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There are numerous ways to make a big profit in real estate, whether you’re planning to flip homes, purchase more rental properties, or sell rental properties to tenants. However, you need a good amount of capital to do this, so it’s important to know which loans will best meet your needs. Investment lenders in Texas offer both fixed and variable rates on investment loans, so it’s important for you to know about each type to ensure you make the smartest choice. Here’s what you need to know.

Variable vs. Fixed Rates

A fixed rate loan means that you’ll lock in an interest rate that will continue for the life of the loan. Conversely, a variable rate loan has an interest rate that adjusts over time depending on the market trends. Since a fixed rate loan has the interest calculated on the principal at the same rate, the overall payment over the life of the loan never changes. The payment on a variable rate loan will change over time because the amount of interest will change as well. There are some benefits of each type of loan that you, as an investor, should consider.

How Variable Loans Work

A variable loan rate is calculated using a well-known index like the Prime Rate or LIBOR. Typically, a variable loan will be the index rate plus an additional percentage. This additional percentage will depend on your credit score. The better the score is, the smaller the additional margin is. Riskier loans or those with a lower credit score will be give a higher margin by investment lenders. Loans that have a shorter payback term also have higher rates. The payment amount can change monthly depending on the interest rate change because the change in rate changes how much will be owed over the life of the loan.

Variable Loan Cap

It’s important to understand that there’s a cap on a variable loan amount. This is to protect borrowers regardless of how high the index rate goes. The caps are generally set at a higher amount than any borrower would want to pay, but it can be significantly lower than if the rates were to go considerably higher. So the borrower always knows the maximum they’ll have to pay, even with a variable rate.

Fixed Rate Pros and Cons

Perhaps the biggest benefit of a fixed rate loan is that you’ll always know how much your payment will be, regardless of what the market does. These standardized, monthly payments make it easy to work within your set budget without worrying about what the next payment amount might be. It’s a much safer loan for those who don’t want to gamble on market fluctuations. The downside of this type of loan is that you might pay a higher rate than a variable loan.

Variable Rate Pros and Cons

Variable rates almost always start out with a lower interest rate than a fixed rate loan does. This is because it’s a riskier loan, so lenders make it attractive by offering lower interest rates. But this can work well for a borrower or investor who plans to pay off the loan quickly. The obvious downside is the potential for rates to go higher than that of a fixed rate loan.

Deciding on a Loan

As you’ve probably learned, unique situations dictate which type of loan is best. That’s why after carefully considering both types of loans, you should contact Investor Loan Source to learn more and decide what’s best for you.

Loan-to-value ratios are an important metric for investor real estate loans in Texas and other states. LTVs determine the amount of the loan by comparing the value of the property involved. As a real estate investor, you need to be familiar with loan-to-value ratios. Here is a guide that will help you understand the basics.

What LTV Is

Loan-to-value ratios are used by investors like you and financial institutions when processing mortgages, investor loans, or refinancing to determine whether to go forward with a loan or not. The LTV can show lenders how much risk may be involved in the investment and show investors the amount of equity you will get from the involved property. Equity refers to how much of a property you own, which is expressed as a percentage on the loan. In essence, equity is the amount you would get if you sold your property minus the amount you need to spend repaying your loan.

A high loan-to-value ratio is an excellent investor loan source that can be used to define the specifications of real estate loans, mortgages, or refinancing options. LTVs are often viewed as a benchmark for how likely payments will be made. If the LTV is too high, there are ways the ratio can be lowered. The most common way to lower an LTV ratio for investor loans is to increase the down payment.

Calculating Loan-to-Value Ratios

The calculation for loan-to-value ratios is simple. You divide the amount of the loan by the purchase price of the property, then convert the sum to a percentage. You should look at how the value of a loan compares to the purchase price or appraisal value of the property. To get a better understanding of this process, use an LTV real estate calculator. This calculator lets you figure out the variables of a real estate investor loan and make note of all possible loan-to-value ratios.

What Makes a Good Loan-to-Value Ratio?

According to the calculations, the higher the LTV ratio, the more you will pay on the property, and the lower the LTV, the less you will pay. This means that a good LTV will have a lower ratio, and there will be more equity on the property. A higher LTV can still be good, though the interest rate may be higher as well. Overall, there isn’t a specific ratio that is good, per se, but there are limits and ranges you can use when considering a specific loan.

