ARV: What It Means and Why It’s Important

In real estate ARV is short for after repair value, or the estimate of a property’s value after all repairs and upgrades are completed. For real estate investors, especially those who flip houses, this number is important because it calculates the margin between the “as-is” value of the desired investment property and the value of a developed property that has been completely renovated.

ARV = Property’s Current Value + Value of Renovations

It is the basis of the property’s selling price, comprising the purchase price plus the total cost of repairs. The key to the profitability of property flipping is that repairs more than pay for themselves.

The after repair value will help you plan your strategy and also help determine which real estate financing choice is best. The ARV can provide investors a pretty good picture of what they can sell an investment property for.

In order for the ARV to be accurate, the investor will need to be able to get accurate repair estimates and insight into the local market. Seasoned investors that have been flipping homes for years can usually walk into a property and assign a value based on their knowledge and experience quickly. For newer investors, this will not be the case and it will take a good bit of time.

The ARV is a calculation of a snapshot in time – the value of the property under the current housing market conditions and the home’s state of repair at the time of calculation. This value can change daily throughout the renovation cycle of a home.

What Is the 70% Rule?

Maximum Purchase Target = (ARV x 70%) – Estimated Repairs

This rule is popular for real estate investors. It tells you the maximum you should spend on a flip property. However, it is only a general guidance and you should not consider it an ironclad rule.

After Repair Value (ARV) Limitations

The housing market can change, causing comparable home values to go up or down. Renovation costs can also vary and there may be hidden damage in the property.

In addition, an appraiser might value properties differently than a realtor or investor. Lenders use appraisals, which could lead to a lower pre-repair property value. Flippers must be good negotiators when they buy a distressed property and then sell it after repairs. A flipper good at estimating repairs but poor at negotiations may not receive the property’s ARV at sale time. 

Need Help Assessing Your Potential Property?

Investor Loan Source is not your everyday lender – we were created by real estate experts who know the markets and typical renovation costs well. If you need help assessing a property and determining if it is “a good deal,” or not, please reach out to us. We are committed to helping investors grow their wealth through real estate. Need a loan? We have a wide variety of products for your fix and flip and rental properties, as well as commercial and wrapable loans.

New Year’s Resolutions for Real Estate Investors

A new year is the perfect time to reflect on the past year and celebrate your achievements, identify areas with room for improvement, learn from the setbacks and move forward. It’s also the perfect time to set new goals and come up with attainable resolutions both personally and professionally. For real estate investors looking to grow their business and achieve financial success, setting new, tangible goals is imperative.

For many of us, 2020 seemed to drag on due to COVID scares and shut-downs. It came with many speed-bumps, hurdles and other uncertainties and discouraging events. Ready for 2021? We all are. Here are some useful resolution ideas to help this year be a more lucrative one for your real estate investment business.

  • Work to Increase Your Return on Investment

For new real estate investors, this means staying focused on finding opportunities with low risk and high profit. Looking at your expenditures, monthly and yearly costs to see if there are areas you could save money is critical for both seasoned and newer investors. One easy step is to ensure you aren’t overpaying for utility services. Another is to review rental rates on a regular basis to be sure you are charging rent consistent with the local market. Smart investors will also learn how to efficiently schedule contractors, pre-apply for permits, pre-order supplies and aggressively price and market their properties for quick sale. Each day saved equates to less money towed to your lender in interest. Evaluating the cash coming in and the amount of cash going out regularly will help you identify ways to increase your return on investment.

  • Mix Up Your Strategy to Find New Properties

Using MLS may be easy, but it won’t usually allow you to get ahead of your competition in finding hot investment properties first. Consider hitting the streets in your car to find for sale by owner signs this year. Focus on networking and growing your contact list. Be sure to include realtors, investors and contractors. A good contact list may help you learn about new foreclosures and opportunities before anyone else.

  • Improve Your Time Management

Improving your time management can help you both personally and professionally. Consider waking up an hour earlier each day and setting that time aside to answer emails and planning your daily list of items to get done that day. Stay focused on accomplishing that to-do list before you get sidetracked. You may find that you get more done in the day if you plan it out carefully. For those that simply don’t time for the more mundane tasks of answering emails and making phone calls, think about hiring a virtual assistant to help free up your time for tasks that could be used for making investment deals.

