Comments Off on Grand Coast Capital Launches New Small Balance Commercial Loan Product
Grand Coast Capital Group is excited to launch their newest loan product, Small Balance Commercial loans. The new product is led by industry veteran John DePalma and is ideal for entrepreneurs, investors and small business owners who are not served by traditional financial institutions. Click below to read more!
Comments Off on Advantages of Using Alternative Financing
There are many different ways to invest in real estate. If your focus is on flips and rehabs it is important that you have access to capital. Using traditional bank financing may not be enough to secure deals you are working on. You need to ability to close quickly and without any strings attached. One of the ways you can do this is through the use of alternative financing, primarily hard money loans. Hard money loans give you the ability to find the capital you need without any of the traditional red tape involved. There are still guidelines and qualifications involved but not nearly as many as your local lender. If you are one the fence as to whether or not hard money is for you here are three reasons major advantages.
- Speed. The number one reason why hard money lending is so popular is the speed in which you are able to close. Regardless of where you look for deals in almost every case time is of the essence. This is especially true when dealing with short sales and foreclosures. Lenders are much more inclined to accept offers that can close quickly and free of any headaches over a lender financed loan. On average most lender financed deals take roughly 45 days to close. Not only is this an issue but this extended timeframe opens the door for problems with the loan approval. By being able to close in ten days or less lenders look more favorably on your offer. They have been burned too many times in the past by buyers requesting multiple extensions without ever closing. The quicker you are able to close the more likely that you will get more offers accepted.
- Approval. Guidelines for investment loans have changed dramatically over the past decade. It is not enough to have a strong credit score and ample income. You need to have excellent credit, at least 20% down payment and a low debt to income ratio. Your income and assets will be picked apart with a fine tooth comb and you will be required to supply multiple supporting documents. If there are any red flag issues it could not only jeopardize the interest rate but even the approval. It is not uncommon to be involved in the process for several weeks only to find an issue that derails the deal at the 11th hour.
- Down payment. Another prohibitive factor for traditional loan approval is the significant down payment requirement. It is not enough to have the 20% down payment. This money needs to be you’re a dedicated account for at least 60 days. It is not enough to transfer the funds a few days before your loan application. If there are any gaps in the seasoning of these funds you will need to start the process over again. This money cannot be a gift and has to be entirely from your account. Not only is coming up with the down payment money a hurdle but verifying every large deposit is also a potential issue. With alternative financing you down need to come up with any funds for approval. You can use 100% of their funds and close the deal in your name.
The more deals you can close over the course of a year the stronger your business will be. By utilizing hard money lending you put yourself in the best position to grow your business.
Comments Off on Hidden Areas that Impact your Credit Score
Regardless of what type of real estate investor you are and how your finance your deals a strong credit score is important. Even if it is not the main consideration it is certainly a factor. Most people understand the major items that impact your score. Timely payments, available of balance and number of credit inquiries are widely recognized as important. However there are several smaller items that if left ignored can do as much, if not more damage. Here are a few hidden areas that can have a big impact on your credit score.
- That old collection account from the credit card you opened in college will not just go away. Even though the letters and phone calls stopped coming in it doesn’t mean the account is forgiven. It is important that you take a look at your credit report every few months to check for items you may have forgotten about. A collection, charge off or lien can pull your score down as much as 100 points. This is the case regardless of how much the account was for and how old it may be. Just because you forgot about the account doesn’t mean it is gone.
- Old items on your credit report are not the only issues you need to keep an eye out for. When you look at your credit report you need to look for any items that may be on your report in error. If you have a common last name errors on the credit report are more common than you may think. The sooner you get them removed the easier they are to deal with. An account on your credit report for several months can take several documents and phone calls to verify that it is not you.
- Having some available balance on your accounts doesn’t mean you credit will be as high as you think. You need your revolving accounts to be lower than 60% of the available balance. Most people pay their accounts on time and are not maxed out and wonder why their scores aren’t as strong as they thought. It is typically because they do not have as much available balance as they thought.