Conforming Loan-to-Value Ratios

A conforming LTV ratio is related to mortgages on personal properties, which is regulated by the Federal Housing Financing Agency. Conforming LTVs vary depending on the number of units in a residence. The ratio will be lower for non-owner-occupied properties and commercial properties (properties with more than four units).

Nonconforming Loan-to-Value Ratios

Nonconforming LTV ratios are used by private lenders who manage real estate loans online. These loans don’t conform to government guidelines. Nonconforming LTVs vary based on the investor’s credit score and the terms of the loan. Private lenders willingly take added risks by lending to investors with poor credit and high LTVs. In exchange, lenders receive higher interest rates on the loan.

Investor Loan Source can give you more insights on loan-to-value ratios. Visit us today at our Houston or El Campo, Texas locations, email us at [email protected], or call us at 409-735-6267.

Those who enter the field of real estate investment in the Lone Star State likely begin the process by seeking out an investment property lender in Texas. However, the next professional service they need after securing investment property loans is a property management service to run the day-to-day operations of their recently acquired properties.

For many who invest in real estate, hiring a property management firm provides an excellent way to let real estate provide a steady, reliable stream of income with minimal hands-on hassle. Managing your own properties can quickly evolve into a full-time job, which is why many investors choose to turn their property management tasks over to a property management firm for convenience and effectiveness. Property management firms are concerned with attracting tenants, negotiating lease terms, and keeping tenants happy. They must also make sure that the property is maintained and that when tenants depart, they leave the property in good order. However, property management isn’t a one-size-fits-all affair. Commercial real estate investors have needs that differ from those for residential real estate investors. Keep reading to learn more about a few of the key differences that distinguish commercial property management from residential property management.

Complexity of the Job

When a person enters the field of property management, he or she will most likely begin in residential property management. There’s a good reason for that. Residential property management is far less complex than commercial property management. Commercial property management involves the management of numerous details that are of little concern to residential managers, and therefore the burden of documentation is much greater. The lease agreements involved in commercial property management feature a far more complex structure as well, which requires more technical expertise to properly execute.

Tenant Types

Obviously, commercial and residential properties attract distinctly different types of tenants. Therefore, commercial property managers must have a more diverse understanding of the needs of potential tenants, how to attract them, and how to accommodate their business goals. Residential properties, even those of a multi-family nature, attract people who want to use the property as a residence. Commercial tenants will use the property primarily in the pursuit of business endeavors such as retail, food and beverage service, manufacturing, industrial, warehouse space, or other service-driven sectors.

Tenant Expenses

Residential property management features a straight-forward agreement between the tenant or tenants and the property management firm and property owner. Residential tenants typically pay a monthly rent or lease that includes a set fee. Within that rent agreement there may be pre-determined services that are offered. For example, some leases for multi-family units include not only the rental fee but utility costs as well. However, commercial leases are far more detailed. In fact, there are multiple lease structures used in commercial agreements, including triple-net, modified net, gross lease, and percentage lease agreements. For example, a triple net lease requires the tenant to pay the cost of property taxes, common area fees, and building insurance in addition to the lease fee. Percentage lease agreements require the tenant to pay a base fee plus a percentage of sales.

Property Management Responsibilities

The responsibilities of property managers for commercial properties and residential properties are quite different as well. For example, residential properties are used for residential purposes and are governed by a different set of regulations than commercial properties. As a result, residential property managers have a greater level of responsibility to quickly attend to the needs of their tenants. For example, if a residential tenant communicates that the plumbing has sprung a leak at 2 a.m., it’s incumbent upon a residential manager to provide a speedy remedy as soon as possible. Commercial property managers don’t bear the same level of responsibility because their properties are not used for residential purposes and many properties are only occupied during business hours, making the likelihood of after-hours call-outs lower.

Property management firms offer a great service to both residential and commercial property investors, as they can streamline the tenant acquisition and maintenance process significantly. However, there are different demands for the two types of property managers regarding their required expertise and responsibility. To learn more about the differences between residential and commercial property management, contact Investor Loan Service at (409) 735-6267.

