Tyler Williamson - Investor Loan Source

Discovering Your “Why”: A Key to Success in Real Estate Investing

Are you ready to take the plunge into real estate investing? Before you do, it is important to take a moment to think about why you are investing in real estate in the first place. Discovering your “why” is an essential part of being successful in real estate investing. When you understand your motivation, you will be better equipped to make sound decisions and build your business with focus and purpose. In this blog post, we will explore how finding your “why” can help you become a successful real estate investor.

What is Your “Why”?

As a real estate investor, it’s important to understand your “why” – your purpose for investing in the first place. Are you looking to build wealth and financial stability through rental properties, or do you see real estate investing to supplement your income? Do you want to try the BRRRR (Buy, Rehab, Rent, Refinance, Repeat) strategy to grow your portfolio, or are you interested in building passive income through long-term rentals?

Once you identify your “why,” you’ll have a clearer focus on your goals and a roadmap to help you achieve them. Whether it’s building wealth for your future, providing financial security for your family, or simply pursuing your passion for real estate, knowing your “why” will help you make better investment decisions.

So take some time to reflect on your goals and aspirations for real estate investing. Are you looking to build long-term wealth, generate cash flow, or create financial freedom? Whatever your reason, understanding your “why” is the first step towards achieving success in the real estate investing game.

How Will Knowing Your “Why” Help You Reach Your Goals?

Knowing your “why” is crucial in the world of real estate investing because it helps you sharpen your focus and make better decisions. With a clear understanding of your investment goals, you can identify which strategies are most likely to get you to where you want to be, faster. Additionally, knowing your why can help you determine your risk tolerance, which is essential in investing. For instance, if your goal is to build wealth over the long term and you’re starting young, you might be comfortable exploring higher-risk and higher-reward investments. However, lower-risk investments might be a better option if you’re older and trying to preserve or grow your retirement nest egg.

Moreover, having a strong why can keep you motivated and focused on achieving your goals. When you encounter challenges or setbacks in your real estate investing journey, remembering your why can help you stay on track and not lose sight of your vision.

What Are Some Ways to Discover Your “Why”?

If you’re struggling to identify your “why” in real estate investing, there are a few things you can do to help clarify your goals and motivations.

Brainstorm: Take some time to sit down and brainstorm what you’re passionate about. Consider your hobbies, interests, and the things that excite you. Think about how real estate investing can help you achieve those passions.

Dream: Think big! Imagine what kind of life you want for yourself and your family. Consider what kind of impact you want to have on your community. How can real estate investing help you achieve those dreams?

Research: Take the time to research successful real estate investors and how they got started. Learn from their experiences and use their strategies to help define your own “why.”

Reflect: At the end of each day, take a moment to reflect on what matters most to you. Write down your thoughts and feelings and consider how real estate investing can help you achieve those priorities.

Remember, discovering your “why” is a personal journey, and there is no one right answer. However, by taking the time to consider your passions, dreams, and priorities, you can gain clarity and focus on your real estate investing strategy. With a clear sense of purpose, you’ll be better equipped to make smart decisions and build a successful real estate business.

In short, understanding your why can be a powerful tool for staying motivated and focused as a real estate investor. By setting clear goals, staying organized, seeking support, and celebrating your successes, you can stay committed to your investment journey and achieve your goals over time.

Investor Loan Source, a private money lending company, provides high-quality investment property loans to private real estate investors at the lowest costs possible. Our process for providing real estate investors with private lending is unique. We place emphasis on the hard asset and value of the collateral (property) and less on the borrower. Our asset-based real estate investment loan model means we can provide more money lending to more investors than is available from standard bank loan models. At Investor Loan Source, providing real estate investors hard money loans is our business; it’s all we do. We offer several business real estate loan products designed to serve a variety of investors and property profiles, including private money lending for properties to sell on owner finance.

To learn more about Investor Loan Source, visit our website or follow us on LinkedIn, Facebook, and Twitter. To apply for a loan, click HERE.

The Sun Belt: A Hotspot for Investors

Investing in the sun belt states is becoming increasingly popular among investors, who are drawn to the region’s booming economies and desirable climates. The sun belt states – which span from the south-eastern U.S. to the south-western U.S. – have seen a surge in population and economic growth over the past few years, making them an ideal target for investors looking to maximize their returns. In this blog post, we’ll explore why the sun belt has become such a hotspot for investors and what it has to offer.