  • Improve Your Marketing Strategies

Thoroughly planned marketing improvements will generally lead to a more profitable investment business. If you are not on the social media bandwagon, hop on in 2021! If you already have a social media presence, set a goal of increasing your followers by 10% this year. Streamlining your websites, direct mail and mass email can all also help you grow your business.

  • Refine Your Investment Portfolio

Last year you may have found your niche. Now is the time evaluate your portfolio and identify properties that just don’t fit anymore. Or maybe you’d like to diversify your portfolio and invest in single family notes. Look over your portfolio and plan how you want your portfolio to grow this year. Decide which markets you’d like to explore. Carefully planning your strategy and talking with your investment advisor will help you refine your portfolio successfully.

  • Learn Something New

Personal growth can be achieved through learning something new and expanding your knowledge. Interested in learning more about commercial real estate investing? Join an in-person or online group or attend webinars. Take a course or read a book about something you’ve always wanted to learn. The possibilities are endless. Hopefully you’ll enjoy the process as well.

  • Improve Yourself

Need to drop 10 or 20 pounds? Want to exercise more? Stay committed by joining a health club, or sharing the goal with a friend or fitness group. Stay more organized this year by using a planner, app on your phone or cleaning out your office. Communicating proactively and more often is also a great resolution that will also help you as an investor. Improving yourself can reduce your stress level and lead to a more positive 2021. Decide what areas of your life are bringing you down or need the most improvement and focus on that. You will thank yourself later.

Most resolutions are easy to set and harder to keep. The key is making small improvements each day. Whatever went wrong in 2020, learn from that and move on. Don’t let the past hold you down. You have a cleaner slate and a fresh opportunity to build a better real estate investment business and ultimately a better you. Ready to dominate in 2021?

Having a great lender to partner with you in 2021 is essential. Let Investor Loan Source help you by walking you through our loan products. Contact us at 409-735-6267 if you have questions or email our loan specialists at info@ils.cash for more information.

Hard Money Loans Made Easy

There are many financing options for real estate investors available today. One of the most popular options has become the hard money loan. A hard money loan is a loan collateralized by a hard asset (in most cases this would be real estate). One of the biggest differences between a hard money loan and a conventional loan is that hard money lenders use the value of the property versus the borrower’s creditworthiness to determine the loan.

Hard money loans tend to have terms of 12 months, but some can be extended to as long as two to five years. This works in favor of investors who plan to purchase a home in need of repairs, rehab it and sell it quickly for a profit

Advantages of Hard Money Loans

One of the biggest advantages is that there are less restrictions with hard money loans when comparing them to traditional loans. Lenders rely less on a borrower’s credit score and more on the value of the property itself. This allows borrowers with a less then perfect credit score to obtain a loan.

Another key benefit of hard money loans is that they can be acquired quickly. Loans from banks and traditional lenders often take up to 60 days to issue, while hard money loans can often fund in a week. This is especially important if investors hope to acquire properties with competing bids. Time is money in real estate and time is on your side with hard money.

Hard money loans also provide tremendous leverage for fix and flip and buy and hold investors. The investor can enter a project without putting their own money at risk and remaining liquidity. This is a huge reason real estate investors seek out hard money lenders.

An Easy Decision for Investors

Although many investors with imperfect credit scores find hard money loans easier to qualify for, because of the higher risk involved these loans often come with higher interest rates. Despite this, they are an integral part of the the real estate investing process and can be utilized when a traditional loan doesn’t make sense or is too difficult to get.

Hard money loans aren’t just for flippers. At Investor Loan Source, we offer loans for rental properties, as well as commercial investment projects. Be sure to ask one of our loan specialists about our exclusive wrapable loans, commercial and one-time close fix and rent options. We make hard money easy – the application process is fast and simple. Contact us at 409-735-6267, email us or apply online today.

Advantages of Investing in Rental Properties

There is no doubt that when done right, investing in real estate can be very lucrative. Whether you invest in fix and flip properties, notes, commercial or rental properties, the payoff can be huge. There are many advantages of investing in rental homes you should know about if you are considering becoming a landlord.

