectations. In the last market, buyers would make offers within hours or days. The reality of this upcoming market is it might take one or two months to find a buyer. Be patient, take your time, look at your area, and keep an eye out for upcoming foreclosures and other opportunities.

Subject To Real Estate Investing

A “subject to” is when you buy someone’s property subject to them leaving the mortgage on the property. You become the owner, you receive the deed or title, and you take over the loan. But it’s still the same loan, in the original owner’s name. You’re not assuming, or refinancing. They keep the loan on the property, and you just make the payments.

Should You Do a Subject To?

How is a subject to beneficial for you? The property’s existing mortgage will likely have rates close to 2.5-3% – rather than the 6% rate you’d get on a new loan. Also, in a subject to, you assume no additional debt.

Most subject tos are made for rentals, lease options, or contract for deeds. A subject to property is not a great place to flip. When people are willing to do a subject to, the reason they’re not selling the property is they can’t get the price that they want at the speed they want. So they have to get rid of the property this way to avoid wrecking their credit for future loans.

The Money Side of Subject Tos

We’ve seen clients with 50 – 200 subject to properties. Subject tos are a great way to build a portfolio without using your credit, and without maxing out your loan opportunities with lenders.

Sometimes with subject tos, you’ll have to give the owner of the mortgage some money to give over the property. There are also occasional fix-up costs, depending on the condition of the property. 

Why some people don’t want to jump into a subject to is because they don’t have the $5,000 – $15,000 start-up costs to get into it. We recommend looking into OPM as a way to cover these costs and take advantage of subject tos. 

You’re getting the cheapest possible financing on a property, so it doesn’t matter much if the loan is still at 100%. Making monthly payments continually brings the loan down. And you’re free from many other financing and closing costs.

If you get a long-term renter, or someone who wants to do a lease option and put some money down, subject tos can become a great source of cash flow.

Subject tos are going to be hot as foreclosures pick up, selling times slow, and people can’t afford to fix up their properties. They are one of the best ways to take advantage of a down market and build a large real estate portfolio.

What To Do Next?

The real estate market at the end of 2022 will look very different than it did in the beginning. But there are always options for making money in real estate – in any market.

We have plenty of experience in markets like the one we’re now entering. If you need more guidance as you navigate your real estate investment career this year, let us help.

Download our free real estate investment resources here.

Check out the information on our YouTube channel here.

And always feel free to reach out to us at hardmoneymike.com.

 

Happy Investing.

Text "What is a credit score?"

How Is My Credit Score Calculated?

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Real estate investing gets a whole lot easier when you understand your credit score.

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?

Read the full article here >>

Watch the full video here >>

Text reads "What Is Hard Money." Mike Bonn stands with cartoon coins surrounding him.

The Beginner’s Guide to Hard Money Loans

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Hard money basics you need to know before real estate investing.

We’ve been in the hard money loan business for 20 years. Half the calls we receive are still beginner real estate investors trying to learn the money side of investing.

If that’s you, you’ve likely applied for, heard of, or thought about using hard money lenders. But maybe you don’t fully understand the private lending world yet. How does a hard money loan work? How much interest do private lenders charge? Do hard money lenders require a minimum credit score? Should you just wait until you qualify for better bank loans?

This guide will help answer:

  • What is hard money?
  • What do hard money lenders look for?
  • How is hard money different than other loans?
  • How do you qualify for hard money?
  • Is hard money better than banks?

Becoming hard money proficient will put you miles ahead as an investor. 

Ready to nail the basics?

What is Hard Money?

Hard money is a short-term loan designed for real estate investors. Hard money lenders focus on lending money on undervalued properties in need of rehab.

Hard money loans are short term – usually around six months or a year – and are designed to help buy properties to fix up.

While “easier” than traditional bank loans, hard money loans are also more expensive due to higher interest rates. Which brings us to the most important quality of hard money loans: they’re fast.

In real estate investing, discounted properties typically require fast-closing deals. Hard money loans can help you take advantage of prices while they’re low, and: 

  • Save on the property cost to begin with
  • Get more from selling or refinancing the property.

These savings more than cover the costs of a hard money loan for most investors.

The speed of hard money makes it valuable for newbie and seasoned investors alike. Hard money loans are made for real estate investors.

How Does A Hard Money Loan Work? 

What do hard money lenders look at? There are two main factors lenders of hard money consider.

