Tom Berry, Co-Founder and CEO of Investor Loan Source, recently shared his thoughts on the power of self-discipline. He shares tips and stories to help real estate investors make better decisions when it comes to purchasing investment properties. Click the video below to view the entire presentation.
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 loans products designed to serve a variety of investors and property profiles, including private money lending for properties to sell on owner finance.
A knowledgeable contractor’s help can enormously help organize a flipping project and provide insight into what is possible with a property. A contractor may guide real estate investors with what type of changes they want to make and if they will be helpful or damaging. Additionally, a contractor will help investors oversee the home renovation project and keep the process moving. This is especially helpful if the house flip is a side job rather than a primary occupation. The contractor should also help real estate investors with financial planning. They should be able to tell how long the job will take, when the draws are needed, and how much the material and labor will cost the investor.
Furthermore, a contractor should also manage getting permits and inform how long the permitting process will take. They will also know what work can be done without permits and which jobs will require them.
Using a contractor will cost more money than doing the project themselves, but it will save real estate investors time and money throughout the project. While owning the property, investors will pay several monthly costs, including real estate taxes, utilities, insurance, and maintenance. On top of the monthly interest from the loan, these costs all add up to significant numbers that can be the difference between the project’s success or failure. A job completed correctly is less likely fail an inspection and incur fines. Hiring an organized contractor will keep the real estate project moving, effectively reducing costs over the project period.
Ultimately, investors can split the work with a contractor. They might be good at painting walls but not good at laying tile. Real estate investors might consider splitting the work with a contractor. Explain from the beginning what they can do and what they expect from the contractor. Real estate investor should make sure they have that in writing and spell out each party’s responsibilities clearly, so there are no misunderstandings.
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 loans products designed to serve a variety of investors and property profiles, including private money lending for properties to sell on owner finance.
Finding house to flip can be difficult. But that doesn’t mean you should jump at the first opportunity you come across. An investor needs to know how to choose the right property. In this article, we will explain a three steps that may be used to evaluate a fix-and-flip project.
Evaluating a Home’s Interior
Walk into the space and look at the floors. Are there any stains or tears in the carpets? Will they need to be replaced? How are the walls? Are they damaged or in need of painting? Each of these problems can be an indication of water or structural damage. You should also investigate the kitchen. Are there any tears, stains, or cracks in the tile? Do the floors need to be replaced? Can the cabinets and countertops be salvaged, or is time to upgrade them?
Many real estate investors spend most of their budget in the kitchen. It may be the most expensive room in a house to remodel. If done right, the kitchen may also give you the most return for your buck.
Evaluating a Home’s Exterior
Excitement can sometimes lead you to overlook important details when evaluating your potential fix-and-flip deal. Take the time to inspect the entire exterior and yard thoroughly, even if the interior is in good shape. While inspecting the exterior, look for cracks and sagging windows or doors. These could be signs of settling in the foundation and could be the source of a significant and costly problem.
Evaluating a Home’s Mechanical Systems
You must always inspect the basic mechanical systems, including the heating, cooling, plumbing, and electrical systems. Some properties may also have swimming pools, fireplaces, and septic systems. Make sure to inspect all of them thoroughly. When possible, have professionals inspects the property’s mechanical systems. While it may cost you a few hundred dollars today, it may save you thousands down the road.
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 loans products designed to serve a variety of investors and property profiles, including private money lending for properties to sell on owner finance.
Your first real estate investment will be a learning process. While you may make a few mistakes along the way, educating yourself may help you avoid some common pitfalls. From misjudging resale or rent value to not doing proper due diligence, new real estate investors are at risk of losing serious cash if they’re not careful.
Mistake 1: Misjudging Resale or Rent Value
If you are unable to determine the potential value of an investment, it is difficult to make a confident purchase offer that meets your profit objectives. It’s an important job, but it’s not easy. Properly evaluating property is a skill every real estate investor must commit to learning. This important skill can contribute to a successful investment career.
On your first real estate deal, you may not yet be a value expert. Here are a few things you can do to help yourself:
Reduce the market to a relatively small, manageable area.
Study all the transactions in the market area.
Hire a professional for assistance.