Leverage

One important benefit to consider is leverage. You can use a small amount of your own money while borrowing and the rest. When investing in real estate, you don’t have to pay the full amount for the property. Instead, you are able to put a down payment (sometimes even as low as 0%) of your own money and get a loan from a bank, private lender or a hard money lender to fund the remaining. While you only put a small percentage of your own money down on the property, you are able to fully control the property and benefit from 100% of the appreciation.

Cash Flow

Any money left after paying your monthly expenses is money in your pocket. Buy smart and you can generate a monthly income from your tenants in the form of rent above and beyond what it costs to own the property. This is cash in your pocket that you can enjoy for as long as you own and rent out your property.

Appreciation

Over time rental properties tend to appreciate in value, which means while you are collecting money in the form of rent you can sit back and watch the value go up. You are able to profit from the passive income while paying off the mortgage, then later sell the property for a higher price and profit from it again. Score!

Tax Benefits

There are many tax advantages of investing in rental properties. If you receive a rental income from the rental there are numerous rental expenses you may deduct on your tax return. Expenses may include mortgage interest, property tax, operating expenses, depreciation and repair. There are quite a few tax benefits – be sure to consult with your tax professional to ensure you understand all tax implications prior to investing in real estate.

Security and Control

Another important benefit of rental property investments is that you are in control of what property to invest in, where it is located, who to rent to and what to charge for rent. You have very little control when investing in the stock market and many other investments. Investing in real estate is also considered one of the most secure investments you can make. Compared to the volatility of the stock market, real estate markets tend to be very stable. It is important to keep this in mind when choosing between investing in real estate versus stock.

Ready to purchase a rental property and need help with funding? Investor Loan Source has buy and hold loans that can help you grow your investment portfolio. Apply now or contact us at 409-735-6267 to get started and begin reaping the benefits that come with owning a rental property.

House Flipping 101

Whether you’re looking for a new career or just a way to make money on the side, flipping houses can be profitable and rewarding if done right. In 2019 approximately 245,864 homes were flipped in the United States. The median gross flipping profit on home flips in the fourth quarter of 2019 was $62,500. Sounds like a great way to make money, right? You’ve seen it on tv shows, but there is more to learn and understand.

What exactly is house flipping? 

Flipping houses is when an investor purchases a property with the intention of fixing it up and quickly reselling it. Most homebuyers want a move-in ready home, so flippers often buy properties that most buyers aren’t able or willing to renovate. The key is finding the right property and flipping it fast.

It can also refer to purchasing and reselling properties in a market where home values are on the rise. In this case, a real estate investor may spot a foreclosure or low-priced home, purchase it and wait a few months until home prices increase. They will then re-list it at a higher price and sell it for a profit.

Ready to get started? Read on to learn about the important steps to take when starting out.

1. Research a range of markets.

How much money will you have to work with? $20,000 will not help you invest in areas with an average sales price of $800,000. Your budget will help you narrow your options. If your hometown is outrageously expensive, consider investing in areas further away, especially ones with rising home prices and strong demand.

2. Set a budget and a business plan.

Every good entrepreneur needs a plan. What amount are you comfortable investing? How big of a renovation project are you up for? All of these things need to be considered when making your plan.

3. Line up your financing BEFORE you need it.

The best deals out there will be snatched up quickly. Make sure you are already pre-approved and have a lender lined up who can finance your deal before you look at properties. You don’t want to miss out on a hot property with huge profit potential. Investor Loan Source can help you with a fix and flip loan. Visit us online to learn more or better yet, apply online today!

4. Build your network of contractors.

It is important to have a team of contractors that you can depend on. You will likely need general contractors, electricians, roofers, plumbers, painters, HVAC experts and well-rounded handymen at some point while flipping houses. Begin building your network ahead of time to avoid stress and delays – time is money in this business.

5. Find a house to flip.

One of the most important aspects of flipping houses is being able to find good deals. It is important to find homes that are not only priced below value, but with wide enough margins to cover your many expenses. For help finding on-market deals you can work with a realtor. For help finding off-market deals you may want to consider working with wholesalers or beginning a direct mail campaign. Patience is often key when finding houses to flip.

6. Buy the house.

As soon as your contract is accepted, you will want to hire a home inspector to ensure the home is structurally sound and the mechanical systems are in good working order. A thorough home inspection will likely take several hours and is critical in ensuring the home will not come with expensive surprises. After the inspection, walk the home with your chosen contractors so you can properly prepare for the next important step.