- Not every account that you have reports to the credit bureaus. You may think that only credit cards, auto loans and mortgages show up on your credit report. Even though these are the big ones they are not alone. Some utilities such as electricity and even a phone bill can show up if you are late. Anything reported to collection will show up as such regardless of the account. Even though some accounts are more important than others it is important to stay on top of all your accounts.
- On one hand you shouldn’t have your credit pulled every time you want to buy something. On the other hand to build your score you need to have some amount of new credit. Use new credit to open accounts with a small limit that you don’t intend to use much if at all. By opening up new credit and paying it on time you can give your credit a quick jumpstart.
There is much more to strong credit than timely payments. You need to know how your credit is scored and how to improve it in a pinch.
Comments Off on What To Do If Your Rehab Doesn’t Sell
In a perfect world your rehab property will sell a few weeks after it is listed for full asking price. Anyone who has flipped real estate before knows this isn’t always the case. There are times when you can do everything right and still struggle getting your property sold. It is during these times when you need to make smart decisions. If you don’t take action a few weeks can easily turn into a few months. On the other hand if your actions are too drastic you may not sell at a price point you are happy with. Here are three things you need to do if your rehab property doesn’t sell.
- Review the marketing. The first thing you should do if you are having trouble finding a buyer is to review the current marketing. Your real estate agent has a log of everyone that has visited the property. If there have been a good number of showings without any offers this may be an indication that the price is listed too high or there is something wrong with the property presentation. If the showings are low this is usually a sign that there is not enough interest being generated. Sit down with your real estate agent and discuss how the property is being marketed and what suggestions they have to increase volume. This can mean an increased number of open houses or a bump in newspaper or social media activity. Whatever the current plan is reduced showings usually means poor marketing. Before you take any action you need to know that your property is getting maximum exposure.
- Reduce price. As much as you may not like it a price reduction can the best move you can make. Ideally you would list the property at the right price from the start. If you took a shot and tried for the high end of the market you need to realize your mistake as quickly as possible. The longer your property stays overpriced the less likely you will find a buyer. Buyers and real estate agents will look elsewhere instead of overpaying for your property. When you decide to make a price reduction it should be significant. You should think about going below certain psychological barriers that buyers have. If you were at $210,000 your new list price should be $199,900. What you will find is by listing at fair market value right from the start not only will your property sell quickly but usually for a higher price than you think.
- Consider renting. If the first two options don’t produce a buyer you need to prepare for the worst. Instead of selling at a price you aren’t comfortable with you should consider renting. There are times when renting for a year and evaluating your options after the lease is the best thing you can do. Obviously this is largely dependent on the rental market and how much rent you can command. Even if you break even on the rental there are tax benefits that can make renting an appealing proposition. As long as you understand all of the costs and risks associated with renting it may make sense on a short term basis.
The last thing you should do if your property isn’t selling is panic. The more prepared you are the better choices you will make. It is always better to be proactive than reactive when you dealing with real estate issues.
Comments Off on 3 Tips for Rehab Success
If you turn on the TV almost any night you can find at least one show dedicated to rehabs and house flipping. Fueled by this growth rehabs have become the most popular real estate investing niche by a large margin. Almost every new investor wants to be a rehabber. For as many new investors that succeed a good number struggle. This is not because they lack the desire or the work ethic but because they aren’t exactly sure which steps to take. Having a plan and the right team around you is a good place to start. Regardless if you are looking for your first deal or a seasoned investor there are a things you can do that will give you an advantage over your competition. Here are three important tips for your next rehab project.
- Wait for good deals. Success with rehab investing is all about the numbers. You can find a great property but unless the numbers make sense you need to pass. One of the biggest mistakes that amateur investors make is jumping at every new property that comes their way. Even if you haven’t had a good deal in weeks you have to fight the temptation to force the issue. It is always better to wait for strong deals than settle for bad ones. One bad deal can put you in a hole that is difficult to get out of. In the world of rehabs quality is always better than quantity. Stay patient and wait for good deals to come your way.