What is the Sun Belt?

The Sun Belt is a region that stretches across eighteen states in the Southeast and Southwest of the United States and includes: Alabama, Arkansas, Arizona, California, Colorado, Florida, Georgia, Kansas, Louisiana, Mississippi, North Carolina, New Mexico, Nevada, Oklahoma, South Carolina, Tennessee, Texas, & Utah. It’s a hotspot for investors, with a growing population and a wealth of opportunities for real estate investing. The region includes seven of the ten largest U.S. cities, as well as many mid-size metropolitan statistical areas (MSAs).

Investors are drawn to the Sun Belt for many reasons, including its growing population and thriving job market. Over the past decade, the region has accounted for 75% of total U.S. population growth, which is expected to continue in the years ahead. As more people move to the Sun Belt, there is a greater demand for housing and other forms of real estate investment.

Follow the Jobs

One of the primary reasons why investors are flocking to the Sun Belt is the availability of jobs. Over the past few years, the region has been experiencing rapid economic growth, which has led to an influx of job opportunities. Business-friendly regulations have also contributed to the attraction of large corporations, making the region an even more desirable destination for job seekers.

This growth in the job market has been phenomenal, especially when compared to other regions of the country. According to recent statistics, the Sun Belt has seen a 20% increase in employment over the past decade, while other areas have only experienced a 12% increase. This surge in job creation has been driving demand for real estate in the region and fueling its economy.

In recent years, the technology and manufacturing sectors have become two of the most important industries in the Sun Belt. Companies in these sectors are investing heavily in the region, creating thousands of high-paying jobs in the process. Additionally, the healthcare industry has been booming, with more hospitals and medical facilities being built to meet the growing demand of the region’s population.

The growing job market in the Sun Belt has been attracting people from across the country, making it a melting pot of diverse cultures. This influx of people has led to the development of a thriving social scene, making it an attractive place for people to live, work, and invest in.

Lower Cost of Living

One of the biggest drivers of migration is that the Sun Belt offers a lower cost of living. Despite a nationwide increase in housing prices, the Sun Belt has remained relatively affordable, especially when compared to the larger cities of the West and East coasts.

This lower cost of living translates to numerous benefits for both residents and investors alike. For one, people who live in the Sun Belt can enjoy a higher quality of life, as their dollars go further and they can afford to enjoy their money more. This, in turn, means that residents are less likely to move away or suffer as badly economically when hard times come. Residents in cities like San Diego have a median listing price of 925K to purchase a home, whereas in Houston (a sun belt city with a larger population than San Diego) average listing prices hover around 340K at the time of this publication. Not only does this make real estate more affordable for residential buyers, but it is also more affordable for investors.

For investors, a lower cost of living means that there is a larger pool of potential tenants and buyers who can afford their properties. This, of course, is great news for anyone looking to invest in the Sun Belt real estate market, as it means that there is a strong demand for affordable housing.

Overall, the Sun Belt’s lower cost of living is a major advantage for investors looking to capitalize on the region’s growth and potential. By keeping prices low and quality of life high, the Sun Belt is rapidly becoming one of the most attractive destinations for investors in the country.

Population Growth

One of the most compelling reasons for investors to focus on the Sun Belt is the region’s explosive population growth. Over the past decade, millions of Americans have flocked to the area in search of new opportunities, affordable living, and year-round sunshine.

Today, the Sun Belt is home to roughly 50% of the country’s population, with projections suggesting that even more Americans will continue to relocate from the Northwest and East to the Sun Belt in the coming years. In states like Florida and Texas alone, population growth has surged, adding more homes than the Northeast and Midwest combined.

This surge in population growth has created a wealth of investment opportunities for savvy investors who recognize the potential of the region. Whether you’re interested in real estate, hospitality, or retail, there’s no doubt that the Sun Belt is poised for continued growth and prosperity in the years ahead.

As more and more people flock to the region, demand for goods and services is likely to skyrocket, creating exciting opportunities for investors who are looking to tap into the Sun Belt’s wealth of potential.

To learn more about Investor Loan Source, visit our website or follow us on LinkedIn, Facebook, and Twitter. To apply for a loan, click HERE.