Interested in getting an investment loan for some real estate in Texas? Loans differ from person to person, and the investor of your real estate loan needs to understand what your needs are before you can finalize the deal. Investor loans in Texas come with two rate term options—fixed and variable. Here is a simple guide to help you decide which term rate is best for you.

Fixed-Rate Loan

A fixed-rate on investor loans will stay the same for the whole term, no matter how much market rates change during that time. How much the payments will be will depend on what the interest rate environment is like when you take out the loan. A fixed loan will stay at whatever the interest rate was at the time of the loan was made, so you will know what you will pay, in total, over the life of the loan. Fixed rates are common for student loans, mortgages, auto loans, and unsecured personal loans.

Variable Rate Loan

With a variable rate loan, the interest rate on your loan will change every time interest rates on the market change. This means that your payments will vary the entire time the loan is in effect. The variation in the rate will continue while payments are a combination of principal and interest. Variable rates are typically attached to changes to what’s called a well-known index, which is the variable-rate the loan will be charged to. The variable includes the interest the bank will charge and the rate the charges will vary over time (usually on a monthly basis).

What Is the Best Choice for You?

Figuring out which rate is for you depends on what your situation requires and how flexible you can be regarding payments. A fixed-rate is a better choice if, for example, interests are low at the time, but are about to rise. You’ll also want a fixed loan if you prefer to know exactly what your monthly payments will be over time, or if you are going to pay the loan over a long period of time, say 10 or 20 years.

If, on the other hand, interests are declining, then you might want to consider a variable interest loan. A variable loan is also ideal if you want maximum savings, are flexible enough financially to make higher monthly payments, or you’re going to pay the loan off in a short period of time (10 years or less). Talking to lenders for a real estate investor can be helpful in making a final decision.

If you would like to find out more about interest rates for loans, contact Investor Loan Source via website, email, or phone today.

If you’re considering real estate investment, there’s a tool that could be helpful in bringing your investment dreams to fruition without extending your credit or hurting your bottom line. That investment tool is known as a hard money loan. Hard money lending in San Antonio can provide investors with quick access to funds for investment without the long, drawn out application period of traditional loans. Hard money lenders help connect real estate investors with the funding they need to take advantage of a dynamic market. They use the value of the purchased property as collateral instead of relying on the borrower’s credit alone.

Hard money loans are perfect for many real estate investment purchases because of their speed of processing and easy accessibility. In fact, they are tailor-made for a few specific circumstances that are common among investors who play the real estate market. Keep reading to learn more about top situations in which hard money loans can help buyers in need of funding.

When Time Is Critical

In real estate investment, those who aren’t ready to act in the moment often find themselves missing out on potentially lucrative real estate deals. A wise investor should have constant access to a sizable amount of funding in order to successfully play the real estate market and outbid competitors for the premier investment properties. That’s one reason hard money loans can be helpful to those in the business. It can provide quick funding that allows investors to seize opportunities to buy high quality properties. While those who apply for a loan from a traditional banking source are waiting for their applications to be processed, hard money borrowers can take action and close on a purchase in short order.

When Credit Is Damaged or Overextended

With traditional financing, your ability to borrow is only as strong as your credit history. That’s because traditional lenders base their decision to loan you money based on the way you’ve handled previous loans as well as your current debt obligations. That helps them assess the risk of loaning funds to you. If you have damaged credit, your chances of getting a loan through a traditional source are significantly lower than they are for someone with stellar credit. However, hard money loans don’t rely on your credit score to make a determination about loaning money to you. Instead, the value of the property you are purchasing is the critical concern of the lender. In other words, the property you are purchasing will serve as collateral on the loan. Therefore, damaged credit doesn’t matter nearly as much, which increases your chance of getting a hard money loan even when you’re not eligible for a traditional loan.

Funding Capital Improvements

Hard money loans can also be helpful in situations that involve extensive remodeling of a property that you already own. For example, if you purchased an investment property only to discover that the renovations will be far more extensive than you anticipated, you could run out of funding. In that case, you’d still have to pay back the traditional loan you took on the property without the benefit of revenue generated from it. However, you could also secure a hard money loan quickly that would provide the funding to allow you to move forward with your renovation so that you could pay back both principals in a timely and efficient manner.

