Author - Adamin

Making Sense of Refinancing

If you keep hearing about the “historically low refinancing rates” and are wondering whether or not refinancing your mortgage is right for you, you’re not alone. Refinancing can seem like a complicated topic, but we’re here to help you make sense of it all in a way that’s straightforward and easy to understand.

What is Refinancing?

In short, refinancing is replacing your existing mortgage with a lower-interest loan. With new terms, you can use the money from refinancing to pay off your old loan. There are lots of reasons to consider refinancing, especially if the difference between the interest rate on your old home loan and your new one are considerably different.

Why Should You Refinance?

There are several reasons you’ll want to consider refinancing. By refinancing with a lower interest rate, you’ll save money every month which you can use on other things or save. If you refinance into a loan with a shorter term, your monthly payments will go up but you’ll be able to build equity in your home faster and therefore pay off your mortgage sooner.

If you do a cash-out refinance, you can turn the equity you’ve built in your home into cash that you can tap into and spend whenever you want without worrying about tax penalties. There are a lot of options to consider as well as how you want to proceed with the refinancing. Everyone has their reasons and it’s important to understand the pros and cons fully before you decide.

Is Refinancing The Best Option for You?

It’s hard to give a definitive “yes or no” answer to “is refinancing right for me?”. You’ll need to consider your financial goals in the short term as well as the long term. Do you want to lower how much you spend on bills every month? Do you want to shorten your loan term and pay off your mortgage faster? These are both great reasons to consider refinancing.

Another point to consider is your credit score. If your credit score is exceptional (800+) or very good (740-700), you have a higher chance of refinancing with better interest rates than someone with porter credit. Keep in mind that once you factor in closing costs, it can take time to break even with your savings.

If you’re thinking of selling your home soon or moving, refinancing may not be a good idea, but if you plan to stay and you’re thinking of making improvements, cash-out refinancing can help you put that money back into your home so that should you decide to sell in the future, you can sell it for more. For example, consider how much you could add to the selling price if you add a new roof, a finished basement, or a new kitchen remodel.

There are a lot of points to think about, but that doesn’t mean that you have to do it all on your own. Our experienced, knowledgeable and friendly loan officers can help you make sense of the process as well as answer any questions you may have. We’ll take the time to understand the big picture as well as your goals in helping you decide if refinancing is right for you.

Contact us today to learn more about your refinancing options and how to take the next step!

The Best Tools to Find Investment Properties

As a real estate investor, just like any other profession, you’ll have some “tools of the trade” that you turn to time and time again in order to not just find the best properties, but make a fair offer and close the deal quickly and efficiently. Given how competitive the real estate market has become because of inventory shortages as well as the great migration from cities and urban areas to the suburbs, the pressure is on now more than ever to not only know about the right tools but understand how to use them.

With that being said, there are a variety of online and offline tools that we use and highly recommend. If you’re looking for tools that will help even the playing field, we’ve got you covered:

MLS / Listing Sites

The MLS or Multiple Listing Service can help you find investment properties for sale quickly and efficiently. With the MLS, licensed real estate agents and brokers are required to provide verifiable and accurate information. Historically, only agents could get access to this information and it was a cumbersome process to keep it updated. However, now thanks to online services like Realtor.com and RealtyTrac.com, multiple listings from different real estate agencies and brokers are combined into one place, and users can browse them for free

If you want to do an advanced search, you’ll need to pay a fee, but having immediate access to properties using the very latest information cannot be understated. It’s a great way to keep an eye on the very latest listings.

Online Real Estate Websites

If you’re looking to fix and flip a property, online real estate listings like Trulia.com and Zillow.com are a great way to find homes in need of repair. These services include some real estate agent listings but can also include user listings. You can narrow your search by city and state, but unlike the MLS, you can also find out about the neighborhood itself.

This allows you to get a bigger picture of the area and what things like the schools are like, so that you can decide whether or not to make a long term investment. If you want to search for properties for long term investments, Apartments.com is a good way to do a precursory search. It also provides all the details needed about a given neighborhood, so you can decide the right course of action for your needs.

Online Real Estate Auctions

Free online auction services like Auction.com and Hubzu.com let you browse real estate real estate properties that have gone into foreclosure and are being sold at auction. If you’re diligent about looking for great deals and finding diamonds in the rough, this is an excellent tool.

Sites like this will detail what kind of property it is, why it’s up for auction, how much time is left until bids are no longer accepted, and opening bids so that you can see if you want to make an offer. Most of these bids can be conducted online, but some of them require you to be there in person.