7. Renovate the property.

Every month that goes by comes with interest and carrying costs – utilities, taxes, insurance and other expenses. The faster you can complete renovations, the faster you can sell it! Be sure to make repairs and upgrades to the home that will add value to the property. Don’t overdo it. Adding high-end, expensive countertops to an $80,000 property is probably not necessary and could eat away your profits. Stick to your budget and timeline.

8. Sell it!

This step is often the easiest if you’ve made the right renovations and priced the home correctly. It’s also the funnest as it entails reaping the profits of your hard work and planning!

Learning how to flip houses can be overwhelming. Lean on experts – your lender, contractors, home inspectors and realtors. Network with other house flippers. Most experienced house flippers have learned from their mistakes and will be happy to share tips on what to do and what to avoid when investing in homes in need of repairs. Building a strong network and planning ahead will help you set yourself up for success.

Need a fix and flip loan for your investment property? Contact Investor Loan Source at 409-735-6267 or visit our website and get pre-approved today!

Home Staging Tips for Fix and Flip Properties

You’ve worked hard getting your fix and flip renovations done so you can get your investment property on the market. But before you begin showing your flip, there is one important step you may not want to skip that can maximize your return on investment – staging the home. Many studies show that not only does home staging decrease time on the market, but it can also encourage potential buyers to offer a higher purchase price. If you are worried that staging the home will be too expensive, check out these tips for staging your investment property on a budget.

Curb Appeal is Key

First impressions are everything. The world of real estate investing is no exception. From the moment they drive up to the property, potential homebuyers will already begin developing an opinion about the property. Good curb appeal is essential to making sure that their first opinion is a positive one. Make sure that the lawn is clean, mowed and free of clutter. An inexpensive way to add curb appeal can be as simple as giving the front door a fresh coat of paint. Adding a new doormat is a great way to welcome buyers and add to that first impression. Plant some fresh flowers in the flowerbeds to improving the landscaping and will give the yard a nice punch of color.

Tidy Up

Renovations and repairs often leave behind a lot of dust. Cleaning the property from top to bottom is essential. Thoroughly dust the home, clean the windows and wipe down all cabinets and baseboards. Consider power-washing the driveway, sidewalks and patio to leave the interior and exterior of the home sparkling clean. A little bit of elbow grease is a cheap way to get your flip ready to sell for top dollar.

Furnish Economically

Placing furniture in the home is an important aspect of home-staging, as it helps buyers get a good vision of the space and how their own furniture will fit in each room. Consider renting or leasing furniture to stay within budget. You may also find gently used furniture for great prices at secondhand stores or neighborhood garage sales.

Accessorize for Impact

While you purchased the property as investment, potential buyers are looking for a home to live in. They want to feel emotionally connected to their home. Help homebuyers feel more at home by adding some accessories throughout the rooms. Place a vase of flowers on the kitchen table to warm up the space. Adding rugs to hardwood floors, accent pillows on the couch and draping a soft throw blanket over a chair will make the spaces more inviting. Framed art on the walls and books in the built-ins are great ways to build character. Stay within budget by looking for decorative items at estate sales and resale shops.

Light Up the Space

Bringing in as much light as possible is an important way for buyers to see all of the hard work that you’ve done in the home. Whether it’s natural light or artificial light, a bright, well-lit spaces are essential to staging the home properly. Maximize the home’s natural light by cleaning the windows, dusting the blinds and opening all of the shades and  drapes. Turn on all lights and light fixtures in the home to avoid dark rooms. No potential homebuyer will enjoy having to fumble for light switches while looking at the property. Use table and floor lights to add to ambient lighting. Lighting is one step you will not want to skip.

Focus On Certain Rooms

Minimize your staging costs by focusing on the most important rooms in the home. Kitchens, family rooms and master bedrooms are usually the rooms that sell homes. It makes sense to spend the majority of your staging dollars on these rooms. Decorate the master bedroom gender neutral to appeal to the majority of buyers. Make sure that the room feels large by using a queen bed vs. a king-sized better in a smaller master bedroom. Consider swapping out kitchen hardware and purchasing stainless steel appliances to get top dollar in the kitchen. Updating the fireplace in the family room is a great way of updating the home and creating a focal point in the room.