Hard money loans can provide real estate investors with an excellent tool for seizing opportunities and creating profit-generating real estate projects. To learn more about the ways that hard money loans can benefit real estate investors, contact Investor Loan Source at (409) 735-6267.

Private equity has long been a strong investment opportunity and has shown little signs of slowing down. This type of investing allows those looking to invest to purchase shares of private companies. There are a number of strategies that can be used by investors that are looking for private equity investment. Here are some of the top private equity investment strategies that investors should know.

Venture Capital

Every year there are a large number of new companies forming. Many of these companies need investment but have little or no record of profitability. While they may be new and have a short history, new industries continue to pop up and some of these companies become extremely successful. Finding the right one of these companies could allow you to easily invest and escape in a short period of time with a large profit. Investors that are able to successfully determine which of these new companies will grow in the coming years will see the highest profits.

Real Estate

Real estate has long been a popular investment strategy and continues to be today. There are four primary strategies used for private equity real estate investment: core, core plus, value-added, and opportunistic. Core real estate investments offer a low, predictable return but are low risk. Core plus investments will require some form of value-added and, therefore, feature moderate risk and reward. Value-added properties will feature medium to high risk and reward, depending on which property you purchase. The idea is to improve the property and sell it for a profit. Opportunistic properties are the highest risk as they need the most amount of enhancements before being sold for a profit.

Growth Capital

Venture capital investments can be very profitable, but it can be difficult to determine if a new company will be successful. A safer bet is growth capital investments. These companies are mature with proven business models. This allows you to make a more analysis-based decision on your investment. Most of these companies are looking for minority capital for the purpose of expanding or restructuring operations, entering new markets, or financing a major acquisition. These companies have been successful and have some capital but need some more investment to achieve certain goals.

Mezzanine Financing

Another option instead of growth capital for established companies is mezzanine financing. This type of financing is used to finance the expansion of a company. The companies take on debt capital and will give the lender the ability to take on ownership or equity interest if the loan isn’t repaid in a timely manner or in full. An advantage of this type of investment is that these companies are well-established with a successful product or reputation in the industry. They will have a history of profitability and a viable expansion plan. Many established companies use this method of raising capital as they won’t have to give up much equity ownership if they are able to repay their loans. However, this type of investment forces the lender to take on greater risk as the financing isn’t collateralized.

There are a number of ways that an investor can invest in private equity. The right type of strategy depends on how much risk they are willing to take on and the level of return they want to expect. These are some of the top strategies that private equity investors should know. Contact Investor Loan Source if you’re looking for private real estate investors in Texas.

If you’ve dreamed of investing in real estate in Texas but hesitate to jump in because you’re not sure about financing, continue reading. Real estate investing is one of the safest pathways to financial freedom and long-term wealth building. Don’t let a lack of funding cause you to abandon the dream. By following this guide, you’ll learn a few basics designed to help new investors fund their real estate projects.

Stash That Cash

If you currently own the home you live in, unless you had down payment assistance, you brought cash to the closing table. Real estate investing also requires cash. Stockpiling cash should be the goal of any new real investor. The more money you put away, the less you need to borrow when you start talking to lenders for real estate investors. Also, even though you may be able to finance your projects, you’ll still need cash for renovations. Cash also gives you more options when looking for future investments. If you can make cash offers or have larger cash down payment than other investors, you can often beat out your competitors.

Credit Scores Matter

While your credit score won’t bear as much weight for investment financing as it did when you applied for the mortgage on your home, your credit rating still matters. Several factors influence financing terms on investment properties. For example, lenders look at the loan-to-value (LTV) ratio. Because investors pose a higher default risk than homeowners, investment lenders mitigate their risk by requiring lower LTVs. When you meet with investment lenders in Texas, you may find that they look more at the collateral than your borrower profile. That doesn’t mean you can ignore your credit score. A credit score is still an important part of the loan approval process.

Consider Short-Term Loans

Traditional home loans usually come with terms of 15 or 30 years. That’s why big banks and mortgage lenders aren’t always the best financing option for investors. You want financing that helps you secure a property, renovate it, and sell it. Private investors specialize in short term loans. The terms average around 12 months, but you can extend the loan period for 2-5 years. Most short-term loans require either interest-only payments or interest and principal. You’ll then have a balloon payment at the end of the loan term.