Mistake 2: Underestimating Repair Costs
At some point, you may underestimate repair costs. It is important to avoid the enormous costs that could cause you to run out of cash or face other problems. To prevent large mistakes, learn a good repair estimating system and get help from other knowledgeable investors or contractors.
Mistake 3: Not Doing Proper Due Diligence
Some investors close deals quickly without completing proper due diligence. A proper due diligence process may allow you to withdraw from any purchase if you discover a problem.
Here are a few things to do during your due diligence process:
Obtain a good professional third-party property inspection
Analyze repair estimates
Evaluate zoning and local ordinances
Get a professional third-party opinion of the value
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 loans products designed to serve a variety of investors and property profiles, including private money lending for properties to sell on owner finance.
Despite the excitement of closing a real estate deal, the process isn’t always simple and straightforward. In fact, there are a large number of investors who are eager to close a deal for the first time but don’t quite know how to. In the video below Tom Berry, Co-founder and CEO of Investor Loan Source, shares tips that may help new investors close their first deal.
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 loans products designed to serve a variety of investors and property profiles, including private money lending for properties to sell on owner finance.
Homeowners usually buy houses based on the price-per-square-foot, but real estate investors think a little differently. When it comes to purchasing property, real estate investors are interested in the potential cash flow a property may generate. A popular tool used to evaluate profitability is called a rent roll.
A rent roll is a consolidated report that tells an investor who the tenants are and how much they pay in rent. A rent roll also discloses which tenants have paid their rent, and when the last rent payment was received.
Additional information on a rent roll includes if a unit or home is occupied (important for multifamily investors or single-family home investors with a large portfolio of rental properties). A rent roll details tenant occupancy length, lease expiration data, tenant payment history, and the amount of refundable security deposit.
Rent rolls can be created for any type of income-producing property – such as a single-family home, a multifamily property, or a short-term rental. A consolidated rent roll report may also be used for groups of rental properties at the portfolio level.
Benefits of Having a Rent Roll
Real estate investors interact with property managers, lenders, and prospective buyers when the time comes to sell. Each party uses the rent roll report to see the current rental income a property is generating. The rent roll also may be used to understand whether current rental income might increase or decrease.
1. Benefits for Investors
The rent roll helps owners and investors maximize cash flow by revealing if a tenant is past due on the rent and if late fees should be assessed. If a tenant has a history of paying the rent late, it may be an early warning sign that it’s time to start looking for a new tenant. A rent roll will also show which leases are coming up for renewal in the next few months so that the tenant may be signed to a new lease well before the expiration date.
2. Benefits for Property Managers
Property managers handle the day-to-day details of rental property ownership, such as rent collection, tenant communications, and making sure the property is well maintained to help value increase over the long term. By using a rent roll, property managers can see if rent is paid in full and on time.
3. Benefits for Lenders
Lenders use the rent roll to help calculate the debt service coverage ratio (DSCR) when a borrower applies for a rental property loan or when the current owner wants to refinance. The DSCR tells the lender how much additional cash is left over after the operating expenses and mortgage payments have been paid.
DSCR is calculated by dividing the net operating income (NOI) by the mortgage debt service payment. A lender determines the NOI by taking the gross rental income reported on the rent roll and subtracting the property operating expenses reported on the income statement.
4. Benefits for Buyers
Buyers also benefit from an accurate and up-to-date rent roll. When a rent roll is properly prepared, it is easier for a buyer to predict if future rental income will change based on the payment history of the tenants. Buyers can also use the rent roll when conducting due diligence and analyzing possible real estate investments.
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 loans products designed to serve a variety of investors and property profiles, including private money lending for properties to sell on owner finance.
Private lending is a financing solution for real estate investors to use for rental properties, rehab financing, fix and flips and even commercial bridge loans. Finding the right lender to meet your needs is not always easy. Here are 10 questions to ask when searching for the right lender for your real estate investment business.
1. What loan products Do You Offer?
Many investors have different types of properties in their real estate investment portfolio. It’s essential to find a lender that has unique products to fit your unique needs. At Investor Loan Source, we offer a wide variety of loans – fix and flip, rental, and commercial loans to help grow your business.