Loan-to-Value Ratio

An important number a lender takes into account is the cost of the property. The ratio of the loan they offer and the cost is important for you to know.

Let’s say you have a property with a current appraisal of $200,000. Then you get a loan for $100,000. The loan is half of the value of the home, so your loan-to-value is 50%.

After Repair Value (ARV)

ARV, after repair value, is another important factor hard money lenders consider. The properties targeted by real estate investors are undervalued. They need work to be brought up to the standards of the surrounding community.

So, lenders look at not only the current value of the house, but also the future value of the house, after it’s all fixed up.

Many hard money loans are based on after repair value rather than loan-to-value. Your lender might offer you up to 75% – not of what you’re buying it for, but what you could sell it for by the end. 

What Does ARV Cover?

A key factor to ARV is that lenders will lend not only for the initial purchase, but for the fix-up costs. 

Many lenders will put money aside in escrows to use throughout the project to pay contractors and cover other renovation costs. 

If your loan considers ARV, it’s possible for you, with ZERO money down, to:

  • Buy a property.
  • Fix it up.
  • Either sell it (fix-and-flip) or refinance it (BRRRR).

After selling or refinancing, you use that money to pay the loan back.

Hard money is designed to build value into real estate. Understanding the role of the after repair value will help you immensely in your hard money investments.

How Is Hard Money Different from Other Loans?

Interest rates on hard money are between 2-5% higher than what you’ll find at banks. You can expect origination fees to be about twice as much. Appraisals will be close to the same.

So on paper, the rates and fees are higher, so it feels like you’re spending more. Which you are! But with hard money loans, you’re paying for:

  • Accessibility
  • Convenience
  • Flexibility
  • The opportunity to purchase properties you’d never be able to while relying on bank loans.

While hard money costs more than other loans, the potential value is also way higher. When sellers have discounted real estate, they want it sold fast. Banks can take 25-30 days to close. You can receive hard money in a matter of days.

Every week, we see hard money work to save people money.

When a recent client of ours bought a property, he saved 10% – just because he could close faster than the other five bidders. His savings on that purchase were $30,000: much more than double what he’ll spend on the loan transaction.

How Do You Qualify for a Hard Money Loan?

There are two kinds of hard money lenders. They each have different qualification requirements.

National Hard Money Lenders

National lenders lend in almost every state. They are larger organizations, backed by hedge funds and private equity.

National hard money lenders require:

  • A credit score check, and a good score.
  • Experience – at least five deals in the last three years. 
  • Properties to be in specific larger communities.

So if you’re new to investing, need to improve your credit score, or are looking at more rural properties, you may need to look into local lenders.

Local or Private Hard Money Lenders

A local, or private, lender will specialize in your state or area. Local lenders are much more likely to:

  • Not ask for a credit score.
  • Not require experience.
  • Lend for rural areas.

Local lenders are focused on the deal itself and whether it has good value.

When deciding which lender to use for hard money, always shop around to see what fits your situation now. And be aware that another lender may fit you better in the future.

Are Private Lenders Better Than Banks?

It’s impossible to say whether hard money lenders or banks are “better” for real estate. It all depends on your deal and where you are in your investment career.

When to Use Bank Loans vs Hard Money Loans

Bank loans will have lower rates and may be the better route if you:

  • Have had a successful investment business for over two years.
  • Make a lot of money at a W-2 job.
  • Have 3-4 weeks to close.

Hard money loans will be easier, faster,  and may work better if you:

  • Are newer to real estate investing.
  • Don’t have money up-front to invest.
  • Don’t want to put your own money into a deal.
  • Need to close within a week or two.

As long as a property promises income, hard money more than makes up for its higher rates with the speed and greater potential savings. Starting in hard money paves the way for you to work up to bigger funding opportunities.

Ultimately, your investment career should always have a mix of funding types. Bank loans, hard money, and OPM all have their place to work for you in real estate investing.

Where to Go from Here

Understanding money is key to successful real estate investments. When you put time into understanding money, you get control of it. With control, you can multiply your investment earnings four times over.

It doesn’t stop here. We want to help with your hard money education:

5 Ways to Make Money in a Volatile Market

5 Ways to Make Money in a Volatile Market

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5 Ways to Make Money in a Volatile Market

Check out our latest Market Watch videos here: https://youtube.com/playlist?list=PLb…

The current market is going CRAZY with increasing interest rates, rising inflation, and supply chain issues. As a real estate investor, how can you prosper in these times? In this video, we share 5 ways to make money in a volatile market. Check it out! STAY CONNECTED ========================

 

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.