Use Space Wisely

How you arrange the furniture can determine if a home feel spacious or cramped. Arrange furniture carefully to make the space feel larger. In small rooms consider pushing furniture up against the wall. In large rooms arrange furniture to create several conversation areas. Buyers also can be turned off by what they see as wasted space. A great way to minimize wasted space under the stairs is by creating a fun reading nook. Be careful to choose furniture that fits the space. In other words, don’t put oversized couches in a small family room. You also should avoid putting furniture in an area that would block the flow of traffic. Whatever you do to show off the space, use the space wisely so that buyers can envision themselves living there.

Keep It Simple

Have you ever heard that less is more? It’s true in the case of staging fix and flips. Don’t go overboard with accessories, artwork and furniture. Too many accessories will make the home feel cluttered. Be careful to keep it simple in terms of your color palette as well. You may love dark purple, but avoid painting walls in dark or bright colors. Consider sticking with a neutral palette to appeal to more buyers whenever possible. Artwork and flowers are ways to add color.

It may be tempting to skip staging the home when you are anxious to sell your fix and flip real estate investment property. But don’t skimp on the accessories and your staging efforts to save a few bucks. Staging the home has the potential to deliver a powerful return on your investment for every dollar you spend.

Do you need financing for your next house flip? Let Investor Loan Source help. We’d love to talk with you about your next real estate investment property.

Money Maker or Money Pit?

Red Flags to Look for Before Buying Your Next Fix and Flip Property

For fix and flip real estate investors, there’s nothing better than finding that perfect “diamond in the rough” property. It’s like a dream come true. It’s in the perfect location at the right price, but is what we like to call “an ugly duckling.” It has an overgrown lawn, outdated light fixtures, horrible paint colors and lots of small cosmetic items that scare off most buyers. It is by far the ugliest home on the block.  With a fresh coat of paint, a little bit of work and some new light fixtures this house could generate some big profits. It may be tempting to make your move right away, but before you do, be sure to do your due diligence. Look for these red flags that could turn your next real estate investment flip into a big flop.

1. Too Long On The Market

If the home has been sitting for too many months (or even years) on MLS, this could be a sign that something is wrong with the property. Be especially cautious if it is showing pending sales that fell through. This could indicate that previous homebuyers or real estate investors noticed serious problems with the home during inspections.

2. Foundation Problems

Major foundation issues can scare off potential buyers and cost thousands of dollars to repair. Look for cracks in the bricks, walls, flooring, foundation, sidewalk and driveway, as they could indicate some foundation problems. Uneven floors are also tale-tell signs that the home might require foundation repair.

3. Sewage and Draining Issues

Sewage and drainage problems can quickly turn into a bad situation for flippers. Drive by the house after a rain before buying the home. If you see puddles of standing water, the yard may have a drainage issue. Puddles near the foundation are especially concerning. Standing water in the yard and heaved walkways may also be signs of a blockage or break in the underground sewer line. 

4. Roof Damage

Replacing a roof is expensive. A new roof can cost anywhere between $6,000 to $20,000 or more depending on  the size of the roof and type of roofing materials. It pays to check out the roof carefully. Shingles that curl up at the corners, missing shingles, cracked shingles and exposed nail heads are all signs that the roof may need to be replaced.

5. Mold

Moisture leads to mold, which is the bane of every homeowner and real estate investor. Not only can it cause health issues and respiratory problems, but It can be costly to remove. Some mold growth is obvious, but it can also be lurking out of site and be more difficult to detect. When checking for mold in the home, look for water stains on the ceiling, walls and floors – including in the attic and basement. Dark, fuzzy stains and musty smells can indicate there might be a mold problem in the home and should not be ignored when inspecting the home and estimating repair costs. There’s a chance of it returning if the initial work wasn’t done right. Mold elimination should also include fixing the water source.

For many real estate investors, flipping homes can be an enjoyable experience. It can also be very lucrative. Keep in mind that due diligence is one of the most important things to master when it comes to real estate investing. There are hidden costs you need to take into consideration when deciding if a home is a good investment. Some repair costs are manageable, while others may exceed your budget. The next time you are looking at investing in a fix and flip property, be aware of the red flags that can help you distinguish the money makers from the money pits.