Ask Family and Friends

Also known as private money lenders, individual investors are another excellent source of funding for newbie real estate investors. Look at your network of family and friends. You likely know someone who has money they’d like to invest. You can often find private investors among your co-workers. Participate in local real estate investing meetups. You may find a partner there as well. The key to private money is making sure you put together a great presentation for your project. Private lenders want to know they’re putting their money into a project with a well-thought-out plan.

Real estate investing doesn’t have to be intimidating. If you’re ready to take the next step and seek financing for your investment projects, you’ll want to work with the experts at Investor Loan Source. Start the application process at https://ils.cash/apply/.

Every real estate investor knows that without money, there’s no deal. They also know banks and mortgage companies aren’t always the best solution for funding projects. If you’d rather fund real estate investments without using traditional financing, consider hard money lending. Here are a few reasons why private money lenders are often considered a dream for real estate investors.

Money in Your Hands Faster

If you’ve ever applied for a traditional real estate loan, you know how long it can take. Time is of the essence for real estate investors. Without fast funding, you run the risk of losing out on lucrative deals. Private money lenders understand the importance of buying, rehabbing, and selling a property quickly. Most private lenders can fund your project in a few days. Some can put money in your hands in a matter of hours.

Less Bureaucratic Red Tape

Traditional lenders require what feels like reams of documentation before they’ll close on a loan. Often it’s the documentation that holds up a loan. You lose time, and as mentioned above, time isn’t your friend when looking for good real estate deals. It’s not only time, but the loan process with a bank or mortgage company can also be invasive. These lenders want to know every detail of your past, present, and future financial life. Private money lenders, on the other hand, aren’t so concerned with your private life. Private money loans are usually asset-based. If you have collateral that qualifies, you’ll get the loan.

No Worries about Hidden Fees

When you closed on your first real estate loan, did you really understand what you signed up to pay? Most people understand they’re paying for the property, interest on the loan, and certain costs to close on the loan. What they don’t understand are the fees added on by the lender. Often, there are multiple fees obscured in the loan documents. When you’re at the closing table, you’re fed document after document. The closing specialist does explain the documents you’re signing but it all happens quickly. You may not realize what fees you’ve agreed to pay until you take time later to read the documents you’ve signed. Private money lenders who specialize in investor loans, don’t hide fees. You’ll know upfront what you’re borrowing and what you’re required to pay back.

More Leniency with Credit Scores

Traditional lenders focus on credit scores. If you have a bad credit score, foreclosure, or bankruptcy on your credit record, you may have difficulty getting approved for a loan. Investors applying for hard money loans in San Antonio  generally experience a more lenient credit scoring process. Private lenders do look at credit, however, they’re often more receptive to investors with lower credit scores. If you’re applying for a conventional mortgage, you’ll need a credit score of 640 or higher. Private lenders typically require a credit score over 550.

Unlimited Borrowing Opportunities

Most banks and other traditional lenders limit the number of mortgages to between 4 and 10 per borrower. For a serious real estate investor, this limitation can prevent any substantial growth. Your funding opportunities with a private money lender are generally more generous. If you can prove you’re a good risk and have qualified collateral, there isn’t a limitation on the number of hard money loans you can apply for.

We’ve covered just a few reasons why private money lenders can help a real estate investor’s dreams come true. If you’re looking for reliable and fast funding for your real estate project, contact Investor Loan Source. We understand real estate investing and know how to get a project funded with minimal paperwork and inconvenience to you.

Thanks to real estate shows on television like Flip this House and Flip or Flop, more people are interested in real estate investing. While there’s money to made flipping houses and renovating properties, going into the process expecting to make a huge profit off your first flip isn’t realistic. Successful real estate investors build their investments over time by achieving modest returns on their investment. Keep reading to more about common mistakes and how to avoid them achieve long-term success.

Mistake #1 – Not Running the Numbers

The reality is that not every home is a good investment even if the price seems right. Before you take out a real estate loan, you need to run the numbers and determine your profit margin. How much do you need to put into the house? How long can the house stay on the market for you to still make the profit you want? Many first-time investors have ended up losing money on their investment because they didn’t prepare ahead of time.