The Importance of Underwriting in Real Estate Investing

Real estate investing is an attractive venture for many investors. However, it’s important to be mindful of the risks involved and ensure that each deal is carefully underwritten with a conservative approach. Doing so can help to ensure that any potential purchase is worth the price and will yield positive returns in the long term. In this blog post, we’ll look at the importance of underwriting in real estate investing and how it can help to mitigate potential losses.

What is Underwriting and Why is it Important?

Underwriting is the examination of both the borrower and the asset to decide whether the investment makes good financial sense. Underwriting is important because it helps lenders and investors ensure that the investment is sound and has the potential to generate profits. Underwriting helps identify potential risks and pitfalls that could negatively impact the investment, such as inflated property values or unrealistic projections of rental income. In addition to minimizing risk for lenders, conservative underwriting is also essential for real estate investors. By presenting a solid, realistic investment plan to lenders, investors can secure funding for their deals. At the end of the day, investments are worth the risk because they often generate profits. Investors and lenders both benefit from a deep examination of the assumptions to flag weaknesses and allow time for planning before the project is underway.

How Underwriting Works

At its core, underwriting involves two key questions: is the borrower a good risk, and is the property worth the loan amount?

When it comes to evaluating a borrower’s risk, underwriters typically take a holistic approach, considering factors like credit score, income, and employment history. In addition to these traditional metrics, underwriters also often look at the borrower’s experience in real estate investing. This is because investing in real estate can be complex and carries a degree of risk, and lenders want to ensure that borrowers have the expertise needed to make wise investment decisions.

The other key question that underwriters ask is whether the investment property is worth the loan amount. This evaluation typically involves a detailed analysis of the property itself, including factors like location, market conditions, and potential rental income. Underwriters also consider the costs associated with any potential defaults or foreclosures, as these can have a significant impact on the lender’s ability to recoup their investment.

Key Variables in Underwriting

Several key variables play a vital role in underwriting. These factors can significantly impact the lender’s decision to approve a loan. Here are some key variables that lenders consider during the underwriting process:

1. Potential for Rent Growth (or Loss)

One of the most important factors to consider in underwriting is the potential for rent growth (or loss). This variable assesses the future market trends and demands for rental properties. As a real estate investor, you must ensure that you invest in properties that have a positive outlook for rent growth. If you fail to consider this factor, you risk being unable to attract tenants and cover your mortgage expenses, making it difficult to get approved for a loan.

2. Vacancy Rate Changes

Vacancy rate changes can also impact the underwriting process. Lenders consider the likelihood of a vacancy occurring and how long it might take to fill the rental unit. If the property has a history of high vacancy rates, it may not meet the lender’s standards for approval.

3. Cash Flow Forecast

This calculation estimates the net cash flow generated by the rental property over a specified period. If the property fails to generate a positive cash flow, it may not meet the lender’s criteria for approval. It’s crucial to ensure that you perform due diligence and factor in all potential expenses and revenue sources when estimating the cash flow forecast.

4. Potential IRR

Finally, the potential internal rate of return (IRR) plays a crucial role in underwriting. This variable assesses the profitability of the investment property. This allows the lender to better understand the quality of the investment and decide if these trends are favorable over time. As properties age, costs of repair increase, and potentially rents decrease, so the risk to the investment increases.

Bottom Line

Overall, underwriting is a critical part of the loan approval process, and a conservative approach is generally favored by lenders. This is because loans for investment properties, such as hard money loans or investment loans, are often high-risk endeavors, and conservative underwriting can help ensure that lenders can build wealth over time while minimizing risk.

To learn more about Investor Loan Source, visit our website or follow us on LinkedIn, Facebook, and Twitter. To apply for a loan, click HERE.

4 Time Management Tips Every Real Estate Investor Needs to Know

Time management is one of the most important skills entrepreneurs need to have if they want to succeed. As a real estate investor, it can be especially challenging to stay organized and manage your time effectively. That’s why we’ve compiled a list of the 4 essential time management tips every entrepreneur should know. From establishing daily routines to delegating tasks, these tips will help you maximize your productivity and stay on track with your goals.