Investing in Real Estate with Zero Down

3 Ways to Start Investing in Real Estate with Zero Down

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Is investing in Real Estate with Zero Down for real?

No money to put down on your first investment? That 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.

  1. Get a HELOC

    If you already own a house, the first tactic you should use to get money for real estate is to get a HELOC.

    HELOC stands for “home equity line of credit.” It’s basically a second mortgage that works like a line of credit that you can use and pay off over and over again. You’re able to use it for multiple properties.

    You could get a HELOC from credit unions or banks. We usually send our clients to credit unions because they tend to have better options for HELOCs. A credit union will likely give you:

    • A longer term
    • Fixed rates
    • A little more money

    If you already own a home, go to a local credit union and ask them about a HELOC first.

  2. Start a Partnership

    But what if you don’t have a house, so you can’t get a HELOC? A partnership might be your next best option. There are two routes you can go.

    Family or Friends

    You can ask a family member or friend to be a money partner. They can provide you with the cash to use for a property’s down payment, or for the repairs of your flip.

    The close and personal aspect of partnering with someone you know can be the best option for some people. In other cases, it’s nice to partner with a person or entity who’s not so personal.

    Outside Partner

    You could also look for an outside partner.

    For example, Hard Money Mike partners with people who find good deals but don’t have the money to make that first purchase. We help them finance the whole amount so they can get into their first two or three deals. After letting us help fund their first three deals, most people come out with enough money to do their own down payment and repair costs on their next property, with no partner.

    Beginning investors can make their business independent quickly when they seek out the right partner to get them started.

  3. Use a credit card

    Many people hesitate to use a credit card to fund their investments – for good reason. But when done right, a 0% credit card can be the simplest way to start investing with no money down.

    What are the wrong ways to use a credit card for a fix-and-flip?

    • Getting a credit card with a high APR.
    • Using the card to go out and have fun.
    • Not paying back the charges you put on the card.

    If you’re smart, it can be easy to use a credit card the right way. Start with a 0% APR card. Understand that it’s a tool for your business, so treat it that way. Only use the card for repairs, contractors, and other costs associated with your flip.

    Take out the money, sell the property, then clear the card back to zero before moving onto your next project. Don’t let the debt accumulate. Don’t keep a balance from deal to deal. This is where credit card use falls through for most investors. They don’t use the money from the sale to fully pay off the card, and it gets out of hand fast.

    But if you do it right, a credit card works as a great way to help beginners get the funds needed to start in real estate.

What Are Other Ways to Investing in Real Estate with Zero Down?

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.

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

Investing in Real Estate with Zero Down

Why Realtors Make Good Team Members

Why Realtors Make Good Team Members

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Why Realtors Make Good Team Members

If you want to make the most money on your real estate deals, then you need to create a solid team.

And some excellent members to add to your team are investor-friendly realtors.

But, why do realtors make such great team members for real estate investors?

Well, first of all, they have a constant pulse on the market.

They know what’s happening, where it’s happening, and how it’s happening.

Second, discounted properties also tend to fall into their laps, and they can pass those properties on to you.

So, what type of realtor should you work with?

Well, they should do more than put you on their MLS drip. Any realtor can do this, and nowadays, many of the properties on the MLS get listed on sites like Redfin and Zillow.

So, getting on an MLS drip won’t help investors much…especially when we’re looking for under-market properties. And under-market properties aren’t found on the MLS often. The right kind of realtor will have a lot more hustle. They’ll actually search for under market properties and then go through the numbers to decide it’s worth investing in before they present it to you.

Better yet, investor-friendly realtors connect with professionals in various industries, like bankruptcy attorneys. That way, when investment properties pop up, they’ll be one of the first to know about it. And then tell you about it, rather than making you wait to—hopefully—see it on the MLS weeks or months later.

Most importantly, the right realtor will LOVE working with investors.

Unfortunately, about 95% of the realtors do NOT like working with investors. Or, if they do, it’s part-time and not a high priority for them. These are usually more experienced realtors who have an established client list. They don’t really need your business to make money. They already have a system in place.

But, when you find realtors who are investor-friendly, you’ll know. You won’t be a side gig or a part-time project for them. They’ll be hungry to help you find investment properties and make a lot of money.