Mistake #2 – Not Having Enough Cash Reserves

Even when you run the numbers, there are still times when things pop up. In fact, since most investment homes are foreclosures or short sales, it’s not uncommon to find maintenance issues that need to be fixed. When you take out a real estate investment loan in Texas, set aside part of that money for those expenses that come up like replacing an HVAC unit or water heater.

Mistake #3 – Listening to the Wrong Opinions

Every one has an opinion about everything, but that doesn’t mean those opinions are right. People are well meaning but that doesn’t mean you need to listen to their thoughts about your investment. Instead, surround yourself with people in the industry who have experience. Investment loans aren’t the same as traditional mortgage loans. Taking advice from the wrong people could cost you money.

Mistake #4 – Not Researching Your Lending Options

Many first-time house flippers start by applying for a loan from their bank or a traditional mortgage company. Soon after applying, they learn that it’s not as easy as they thought to get a loan. That’s because conventional lenders aren’t as invested in investment real estate. They see these transactions as risky, and if they do loan you the money to purchase the property, there might be restrictions about how long you have to live in the house before selling or you might be required to put down a large down payment.

Real estate investor loans in Texas operate differently. They are designed specifically for flippers, renovators, etc. The terms of the loan are more relaxed, the funding is quicker, and approval rates higher.

Real estate investing offers the opportunity for sustainable growth and financial freedom, but you have to start small and with the right information. You need people backing your venture who understand the unique needs and challenges that house flippers face. If you’re ready to find a real estate loan in Texas for your first project (or your second, third, fourth, etc.),  visit Investor Loan Source at https://ils.cash and start the application process today!

Investors are making money flipping houses and securing their financial future. House flipping is the process of buying homes in poor to fair condition, renovating them, and quickly putting them back on the market to sell for a greater return. If you’re interested in flipping real estate but don’t have the cash to invest upfront, you need a lender or private investor.

The obstacles flippers run into is not being able to find financing. Traditional lenders aren’t eager to lend to house flippers, which is why many first-time and seasoned flippers turn to hard money lending.

Hard money loans make purchasing investment properties easier, but most newbie investors haven’t heard of these helpful products. Keep reading to learn more about how these loans work and why they could help you achieve your real estate investment goals.

What Are Hard Money Real Estate Loans?

At first glance, hard money lending isn’t much different than any other real estate loan. Flippers apply for financing and repay the loan over the course of a set period. However, hard money loans have different requirements, and most importantly, benefits.

Here are some of the differences:

• Traditional loans require the home to secure the loan.
• Hard money lenders let you use other real estate as collateral.
• You don’t have to collateral that equals the full value of the property.
• Lenders of hard money loans have access to the homes equity in case you don’t pay back the loan.

Reasons to Use Hard Money Lending for Entering the Real Estate Market

There are several reasons to choose hard money lenders for flipping homes, especially if you have any of the following obstacles.

• Credit problems: Not everyone has stellar credit, but why should your credit score hold you back from making money? It shouldn’t and hard money loan products consider other factors, not just your credit score. These lenders work with individuals, not credit scores.
• Proof of income: If you’re self-employed, make too little money, or have other issues that affect income eligibility requirements for traditional loans, you’ll have a better chance of securing financing working with hard money companies. These companies don’t require proof of income.
• Property condition: Banks want to finance homes that are in good condition because it’s less risky for them. However, this doesn’t help house flippers. In fact, it’s a huge obstacle. It’s the reason many investors, even those with great credit and proof of income, choose hard money lenders. These lenders know investment properties need work and don’t hold it against you when applying for a loan.
• Time restraints: Anyone who has ever flipped a home knows that timing is everything. To make the most money from your investment, you need to get in and out fast. That means you don’t have weeks or months to wait for loan approval from a regular bank. You need fast financing, which is exactly what you get with hard money products. The approval and funding process is done most of the time within 7-14 business days.

Are you ready to start flipping homes with hard money loan financing? Learn more about the process and find the best hard money lending in Houston. Contact the hard money pros at Investor Loan Source at https://ils.cash and apply online.