1) Touch it once

Time is an invaluable resource and something that you should never take for granted when you’re a self-employed entrepreneur. To manage your time efficiently, there’s a great strategy called “touch it once.” This concept essentially means that whenever you come across a task, you should finish it right away instead of procrastinating. When you “touch it once,” you’re able to move through your to-do list faster, while preventing tasks from piling up and creating an unnecessary amount of stress. When applied correctly, this time management strategy will help you save time, stay organized, and keep on track with your goals for building wealth through your business.

2) Schedule everything you do

As a self-employed real estate investor, time management is key to building wealth. Scheduling every single activity that you plan to do during the day is a great way to maximize your productivity and keep yourself organized. It doesn’t matter if it’s a major meeting or a mundane task like checking emails – if it isn’t scheduled, don’t do it. You need to protect your time as a limited resource and make sure you are using it wisely.

3) Have regular productivity checks

Another essential habit of those who manage their time efficiently is to have regular productivity checks with themselves. This means creating a pattern of regularly asking yourself, multiple times every hour, if the thing you are doing right now is the highest and best use of your time. If you continue to answer “no,” then you can course-correct the tasks you’re doing, being aware of how you use your time and setting the goal to do the best thing with your time as often as possible. Regular productivity checks can help real estate investors save time in the long run by avoiding wasted effort and ensuring their tasks are completed efficiently.

4) Know the cost and value of your time

Time is money, and as an entrepreneur or real estate investor, it is essential to understand the value of your time. Calculate your annual earnings and break that down into an hourly or daily rate. This will help you prioritize the work that aligns with the value of your time and help you determine what tasks can be delegated or outsourced to others. Consider how much of a loss you would take by doing the job yourself and decide whether it is worth your time. Make sure to focus on the work that is worth your value, as this will be the most beneficial for your business in the long term.

To learn more about Investor Loan Source, visit our website or follow us on LinkedIn, Facebook, and Twitter. To apply for a loan, click HERE.

The Right Mindset for Real Estate Investing Success

Having the right mindset is essential for any successful venture, and real estate investing is no exception. For real estate investors to be successful, they need to have a resilient and open mindset that enables them to navigate the often-complex world of real estate investments effectively. This blog post will discuss the critical elements of the right mindset for success in real estate investing. We will also provide some tips and advice on developing and maintaining this mindset.

1. Be professional and take your REI business seriously.

Real estate investing is a business, and successful REI investors treat it that way. At the ground level, this means conducting yourself professionally in all situations and having integrity and honesty be the foundation of your business. Real estate investing is a relational business so you must build a strong network between yourself, clients, and colleagues. Considering yourself a professional, even if you are a rookie with zero experience, is the first step along the way to becoming one.

2. Have a long-term vision for success.

Successful real estate investors understand that having a clear goal and working hard to achieve it is essential for building a successful business. Taking a long-term approach, rather than focusing on the day-to-day tasks, helps keep you motivated and inspired. Having a vision for what you want to achieve in real estate investing—from rehabbing properties and becoming a landlord to building wealth, achieving financial freedom, and living the new American dream—is key to success. It takes determination, grit, and flexibility for investors to succeed. Ultimately, having a long-term vision for success will help you stay focused and motivated as you work towards your real estate investing goals.

3. Embrace failure and mistakes.

Real estate investing is a business; mistakes and failures are guaranteed like any other. The path to success is not without its challenges and setbacks. Respect failure and mistakes as part of the journey, not something to be ashamed of. Accept that you cannot know everything or predict every outcome; there will be mistakes and sometimes they will be costly. To hedge against mistakes, commit to being a lifelong learner who invests time and resources into real estate investing education. Your community hosts many REI organizations whose sole mission is to educate real estate investors and help them build their networks and businesses. Run into an issue you cannot solve or a problem that requires skills you don’t have? Don’t feel pressured to be an expert in everything. Rely on your network when issues arise that are beyond your knowledge. With each misstep, you can learn and grow, enabling you to make better decisions for the future. Rather than allowing them to defeat you, use them as a stepping stone to propel your real estate investing career forward.

4. Be proud of your investment business.

Real estate investors reshape communities and see opportunities where others only see negativity. Be proud of the work you do, the teams you lead, the projects you run, and the business you’ve created. Your positivity and confidence will attract great employees, partners, investors, and others who will want to be a part of the organization you are creating.

To learn more about Investor Loan Source, visit our website or follow us on LinkedIn, Facebook, and Twitter. To apply for a loan, click HERE.