Many times, these are newer agents who are willing to be trained. They’ll be the ones looking for business and finding ways to make money with you, not off of you. So, rather than selling 3-5 properties a year, they want to sell an investment property every month.

Now, is it a bad idea to team up with both experienced and new realtors?

Not at all.

In fact, it’s a great idea to work with multiple realtors, because they all have different resources, experiences, and ideas. Plus, if one moves away or quits their job, you don’t need to worry about losing your main resource for finding properties. You’ll have others to fill in the gap.

If you want to create a smooth, easy system with your investment properties, then adding a realtor or two…or three…to your team is an excellent idea. Just make sure they like working with investors and are hungry to make money. The hungrier, the better for both of you!

Happy investing!

How to Combat Red Flags in Real Estate

3 Ways to Combat Real Estate Red Flags

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3 Ways to Combat Real Estate Red Flags

It’s time for a real chat.

Because we care about our clients and anyone else who decides to invest in real estate.

So, here’s the brutal truth: there are people who will lie to you in this industry. Lenders, realtors, other investors, and so on. Or only tell you half-truths.

I know. This is a HUGE surprise.

Okay, maybe not.

But, even if common sense and experience tells you that people lie, you can’t always believe it when it happens to you.

Why?

Because, more often than naught, you WANT something to be true, especially when it comes to making money. You want to believe you found an incredible deal, or an incredible lender, or an incredible something that nobody else has had the luck to find.

We all want those incredible moments to be true, right?

But most of the time, they’re just not.

So, what can you do to protect yourself and your wallet from real estate red flags?

Well, here are 3 tips we give to our clients:

First, if it seems too good to be true, it probably is.

For example, “If you buy this property, then you can generate $5,000 – $6,000 every month.”

Okay, that’s definitely a red flag.

Sure, we all want to make excellent cash flow on our properties. But, even in our competitive market, it’s near impossible to make $5,000-$6,000 every month on a standard rental in most towns or cities. The norm is more like $200-$500 a month…at least until a property pays off.

But, even then, making $5,000 – $6,000 every month with a single property is…too good to be true.

Unfortunately, we’ve seen this situation happen more than once to our investors. They get convinced of a sweet, sweet deal and jump into it. And…it doesn’t take long for them to figure out the person who convinced them to buy the property streeetched the numbers and the truth…a lot.

So, what can you do when a red flag waves in your face?

Ask questions.

Okay, someone told you something that’s too good to be true. Now what?

That’s right: ask questions. A lot of them!

For example, let’s say a lender quotes you a 4% rate when everyone else is quoting you about 10%.

Your first reaction is to cheer and think, “That’s amazing! I’m so happy I called this lender.”

But your second reaction should be, “Wait, why? Why is this lender quoting me so much lower than everyone else? What do they see that the other lenders missed? Why are they so much more forgiving and accepting of my financial history?”

There’s gotta be a catch.

Trust us, there is.

When lenders give quotes that are significantly lower than their competitors, it’s because they pad the rest of the loan with junk fees. They charge for everything, not just the loan itself. So, before you know it, you’ll be paying more than the 10% interest you would’ve paid with one of the other legitimate, honest lenders.

So always ask questions when a red flag pops up.

And, part of that process includes…

Getting a second opinion.

So, a red flag went up. Then you asked the lender, realtor, seller, investor, or whoever a bunch of follow-up questions to figure out if they’re telling you the truth…or yanking your chain and taking advantage of you.

Sadly, even if you grill this person, you might not get a direct or honest answer from them.

So, go and get a second opinion. Heck, get a third opinion! There are plenty of experts in the field to ask. Go out and see what they think of this “too-good-to-be-true” offer. Is it real…or fake?

Spoiler alert: it’s probably fake.

By taking these simple steps, you can protect yourself and your wallet from falling into a bad situation.

Just remember:

If it’s too good to be true, ask questions and then get a second, third, or even fourth opinion. Do your due diligence to save yourself a lot of hassle…and money.

Happy investing!

How to Make Money Bird Dogging

How to Make Money Bird Dogging

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How to Make Money Bird Dogging

Do you know how to make money bird dogging?

So, let’s say you’re eager to start investing in real estate, but you’re not quite ready to fix and flip or BRRRR. It’s just too big of a commitment or too much of a risk. Or both.

No problem.

You can still make money in real estate with a simple, but effective method called bird dogging.

What is bird dogging?