Ready to purchase your next fix and flip property? Investor Loan Source, a private lender based out of Texas, is here to help. Visit ILS.cash to learn more or apply now to get started.

The Basics of House Flipping

Do you ever watch reality tv house flipping shows and dream about making a big profit in weeks?

Real estate investors that purchase homes in need of repairs and cosmetic work can earn huge returns in a relatively short period of time. It’s important to keep in mind that house flipping involves work and careful planning in order to be lucrative.

There are financial risks involved as well, but if you follow the key steps outlined in this article, flipping homes can be an excellent way to make money quickly.

What is House Flipping?
Flipping houses involves buying a property, renovating it and selling it for a profit. In order for a home to be considered a flip, it must be purchased with the intent of selling it in a short period of time.

Step 1: Know Your Market
Getting familiar with the real estate market in your area is critical to the success of your flip. It will help you recognize undervalued homes with profit potential and ensure you don’t overpay for a property. It will also help you determine the price you should be able to list the home when you sell it.

Step 2: Set a Budget
How much do you have to invest? How much money will you need to borrow? There are excellent private lenders out there willing to finance your next real estate deal. Do not assume not having enough cash resources will rule out a possible investment. Learn more about fix and flip loans here.

Make a list of repairs needed and get quotes from contractors while setting your budget plan to ensure you will be able to profit after selling the property.

Step 3: Line Up Your Financing
When you find an ideal property for flipping, you will need to be ready to act fast. Talk to lenders BEFORE you are ready to purchase the home to ensure you don’t miss out on opportunities. Investor Loan Source specializes in short-term fix and flip loans and are able to get you pre-approved quickly. Having your financing available before you discover your dream fix and flip property will help you beat out other investors looking in your market at investment properties. If you are already considering purchasing a real estate investment property, consider getting pre-approved today.  

Step 4: Establish Your Team
You need to start building relationships with contractors before you buy your first flip. Begin asking for quotes and estimates immediately after purchasing your property, or even better before.

Part of learning how to flip a house is building a strong network of contractors you trust and can depend on –  general contractors, electricians, roofers, plumbers, painters, HVAC experts. Get to know several lower-cost, well-rounded handymen as well.

Unless you plan on doing the work yourself, your team of contractors are essential to the success of your flipping business. It is helpful to ask for references and to contact them ahead of time to ensure you are hiring a trustworthy contractor.

Step 5: Locate and Identify Your Property
Learning how to find good deals is critical. That means not only buying below market value, but with wide enough margins to cover your expenses.

There are many strategies to find below-market deals on homes to flip. You could work with a realtor to find on-market deals, work with wholesalers to find off-market deals, build a direct mail marketing campaign and so on.

Part of finding a good deal as a home flipper is patience. It may be tempting to act quickly on a property that is not ideal, but if the numbers don’t work or if the repairs involve more work, time and money than what you are comfortable with, it is best to keep looking. Be ready to act quickly on properties that are ideal, but be ready to walk away from properties that simply aren’t good deals.

Step 6: Buy the Property
Got a contract accepted? Wonderful! Now consider hiring a home inspector. The home inspector will help you ensure the property is structurally sound and that the mechanical systems are in good working order. You don’t want any expensive, unpleasant surprises.

Contact your team of contractors for quotes. Choose a contractor and schedule them to start work on the same day you settle on the property if at all possible.

Step 7: Renovate
Get to work! Time is money, so the faster you can complete the renovation project, the faster you can sell the property and pay off your loan.

Step 8: Sell It!
The final step of flipping homes is usually the simplest – selling it! You can usually lean on a realtor, but ultimately, you’re the one responsible for pricing properly; your profits depend on it. Make sure you understand the fundamentals of real estate pricing, before buying your first investment property to flip.

Once you sell the property, you can celebrate and enjoy the financial rewards of being a successful house flipper!

How to Add Curb Appeal

Ways to Add Curb Appeal to Your Home

You only get one chance to make a first impression. Having good curb appeal is one of the most important factors in attracting buyers to sell your fix and flip homes quickly. If your curb appeal is lacking, the right buyers may never even set foot in your home.