Is Office Space a Good Investment? Everything You Need to Know

Are you considering investing in office space? If so, you’ve come to the right place. Commercial real estate investing in office space can be a profitable venture, but it’s important to understand the risks and rewards before you make any decisions. In this blog post, we’ll cover everything you need to know about investing in office space, including the advantages and disadvantages. By the end of this post, you’ll be equipped with the knowledge you need to make an informed decision about whether office space is a good investment for you.

The Pros of Investing in Office Space

Investing in office space can be a great way for entrepreneurs and investors to diversify their portfolios and generate passive income. It’s also a safer alternative to more volatile forms of investing, such as stocks, which can be vulnerable to market fluctuations. Office space offers a steady stream of cash flow that can help you build wealth over time without having to worry about the daily ups and downs of the stock market.

Office space is also an attractive buy-and-hold investment opportunity. Unlike other investments, office space provides a long-term return on your capital. Investors can take advantage of stable cash flows because of the long lease structure of commercial office space. With leases averaging 5-10 years, investors in office space enjoy the benefits of long-term returns without the cost of frequent tenant turnover.

Investing in office space is also a great way to take advantage of the tax benefits associated with real estate investments. Tax breaks, deductions, and credits are all possible when investing in office space, making it an attractive option for savvy investors looking for ways to build wealth.

Overall, investing in office space is a great way to create a diversified portfolio that can generate consistent cash flow and provide tax benefits. Investing in office space can be a great way to grow your wealth over time.

The Cons of Investing in Office Space

When considering office space as an alternative investment opportunity, it’s important to be aware of some potential drawbacks. Office lease rates and the demand for office space can change depending on the strength of the local and national economy. During a recession, there may be fewer tenants seeking office space, and those that do may be able to afford a lower rent than what you originally planned for. Additionally, if a large number of your office building’s leases are expiring soon, you may be at risk of unexpected vacancies if tenants choose not to renew their leases. Lastly, older office buildings may have floor plans that are outdated and, as a result, difficult to lease. Outdated office buildings do offer the opportunity to value add either in rehabilitating the property or redeveloping it for another purpose (such as multifamily).

The Bottom Line

Investing in office space can be a great way to build wealth, but it is important to assess the conditions of your local market and evaluate the risks involved. Before investing in office space, do your research and become well acquainted with the changing market conditions that are taking place in the areas you will invest. With careful consideration and planning, investing in office space can be an excellent way to build wealth.

To learn more about Investor Loan Source, visit our website or follow us on LinkedIn, Facebook, and Twitter. To apply for a loan, click HERE.

3 Classes of Office Space

Office space is a way for businesses to provide their employees with the tools and resources needed to do their jobs. Every business has different needs, so there are many types of office space that cater to those needs. As an investor, different classes of office space offer advantages and challenges that may or may not fit the type of investment you are looking to make. Classifications of office space can sometimes be difficult to make, and what qualifies as an A-class building in a smaller suburban setting may only be a B-class building when compared to a larger market. In this blog post, we will explore the different classes of office space and what investment opportunities each presents.

Class A

Class A offices are the most prestigious and premier space. They’re typically leased by large companies, and they have to be in the best locations. A Class A building will have high-end finishes and construction, making it ideal for those who want their business to make an impression on clients and colleagues alike.

Class A buildings don’t just have great features; they also command higher rents than other types of office space because of their prestige factor–making them a great investment opportunity. They’re often newer construction or renovated older buildings with a lot of character, so they tend to stand out from other options in any given market area. This can make them expensive options for businesses that need more than just office space (like law firms) but also want something special enough that people will notice when visiting or receiving mail there.

Class B

Class B office space is in between Class A and Class C. This class of office space serves a wide range of businesses, from small startups to Fortune 500 companies. Class B buildings tend to be higher quality construction than Class C buildings, but they are located outside of the main business district or with fewer amenities. Class B properties typically house strong tenants and have fewer expenses for investors considering this class.

For example:

Companies that want good, high-quality space but don’t need to be right in the center of everything (and can afford it) will often choose this route because they don’t need all of the bells and whistles that come with being in an A building.
Smaller startups may also gravitate toward this option because they don’t have enough money yet to sign a long-term lease at an expensive location; instead, they would prefer something more affordable while still giving them access to all sorts of amenities such as cafeterias or even gyms for employees who want them!