Basically, it’s driving for dollars. You hop in your car and drive around the neighborhood, city, or entire state and look for potential investment properties. You can even put on your best walking shoes and take a jaunt around your own neighborhood.

So, what does an investment property look like? Well, you should be able to tell it hasn’t been maintained. The paint is chipped, the windows are broken, the lawn overgrown, and so on. Or it’s vacant. Or there’s just something else is wrong with it that makes you think it can be sold at a discounted price.

Then, you collect information about the property. That means you can knock on the door and chat with the owner, take photos, and/or jot down the address. Once you do one or all these things, you can share it with potential buyers.

Buyers are usually wholesalers, investor-friendly realtors, flippers, or other real estate investors. They take the information you provide and follow-up with the owner to see if they’re actually interested in selling their property.

Essentially, you become the eyes and ears of the market.

So, what are some of the biggest benefits of bird dogging?

  • First off, it’s great for beginners who want to learn more about real estate investing. Maybe you’re not ready to flip or rent homes now, but you want to in the future. Bird dogging is a great introduction to both.
  • Unlike flipping and renting, bird dogging also doesn’t require any money to start. You don’t need to worry about classes, training, loans, or anything else that requires cash out of your own pocket.
  • Bird dogging is also something you can do when you have the time. So, it’s easy to fit into your schedule, be it during your lunch break, after you drop off the kids at school, or during your Sunday stroll. Really, whenever works for you!
  • Better yet, bird dogging can create multiple streams of income. You can make money when you find an investment property, when a wholesaler or realtor sells it to a flipper, and—if it’s a flipper—when they sell it after renovating it.

So, there you have it! Bird dogging is something you can do whenever and wherever. Just hop in your car or put on your shoes and go exploring. Find those properties that are in disrepair and share them with buyers.

How to Buy: Breaking Down BRRRR

How to Buy: Breaking Down BRRRR

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How to Buy: Breaking Down BRRRR

So, you’ve heard about the BRRRR method. You know it stands for Buy, Rehab, Rent, Refinance, and Repeat.

But do you know what each of these steps in the BRRRR method really mean? More importantly, do you know how to set each one up?

Because if you don’t, your success will be limited. Because you won’t be able to make as much money as you could by doing things right. Your monthly cash flow will be lower, your down payments will be higher…a lot higher…And your ability to repeat the process will much…much… slower.

So, let’s break things down, starting with the B in BRRRR.

As mentioned, the B in BRRRR stands for Buy.

But wait! Before you run out and buy the first property you find for sale, you need to know a few important—er, VERY important things. Because the B in BRRRR is one of the most crucial steps in the entire process. If you don’t buy strategically, then you might set yourself up for failure.

First you need to find under market properties that you can add value to.

Under market properties are not found on the MLS. They’re usually found through wholesalers and investor-friendly realtors. And they come at a nice, discounted price.

Just taking this step will do wonders for your wallet.

But it’s not the only thing.

You also need to work with the right lenders.

With BRRRR, there are two lenders involved. The first is for purchasing and renovating the property. The second is for refinancing into a cheaper, long-term loan.

For now, let’s focus on the first lender, for when you BUY the property.

Typically, this is a hard money or private lender. It’s not a bank or another traditional lender. Because those lenders usually require 10, 15, or even 20% down when you go to close. And, if you want the most bang for your buck, you should aim to put 0% down at closing. Because once you put money into a deal, it’s difficult to get it back out.

Hard money and private lenders can help you achieve this.

How? Because they let you maximize your LTV (loan-to-value) by lending up to 75% of the ARV (after repair value).

Ok, deep breath! We get it. This is starting to sound too complicated and confusing.

But trust us, it’s not. Just stick with it. You got this!

The right lender will give you a loan that is 75% of your ARV.

That means they will try to cover the full purchase price, plus part or all the rehab, closing, and holding costs. Basically, they will cover as much as the 75% allows so you don’t have to spend your own money.

And the less money you personally have to put into each deal, the faster you can repeat the BRRRR method. Because you’re not forced to wait until your bank account recovers to make another big down payment on another property.

Aiming for 75% of the ARV will also make a big impact on your refinance (the third R in the BRRRR method). But we’ll get to that later. Let’s stay focused on the B in BRRRR.

If you’re interested in trying the BRRRR Method, then it’s crucial you understand this first part of the process. If you buy an under-market property AND find a lender who can cover 75% of the ARV, then your success rate will be much, much higher. And your bank account will be a whole lot happier.

Happy investing!