Mashvisor

Mashvisor is an awesome online tool — leveraging heat maps and predictive analysis to give you information about recent home sales, rental details and much more, all compiled in a color coded map that’s easy to read at-a-glance. Mashvisor does require payment for their service, but for those who like a visual overview about a particular neighborhood or property, you’ll find Mashvisor an excellent service that helps to clear out the MLS clutter in a way that’s straightforward and easily understandable.

Mashvisor lets you use some of its features for free but the full version is definitely worth the investment if you want a hot/cold overview of the metrics that matter most to investors.

Social Media

Social media is one of the best ways to find certain types of property. Depending on what you’re looking for, different hashtags can help you narrow down your search: #justlisted or #offmarketlisting to name a few. There are lots of different hashtags so dabble a bit in the world of social media real estate investing and you’ll learn them quickly, enabling you to navigate the listings more efficiently.

Driving for Dollars

Good old-fashioned driving for dollars gives you eyes on the ground and is still a great way to find listings that haven’t gone up on the market yet. That means you have leverage and time to get together everything you need to make an offer. Driving for dollars, if you’re not aware, is exactly what it sounds like, driving around and trying to find investment properties in your area. It’s time-consuming but it can put you ahead of other investors, especially in competitive markets.

It’s also possible to find homes in need of major repair and inquire as to whether or not the owner may be interested in selling. If you can immediately improve it, you can make a nice profit. If you find such a property, reach out to them by leaving a postcard or a letter in the mailbox. Online real estate mailing services like OpenLetterMarketing.com can help you print postcards and other such mailings expressly for this purpose.

Network Like a Pro

Finally, right up there with driving for dollars is traditional networking. With things like social media it might seem outdated and out of style to network the old fashioned way, but you’d be surprised at how well it can pay off, especially local real estate investing groups. Naturally, you can’t be driving through every area and making note of the homes or properties in need of repair or those that will be going up for sale soon, so by working together with others, you greatly increase your odds of finding a great investment!

Remember that it doesn’t always have to be competitive. Certain real estate investors are looking for certain kinds of deals, and if a deal isn’t right for them, they’ll pass it along. You should do the same.

Now that you have the best online tools for real estate investing, the next question is how to secure funding. Fortunately, we’re here to help! As hard money lenders in California, we can help you get financing for construction loans, fix and flips and other types of real estate investing. You may also contact a local Los Angeles hard money lender to find out the best rates and terms for your project.

The Uncertain World of Hard Money Lending During COVID19

And What Our Network of Lenders is Doing to Help Maintain the Economy and Continue Lending to Those in Need of Alternative Financing

You’ve heard it time and time again: these are uncertain times we live in. Everyone’s understandably sick and tired of hearing about COVID19 — from doctors and scientists, disease researchers, right and left wing media, social media and conspiracy theorists. It seems to have taken on a life of its own.

But what about hard money lending? There’s no doubt that COVID19 has changed the financial outlook in this country in many ways, but just like the media pundits, researchers and opinion columnists, every financial analyst and lender has an opinion on how COVID is or will affect the hard money lending industry.

What are Hard Money Lenders Saying?

Now it’s worth noting that we are very much in unknown territory here, and there’s a lot of uncertainty in terms of what will happen and when. However, we recently consulted our vast and varied network of hard money lenders to get their thoughts on what wil lbe happening at the end of this year and through next year.

Many of them fear things like a massive unemployment rate or another Great Depression. Others think it’s going to be a great buyer’s market and real estate prices will continue to fall as the Fed keeps throwing out stimulus after stimulus to try and keep the economy afloat.

Looking for Indicators

Like many professionals, hard money lenders are looking for reliable indicators in terms of which ways the financial winds are blowing. Some are looking for reasons to invalidate the loans in their portfolios while others are looking to validate their experiences by pointing to other instances in their portfolio which have had similar outcomes.

It’s also understandable to note that hard money lenders, like your average educated person, carry their own share of preconceived notions, fears and built-in biases that affect how they receive and react to the news and the aforementioned indicators.

Something We Can All Agree On

One thing that we can all agree on no matter what our stance is on the economy or how the Coronavirus is being handled is that more testing must be done. The wheels of the economy need to keep turning and people need to be able to continue working with common-sense precautions and protections in place. If they don’t feel safe at work, or confident that they’ll still have a job weeks or months from now, fear will take over and they’ll find themselves in a difficult situation.