- Do the right work. It is not enough to slap some paint on the wall and call your property rehabbed. You need to make improvements that are in line with your market. Before you even make an offer you should have an idea of what styles & trends are hot for your area. A fancy swimming pool may sound appealing to you but may not work best for your local market. You need to do work that maximizes your return on investment. There are certain properties that you can cut corners and others where only high end labor and materials will do. Talk to your contactor, a few local builders and your real estate agent before you start any work.
- List at the right price. In most cases you will hold your property in higher regard than everyone else. Because of this you are likely to list your property above the fair market value. This is one of the worst things you can do. Buyers do not care what condition you bought the property in or all the struggles you may have gone through. All they care about is how your property stacks up with everything else on the market. By listing too high you put yourself behind the eight ball. Instead of creating instant demand and appeal you run the risk of losing a good number of potential buyers. Every day your rehab sits on the market directly costs you money in the way of carrying costs. As a side effect buyers will think you are desperate and start throwing lowball offers your way. By listing at the right price right from the start you can sell your rehab quickly and usually for the best price.
There is always something you can learn with every rehab. In most cases it is the little things that determine your rehabbing success.
Comments Off on There Are Still Good Foreclosures Deals Out There
It wasn’t that long ago when foreclosures were all the rage. It seemed like every other day there was a story about the foreclosure crisis. There were even laws put in place that changed the way foreclosures were taxed. While that may seem like forever to some it was only seven years ago. During that time things have changed in the foreclosure market. Foreclosures were down roughly 20% in the first half of this year alone. Many investors who relied solely on this niche have moved on to other areas of the business. For those that have stuck around foreclosures are still over 25% higher than in preforeclosure days. There are plenty of good foreclosure deals out there if you know where to look and how to find them. Here are three tips to help find foreclosure deals in any market.
- Know your market. Most real estate numbers that you see are on a national level. Those figures often have little to no bearing as to what is going on where you invest. Regardless if you are just getting into foreclosures or have been with them for almost a decade you need to know what is happening in your market. Take the time to research local trends including unemployment, housing supply, income levels and number of days on the market. These will give you some idea as to which way foreclosures are headed. Pick five local markets and study up on as much as you can. Only look for foreclosures in one or two markets that may offer some value. It is not enough to find foreclosure deals. You need to be able to sell them at a profit. The markets usually dictate just how likely this is.
- Increase your reach. At the outset of the foreclosure craze a good real estate agent was all you needed to find good deals. While they are still a viable source they are not enough. As foreclosure supply declines and competition increases you need as many different sources for deals as possible. You need to reach out to local wholesalers you meet at investment clubs. You can try talking to your local mail carrier and asking them to inform you of any vacant looking properties they see. You can reach out to real estate attorneys, mortgage brokers and even accountants asking for any potential foreclosure client they may have. You need a good half dozen or more outlets for deals in tight foreclosure markets.
- Keep eyes open. In almost every market there are a handful of foreclosure deals there for the taking. You need to keep your eyes open and find them. Every time you are in the car you need to be looking for possible foreclosure signals. Overgrown grass, garbage cans out for days on end and excessive work needed are the typical signs of foreclosure. You can spend money on expensive mortgage delinquent lists but these don’t guarantee accuracy. You are better off making as many local contacts as possible and keeping your eyes open for deals every time you are in the car.
With any prospective foreclosure deal you need to be willing to act quickly. Good deals will only be on the market for a very short window. There are still foreclosures in most markets if you are willing to put the time in to pursue them.
Comments Off on Take Advantage of Late Summer Sales
As difficult as it may be to believe summer is almost over. While the official end of summer isn’t for another six weeks the summer home selling season ends right around Labor Day. For many sellers this closes their window of selling before the start of the school year and the beginning of autumn. With this there is often a decrease in the amount of inventory. As a real estate investor there is still time to take advantage of the few weeks left in the season. By locating sellers who are desperate to move you can find yourself with a great deal in the coming weeks. Here are a few ways to take advantage of the last few weeks of summer.