Class C

Class C office space is often much older and requires renovations, but it’s also one of the most affordable. These tend to be occupied by smaller, family-owned businesses or companies that cannot afford higher-quality spaces. Small businesses in blue-collar industries may also use C-class space while rendering off-site services. These office spaces tend to be located further away from desirable areas and may not offer any amenities or have important features such as parking, elevators, or HVAC. For these reasons, this class of property offers lower than market area rents. For investors, this class offers deep discounts and the opportunity to rehabilitate the property for higher rents and an increase in value.

Conclusion

As you can see, there are many different types of office space. Each kind has its own advantages and disadvantages, so it’s important to know what type suits your needs before choosing where to invest.

To learn more about Investor Loan Source, visit our website or follow us on LinkedIn, Facebook, and Twitter. To apply for a loan, click HERE.

3 Reasons to Invest in Self Storage

Self-storage is a real estate investment that can be used by people and businesses to store their goods. It’s one of the fastest-growing segments of commercial real estate, with an estimated $22 billion in revenue in 2016.

Self-storage services a large cross-section of the population, including individuals and businesses, and is needed in good and bad economic times. In this blog post, we will explore the three reasons why you should invest in self-storage.

Self-Storage services are needed in all markets

Self-storage businesses offer services to both individual families and businesses for a multitude of reasons and remain a strong commercial real estate investment. Families spend money at self-storage units for many reasons, including storing furniture and vehicles during a move, remodeling, or downsizing. Businesses also utilize self-storage units to organize additional office furniture, house seasonal items, and protect specialized equipment.

With so many potential customers, self-storage units tend to thrive in any market, and the sector continues to grow. Commercial real estate investors appreciate the stability and reduced risk self-storage offers compared to other commercial real estate investments.

Self-storage rentals have fewer headaches, with more favorable lease terms for investors and fewer issues with renters

Because self-storage is not residential property, owners have more freedom to regain their units upon nonpayment than traditional landlords. In some states, the unit can be returned to the property owner within a week of nonpayment, making it much easier to manage tenants who fail to pay rent on time. Any remaining items in the unit can be sold, giving the property owner some ability to recoup lost income in the event of nonpayment. Additionally, because there’s less worry about tenants damaging their units or leaving them uncleaned after vacating them, owners don’t have to worry about cleaning costs or repairs when they turn over the unit–they simply clean out the unit and put it back into inventory!

Self-storage businesses generally have lower operating costs than other commercial real estate properties

Self-storage businesses generally have lower operating costs than other commercial real estate investments, as they require much less attention and upkeep. The units themselves are low maintenance, which means they require fewer repairs and can be left unoccupied for longer periods of time without suffering damage. Additionally, self-storage facilities employ a small staff of workers onsite who oversee the facility’s operations and maintenance needs. Having lower operating costs allows owners to reinvest in new updates in the property and still earn a profit.

Conclusion

With so many benefits, it’s easy to see why self-storage is a great investment. Businesses that invest in this industry have seen positive returns during economic downturns, and the sector continues to grow. Is it time for you to invest as well?

To learn more about Investor Loan Source, visit our website or follow us on LinkedIn, Facebook, and Twitter. To apply for a loan, click HERE.

Hard Costs vs. Soft Costs in Real Estate Development: What’s the Difference?

Real estate development and investing are complex processes, with a wide range of activities for investors to track and manage for a successful project. Budgeting and tracking costs are one of these tasks, and it is incredibly important to the overall success of any project — especially in a market with uncertainty and price fluctuations.

An important distinction that investors and developers should be aware of is the difference between hard costs and soft costs in real estate development. Hard costs refer to the tangible costs associated with a development project, while soft costs are more intangible expenses. In this blog post, we’ll discuss the differences between hard costs and soft costs in real estate development and how to manage them best.

What are Hard Costs?

Hard costs are costs directly related to the construction of the physical asset. Think “brick-and-mortar costs” of the project, as well as labor costs for construction of the real estate development.