Likewise, we haven’t stopped doing our jobs either. We hold our lending network to high expectations and we always have, which is why we endeavor to do what we can to make hard money lending a safe, secure process every step of the way.

What We’re Doing to Keep the Economy Moving in the Right Direction

As more information and new research becomes available, we’re zeroing in on a plan to fight COVID and restore life to the way it was before the virus. You’ll be glad to know that although we certainly have a finger on the pulse of new COVID information, we’re not slowing down or stopping the work we do.

Within as far as we can influence and contribute to the economy, our lenders are still lending and originating new loans while funding the best risks and finding creative and unique ways to make deals work.

What to Do If You Have Questions About Hard Money Lending During COVID

We’ve often had people contact us with numerous questions about our lending abilities during COVID. These people understandably want to know how COVID and Coronavirus will affect lending potential and the economy as a whole. The truth is, no one knows the answer to that. But as long as we can make solid loans and offer creative financing to help others in need, that’s exactly what we intend to keep doing.

If you have questions about hard money lending in general, or you have a unique situation but you’re concerned about how COVID may affect our ability to lend you capital, we welcome you to contact us. We’ll take the time to get to know your unique situation and challenges, and we’ll work hard to create an alternative financing solution that works in your best interests as well as in the best interests of our extensive network of lenders.

We endeavor to make the hard money lending process as easy and as hassle free as possible for all parties involved, so that everyone can benefit from the possibilities of creative financing. Contact us to learn more about what options may be available to you to help support your loan needs. We look forward to speaking with you soon!

What California Homeowners Need to Know About Proposition 58 Home Loans

In short, Proposition 58, also known as Prop 58 for short, is an amendment to the constitution of California that excludes property tax when real estate is transferred from parent to child. Normally when property is transferred in California, it is reassessed at its current market value. This can cause annual property taxes to surge.

To help prevent this financial burden when property moves from parent to child (or grandchild), Proposition 58 was created. This allows the new owner to maintain the property tax at the rate that it was when it was originally purchased.

Why Would Someone Need a Prop 58 Loan?

This brings us to the next question — why might someone need a Proposition 58 loan? There are several reasons why these kinds of loans are necessary:

It offers liquidity to divide interest in property that’s inherited

When beneficiaries divide their interest in real estate, they often need to borrow against the real estate so that one sibling can buy out the others. At this time the property is still in the trust or estate’s name. Since the beneficiary isn’t on the title, the bank can’t provide financing. A Proposition 58 loan can step in and give the liquidity needed to divide interest between beneficiaries.

It avoids the need for a sibling to sibling transfer

Even if the one who’s going to keep the property has enough money to be able to buy out the others, it’s not a good idea to use personal money to divide interest in the inherited real estate. It makes the cash look like a simple sibling to sibling cash transfer and that’s not eligible for prop 58. Only parent to child transfers are considered (or in the case of Prop 193, grandparent to child).

What Happens When You Get a Prop 58 Home Loan?

Getting a Prop 58 loan from a trust loan lender allows the loan to be made directly to the estate or trust that currently owns the property, since they’re technically the borrower. When this happens, a note and deed of trust are recorded against the property, in the same way that a traditional mortgage works. This provides for loan security.

Once the loan is funded, proceeds are sent directly to the trust or the estate. Cash is then paid to the beneficiaries that are selling their interest in the real estate. Once they’ve been paid, the title can be transferred into the name of the beneficiary that is keeping the property.

After this happens, the new owner can refinance that short-term Proposition 58 home loan into a long term loan, paying off the Prop 58 loan with the cash. Although the process sounds involved, it’s very simple and straightforward and very common in California.

How to Get a Proposition 58 Home Loan in California

If you’re interested in learning more about how Prop 58 loans work or you’d like to apply for a Prop 58 home loan, contact us at LBC Mortgage today. Our dedicated home loan experts can help you navigate any uncertainties while answering the most common questions about the process, so that it is straightforward and simple.

We also work with an established network of lenders offering affordable rates to help make the process easy and hassle-free. We can help you determine your eligibility, and our senior loan officers can work to get you approved in as little as 24 hours. We also offer great rates on conventional mortgages too. Work with a name you know and trust, and a leader in Prop 58 loans. Contact us today to learn more.

When Should You Consider Applying for a Hard Money Loan?