Walk around your home and look for any neglected areas that might seem like “red flags” to buyers, such as missing roof shingles or rotted siding. Trim trees and shrubs if needed, and make sure your lawn and flower beds are well maintained. Add some colorful flowers to your front beds and/or flower boxes to brighten up your landscaping.

To  bring your house to the next level and really make it stand out from the rest, you want to create some sort of focal piece. Some houses have pre-existing outdoor focal pieces that you can enhance and highlight. For example, a porch on its own is great, but you can make it amazing with some simple improvements like patio furniture or seating. Adding some Adirondack chairs on the front lawn can create a conversational space that buyers will be sure to remember.

Make sure the exterior of your home is as clean as the interior. This can often be accomplished with a simple garden hose. You may even want to rent a pressure washer if the siding, walkway or driveway is stained or dingy.

Thoroughly wash windows and screens, and remove and dark solar screens if you have them. Open shutters, curtains and blinds, to make your house look more inviting from the outside – it will also brighten the inside of the home as well.

Consider a fresh coat of paint on your front door, trim and shutters. Personalizing the home will make your home stand out. Try small, cosmetic improvements like new house numbers, a colorful wreath and a clean front doormat. These minor inexpensive changes can pay off in a big way and help you sell your flip quickly for top dollar.

Looking to buy a new fix and flip? Let Investor Loan Source help with your financing needs.

A Letter from Our CEO, Tom Berry

As I write this letter, I can’t help but think that this will probably be the craziest, most unpredictable experience of my lifetime. First, I hope you and your family members are well and are in good spirits and optimistic about the future. I read in a “good book” one time that “without vision, the people will parish”. I think it is important to always look to the future with vision and wisdom. Fear is crippling and debilitating. It is born of uncertainty and a lack of understanding. Today is certainly ripe for that, isn’t it? So much is unknown right now that I wanted to focus on what we do know and share with you what we at Investor Loan Source have done and what we continue to do, to ensure that we remain strong and secure for our families, investors, lenders and partners.

We have always taken what we have considered a conservative approach to lending and investing. We have never swung for the fences. We keep our pricing at reasonable, sustainable levels, and we have limited exposure as much as possible. When our competitors slashed their margins and raised their LTV maximums, we didn’t chase them. We let borrowers go to them and we focused on diversifying our product lines, so we didn’t have to compete with craziness. It turns out that our strategy worked out well, as many of those competitors are now unable to lend or have closed their doors all together. As a result, we have had record numbers of loan applications in the last 30 days. With this THREE-FOLD increase in applications, we have been able to make changes that will only serve to make us and our loans even stronger.

  1. We raised the credit score requirements of borrowers to get into our A&B loan programs. This results in higher percentage rates on most of our loans without us really raising rates.
  2. We lowered LTV maximums on certain loans. This means they need to bring more of their own money to close.
  3. We have lowered the maximum loan amount for residential fix and flip loans. Now we will generally lend only up to $250,000 in most of our markets, as we believe that the higher priced houses may take a value hit in the next 12 months. As an investor over the last 13 years, I know that the blue collar “affordable housing” is always in short supply and demand increases during rough financial times. This leads to smaller price drops as a percentage on lower priced homes compared to higher priced homes. It creates more work for us since we get paid based on the loan amount and a $500,000 loan takes the same amount of time as a $50,000 loan, while paying only one tenth as much. At this time, we are fine with that to keep the integrity of our loan portfolio as high as possible.
  4. We have diversified into commercial bridge loans that have higher loan amounts in asset classes not effected as greatly by the downturn (if it hits real estate). This has given us the ability to diversify geographically, by asset class and by industry. Our approach is to not have huge exposure in any one place.

While we have taken a cautious attitude through all this turmoil, we are very optimistic about the future. Our borrower payment rates have been outstanding. We have not seen much of a difference, if any, from our normal collection rate. Our Private Equity Funds have been posting phenomenal returns and I expect that to get a little higher, given our ability to charge more interest in the current market. With less competitors, we are able to cherry pick the best loans out there and let the rest lay. While the future is uncertain, with the wisdom of the past and steady patience, opportunities will abound. I will remain diligent and seek to bring in the very best business I can. Donald and I look forward to many more years of our families working with you and your families.

Best Regards,

Tom Berry Signature
Tom Berry