Some examples include:

Materials and supplies such as drywall, timber, and tile
Labor costs like carpentry and plumbing
Clearing, grading, excavation
Equipment
Landscaping
Utilities

In general, estimating hard costs is straightforward, as gathering information about the costs of materials and services for development is readily available. However, as projects are underway, unforeseen changes or challenges can add to these hard costs, such as a rise in the price of materials or additional development requirements. Additionally, different markets will have fluctuations in hard costs. Having a solid estimate of the hard costs of any development project is essential to staying on budget and capturing as much profit from the investment as possible.

What are Soft Costs?

Soft costs are all expenses indirectly related to the development of a property. Because these costs are not visible, they can be less obvious, but nonetheless are essential to the development of the asset. These costs provide for the strategic and admin work involved in any development project and can be more difficult to accurately account for when planning.

Some examples include:

Architecture /Engineering
Inspections
Permits
Taxes, legal fees

Whereas hard costs end at the completion of construction, soft costs can continue and include building maintenance, insurance costs, and other fees.

The Importance of Considering Both Types of Costs

As an investor, understanding and estimating the hard and soft costs of a project is essential to its success. Hard costs may face challenges based on the geographic location of the project, fluctuations in supply and labor pricing, and the overall skill and experience of the budget developer. Soft costs require experience in the market to accurately project the invisible costs that build up as the project moves forward.

As projects are completed, investors need to reflect on how accurately their hard and soft costs were estimated and examine what trends appear. Is there a line item that is being consistently missed that is added later into the project? What recurring issues pop up throughout the process that must be addressed? By gathering and evaluating data from each project, investors can understand where their budgeting issues lie and be better prepared for the future.

To learn more about Investor Loan Source, visit our website or follow us on LinkedIn, Facebook, and Twitter. To apply for a loan, click HERE.

Top 3 Reasons to Invest in Multi-Family Properties

Are you wanting to grow your investment business but don’t know where to start? Multi-family properties can be a great option for investors looking for growth and the possibility to step back from the daily management of the asset. Multi-family properties offer many advantages over other types of investments, and there are several compelling reasons to invest in them. In this blog post, we’ll discuss the top three reasons why investing in multi-family properties is a smart move for your portfolio. By understanding the potential benefits, you can make an informed decision about whether multi-family investments are right for you.

1. More Cash Flow

Compared to the monthly income of single-family properties, multi-family investments have the potential to bring in exponentially more income per month through various strategies. The larger the property, the greater potential there is for rental income. For example, when a multifamily unit is vacant for a short period of time, it is less painful than when a single-family home is vacant, leaving no income at all for the investor (meanwhile, costs do not stop for an unleased house). Investors still earn a significant portion of the rental income from other units without drastically changing the bottom line. Multifamily units are also more responsive to changes in renal prices, with multiple leases requiring renewal at different times throughout the year. This means multifamily investors can capture rises in rent prices proactively, increasing the property’s overall income throughout the year. Lastly, investors can also add non-rental revenue, such as on-site amenities, additional parking, and premium units that bring in additional money. With all that extra cash flow, multifamily investing can be a great tool for building wealth in one transaction.

2. Fast & Simple Portfolio Growth

Which is faster, buying a 10-plex or buying 10 single-family homes? In one multi-family transaction, investors can own and manage a much larger asset, increasing their overall net worth and growing their real estate portfolios much faster than with single-family real estate. Just imagine — building a small portfolio of 10 single-family homes means funding 10 purchases, managing 10 individual assets, and a much larger amount of time to find and close on all these deals, not to mention how spread out geographically these 10 properties might be. By buying multi-family properties, investors can achieve the benefits of real estate investing more quickly, including building wealth and increasing cash flow, with the investment in one easy location, with one transaction and one asset to manage. Hoping to double or triple the number of units? Adding an additional multifamily property to your portfolio compounds the rate of growth without the inefficiency and effort of building it all off of single-family properties.

3. Semi-Passive Investment Potential

While some real estate investors may enjoy being involved in the day-to-day management of their properties, many would rather focus on building their investment business. But with many smaller properties sprinkled throughout a market, management of single-family homes can be a headache that doesn’t cash flow enough to afford a management company.

Multi-family investments, however, offer the potential for an investor to be “semi-passive,” meaning they will be required to ensure the positive management of the investment, but they will not need to take every call and handle every lease. Because multi-family properties produce a higher income, they are better positioned to afford an excellent property management company that will allow the investor to get out of the daily management of the property and back into building their business.

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