2. What are your interest rates and how many points do you charge?
Points and interest rates vary across regions and by lender. The type of loan is an important determining factor. For instance, fix and flip loan interest rates are often higher than rates for purchasing a rental property to buy and hold. The riskiness of the project also affects the interest rate. In general, hard money loan rates are higher than traditional mortgage loans due to the risk involved. In both traditional loans and hard money loans, interest rates and points charged vary based on a borrower’s credit history.
3. What loan to value of the after repair value are you able to offer?
Hard money lenders make loans based on the after repair value (ARV) of the property. The loan to value ratio (LTV) of the (ARV) is the loan amount the lender will allow based on the renovated value of the property. This ratio can vary from lender to lender. The LTV/ARV percentage will also vary based on the property type and age. It’s essential that you find out the answer to this question early to avoid having to find a different lender or rule out a property.
4. Do you work with customers with less than perfect credit?
Many investors worry they may not qualify for a loan if they don’t have a high credit score. The good news is that many hard money lenders usually lend based on the project and property itself vs. the buyer’s creditworthiness. This is a great resource for buyers who have had some issues on their credit history. However, it’s important for you to ask if the lender requires a minimum credit score. Your rate and points charged may be affected by this, but hard money lenders most likely will not turn you down based on your credit score alone.
5. How long will it take to fund my loan after my application is complete?
Time is money in the real estate investment business. Hard money lenders should be able to approve and fund a loan within 2 weeks. Some lenders may fund deals within 3-5 days. Lenders may be able to fund a project more quickly if the real estate investor stays on top of the application process. It may be helpful to use the same lender for multiple deals, especially if they offer technology and resources like a user loan portal to make the loan process more efficient for repeat investors.
6. Is there a prepayment penalty if I pay my loan off before the full term is up?
It’s common for many lenders to have a small prepayment penalty when a minimum amount of interest must be paid on the loan. In many situations the prepayment penalty will not affect the borrower in any way. Ask potential lenders if pre-payment penalties may be applied if the loan is paid off early and make sure it works for your proposed timeline.
7. Will you provide a pre-approval letter I can use to submit with my offers?
Finding good deals for fix and flip properties can be competitive. Real estate investors may have a greater chance of having their offers accepted if they submit a pre-approval from an experienced hard money or private money lender. It’s important to ask your potential lender if they provide pre-approval letters so you don’t miss out on a good property.
8. Do you offer loan extensions?
It’s important to understand if an extension would be available for your loan due to unforeseen circumstances. Establishing this with a lender before you need an extension can be less costly than needing to ask for one once you’ve taken out the loan.
9. Will I work with someone who is knowledgeable about my business and real estate projects?
Not all lenders have experience and knowledge when it comes to real estate investing. Choosing a lender that has first-hand experience in the business of flipping homes and investing in real estate may impact the success of your project. Investor Loan Source was created by real estate investors who know your unique needs and understand the market.
10. Do you have any references?
A good, reliable hard money lender will be able to offer references from other real estate investors who borrowed from them in the past. If the lender is unable to provide any positive references, it might be a good idea to reconsider doing business with them.
To be successful in real estate investing, it’s important to find a lender that is right for you and your business. If you’d like to learn more about Investor Loan Source or our products, visit www.ils.cash, call us at 409-735-6267, or reach us via email at [email protected].
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 loans products designed to serve a variety of investors and property profiles, including private money lending for properties to sell on owner finance.
The real estate market is changing rapidly. While we can never be sure which direction the economy is heading, investors can make smart decisions to navigate uncertain times. In the video below, Tom Berry discusses ideas real estate investors should consider in this changing market.
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 loans products designed to serve a variety of investors and property profiles, including private money lending for properties to sell on owner finance.
Tom Berry, Co-founder and CEO of Investor Loan Source, is an experienced real estate investor. He shared his thoughts on how to diversify your real estate investment portfolio. One way you can diversify your real estate investment is by asset type. Some investors may have a dozen single-family homes; a good recommendation may be adding a small commercial asset. Check out the video below as Tom Berry goes into more details on diversification of real estate investments.
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 loans products designed to serve a variety of investors and property profiles, including private money lending for properties to sell on owner finance.
Real estate investors know that a great property could yield great benefits. However, for new real estate investors, finding the perfect property may be a challenge. This guide focuses on ways new investors may be able to find their first investment property.
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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 loans products designed to serve a variety of investors and property profiles, including private money lending for properties to sell on owner finance.