- Scour the MLS. One way to find deals is by looking through the multiple listing service (MLS). Look for properties that have been on the market for at least 90 days or are set to expire in the next 30 days. There are many sellers who put their home on the market in the spring looking to sell quickly. When this doesn’t happen it can serve as a wakeup call that their home may be listed too high. This is the same whether you are looking at bank owned properties or a traditional sellers. A property that is set to expire shortly is much more likely to take a below asking price offer than one that is fresh to the market.
- Read Comments. As you are pouring through listings provided by your real estate agent it is important to look at the comments. Often times the seller will provide plenty of hidden information in the comment section. The comments may give you an idea on the condition of the property and whether or not they will entertain all offers. A property that needs work coupled with a desire to negotiate and a listing that has been on the market for over 90 days is a great candidate for a potential deal. It takes some time to pour through every listing but the payoff is often a good deal.
- Quick Closings. There are many sellers who want to avoid selling in the fall and eventually the winter. They understand the struggles of showing a home with leaves all over the yard and snow in the driveway. One of the most important factors for them is the ability to close quickly. However you structure your offer you need to highlight just how quickly you can close. A solid cash offer that can close in a few weeks may be enough to push it over the top. This is especially the case with short sales, foreclosures and REO properties. Banks don’t want to have to pay to have the property winterized or risk having it roll over to next year. By highlighting everything wrong with the property coupled with a quick closing you may stumble upon an extra deal or two in the coming weeks.
There is opportunity for investors in every market and every time of year. It is up to you to take advantage of them.
Comments Off on Access to Capital Equals More Deals for YOU
Closing a traditional real estate transaction isn’t easy. If you want to close with a local lender there are a number of hoops you need to jump through. Although lending practices have improved in recent years there is still plenty of red tape and obstacles that need to be addressed. The goal for any investor is to maximize opportunities that come their way. There will only be a few times a year when true home run deals will fall on their laps. Without the ability to cut through the red tape and close quickly you will let these opportunities pass you by. Access to capital allows you to take advantage of every opportunity and close on deals you see value in.
Most traditional loans take an average of 45 days to close. Some sellers may wait for you but to get deep discounts you need to be able to close quickly. Any type of bank owned listing or foreclosure gives preferences to cash offers. Not only do they know they will close quickly but they are confident they will really close. Too many sellers have been burned by lender preapprovals that end up going nowhere. After constant delays and extensions the deal finally hits a road block months after the process begins. Sellers would rather take an offer that they know will really close than roll the dice hoping for lender approval.
Closing with a bank or mortgage broker is a lot of work on your end. Long gone are the days of low income or no documentation requirements. Today you need to provide two years of full tax returns, months of bank statements and piles of other documentation to generate approval. Just when you think you are finished there will be a request for something else. This requires you to stay on top of everything that is needed and alter your day to get it. Some of these items are not kept in a file or easily available in your office. You will have to track down deposits and cancelled checks you may have received months ago. Even when you do submit everything there is no guarantee you are out of the woods. There always seems to be just one more item that is needed before you get to closing. After a while your purchase takes over your business and can become a great source of frustration.
Closing with a lender on an investment property requires at least 20% down payment. This alone may not be an impossible hurdle but when you throw in the closing costs, property tax escrows and rehab costs you are looking at a significant amount of money. All of this is avoided if you have access to capital. Instead of scraping together every nickel to acquire the property you can start the project with a little breathing room. This allows you to do the work you really want and maximize the property’s value. Ultimately this leads to increased profits on your end and a quick turnaround to your next project.
Access to capital gives you the opportunity to make every transaction as quick and painless as possible. It also puts in you in the best position to take advantage of deals when they come your way. By closing just a few extra deals a year you will see a big impact on your bottom line. Access to capital can make this happen for you.
Comments Off on Get More Offers Accepted
As a real estate investor it is not enough to simply make offers and hope for the best. Your success is often determined by the ones you get accepted. When you find a property that you really want you need to do everything in your power to make it yours. Instead of overpaying there are a few things you can do to give yourself an advantage. While most of these may be obvious they are not done enough. What you will find is that it is the little things in an offer that can make the biggest impact. Here are a few tips to help you get more offers accepted.
The single biggest factor for most sellers is price. However, many sellers place a greater importance on the ease of transaction. It is essential that you have the ability to pay cash or have an outlet to find it. A cash offer alone will not guarantee acceptance but it certainly puts it at the top of the list. Many sellers have been burned waiting for lender financed offers to come through. They wait for weeks only to find that the deal will not move forward. By using cash the seller knows they don’t have to deal with any lender red tape. Whatever the offer is they know that the deal is really going to close. You may not be able to get the steep discounts that were once available using cash but you greatly increase the chances your offer gets accepted.
Whether you use cash or not you need to be able to close quickly. Obviously, this is much easier when you are using cash but it not impossible with a mortgage either. The key is to have all of your loan items lined up even before you make an offer. Reach out to your lender or mortgage broker and find out exactly what you need to submit your loan. Tell them that time is of the essence and a quick closing is more important than a slight discount in the interest rate. The more items you submit before your offer the easier it is to close quickly. Closing just a week or two quickly can make all the difference.
With the contract itself you want to make it clean and with the least amount of contingencies possible. Sellers typically will choose the offer with the path of least residence. If your offer is full of excessive credits and demands you can bet the seller will look elsewhere regardless of your price. It is also important that there are signatures and dates wherever needed. If the seller has to return your offer and wait for changes they will start looking elsewhere.
There is one final item that can push your offer over the top. Sellers want to see that the buyer is committed to moving forward. The greater the earnest money deposit the more serious your offer is. Most buyers will make offers with as little deposit as possible. If something happens and you decide to back out you stand to lose this money. If you are truly serious about the property you need to increase your down payment. If everything else is equal, or close to it, this can be the deciding factor that can seal the deal.
It stings losing a deal that you really want over just a few dollars. Never let this happen to you. Think like a seller and get more offers accepted.
Comments Off on Selling Your Rehab in a Buyers’ Market
There are times when selling a property is much more difficult than others. Currently there are many markets across the county that would be considered buyers markets. These are areas that have a greater amount of housing supply than buyer demand. This allows buyers to pick and choose the property they want and sometimes with the terms they desire. Selling in these markets presents a greater challenge but doesn’t mean you can’t have the success you desire. With a few changes in mentality and presentation the property can be treated just like any other sale in any market. If you are currently in a buyers’ market here are a few tips to help with your transaction.
The first step to getting your property sold starts well before you list your home. In order to get top dollar you need to have your home stand out. Instead of unique layouts or exotic colors start by delivering a quality product. Most buyers want to be able to move right in without doing any work. They will typically pay top dollar for craftsmanship and quality. You need to remember this with any work you put in. There are ways to cut corners but quality should not be one of them. By delivering a superior product to what is available in your market you increase your demand which in turn will get your property sold much quicker.
Buyers in any market focus on price. This is especially the case when dealing with a buyers’ market. This doesn’t mean you need to slash your list price to fire sale levels but you do need to recognize your competition. Before you list you should look at comparable listings and recent sales. This is exactly what potential buyers will do. If you list too high you will eliminate a large segment of potential buyers right off the bat. If you list too low you will end up leaving some money on the table. Instead of looking for the highest comparable sale look for the best one. By using the right list price number you can generate interest in the property and ultimately sale for the highest possible number.
It is also important that you stay on top of the appearance at all times. You only have one chance to make a positive impression. You don’t want to let overgrown bushes or weeds in the driveway derail your chance of a sale. This certainly requires increased diligence on your end but it is necessary in a buyers’ market. You may also want to consider staging the property. The right furniture and colors create a wow factor that will strike a chord with buyers. Again, this will be an increased expense but often times are what is needed to sell for the highest price. These methods may not have to be employed in sellers markets but for buyers markets is a necessity.
Little things prove to be the most important when dealing with a buyers’ market. Fortunately real estate markets work in cycles so you can bet that you will have the upper hand at some point soon. Until then you need to do everything you can to sell your rehab property.