If you’ve had your eye on a commercial property or an investment property, you may think that the process of applying for a home loan is the same as a traditional FHA or VA loan. But it’s not quite that simple. Both of these types of properties are not something that banks and lenders like to deal with because of the possibility that the applicant’s business will ultimately fail or the investment won’t recoup its profitability, so banks are loathe to approve loans for these types of properties in particular.

But does that mean you’re out of luck? Absolutely not. In fact, there are loans that are specifically designed to make applying for these types of properties even easier, but because banks shy away from them, you may not have heard of them before. They’re known as commercial hard money loans and investment property loans.

Commercial Hard Money Loans

If you’re a business owner, you may have plans to scale and expand your business while renovating your space. This is a great problem to have, but getting financing for it can be a huge hurdle. Commercial hard money loans are loans made from private lenders (or lending networks).

You may be wondering, why go to a private lender for a commercial hard money loan? Because banks likely won’t even give you the time of day if you start talking about buying commercial property or renovating your space. Private lenders, who themselves may also be commercial investors, understand the difficulty of this process and are willing to help out their fellow business owners in the process.

Although commercial hard money loans have a higher interest rate than your traditional home loan might, the process of applying and getting approved is often very fast. If your business is new and doing well, you may not have the established track record that banks love to see when considering a commercial loan.

The benefit of commercial hard money loans is that there are less strict requirements and are a solid option for businesses looking to expand that may not have the credit history or business history to show their financial responsibility and creditworthiness.

Investment Property Loans

The same line of thinking applies if you’re considering investment property loans as well. Since banks aren’t in the real estate business, they tend to shy away from people who are looking for loans to invest in a property, either to fix it up and flip it, or otherwise resell it down the road.

Investment property loans work similarly to commercial hard money loans in that they’re made by private investors to people who want to fix and flip or otherwise have a short term investment in a given property.

Taking the Next Step

If either of these types of loans sound like something that could benefit your business, there are two points to keep in mind. First, save as much as you can to make a larger down payment on the loan. The bigger your down payment, the less you’ll pay in interest (and the less money you’ll have to pay back over time).

You’ll also want to consider things like your credit score and the length of time your company has been in business. Although these are not scrutinized quite as much as they are by traditional lending institutions, they are still nevertheless an important part of the loan process.

Last but not least, you’ll want to consider the value of the property you’re looking to purchase. Investment property loans and commercial hard money real estate loans are made on the basis of collateral. They’re concerned about being able to make their money back in the event that you fail to repay your loan, so having some form of collateral is imperative in order to successfully apply for and be approved for a commercial hard money loan or an investment property loan.

If you’d like more information about either of these types of commercial loans, we invite you to reach out to us. We’ll take the time to answer all of your questions as well as provide advice and guidance to help you better understand the benefits of commercial hard money loans or investment property loans. If you’re ready to apply, we’re ready to help. Call us today to learn more!

Getting Started: Bidding on a Fix and Flip Property

Looking to bid on a fix-and-flip property? Before you do, it’s important that you create a plan that not only includes detailed information about the property itself, but also the capital you’re going to use in order to purchase it.

In competitive markets, it’s highly possible that there will be several bids on a property, so having access to cash in order to make a competitive bid is important. So what can you do to ensure that your bid gets noticed by the seller and has the highest chance of being accepted? Let’s take a closer look at what you’ll need to do to put the odds in your favor:

Get a Pre-Approval Letter

The first thing you’ll need to do to ensure your bid is taken seriously is to get a pre-approval letter from your lender. This demonstrates to the seller that you meet all of the relevant loan qualifications. Since you’re looking to make a solid profit and return on investment, you’ll have to make sure that your profit margins are not too thin yet still make a compelling offer.

If the property you’ve got your eye on looks like it will need more work than you feel comfortable with, don’t hesitate to walk away. If the work needed is tolerable and you’re able to come away with a good return on investment, the next step is to make sure you have:

Fast, Reliable Access to Capital

Sellers looking to unload properties in need of repair want to do so quickly, without a lot of hassle. Especially in competitive markets, it may be a race to see who can underwrite you as a borrower and allow you to close quickly. In addition, the lender will have to have funds on hand to make sure they’re available when you’re ready to close.

Being able to offer the ability to close on a property with funding ready in a week or two can definitely put you ahead of a lender that can close within a month. You’d be surprised how this can be the deciding factor for the seller!

But by the same token, you want to be sure that your bid is strong enough to be accepted in the first place. That means not only being pre-approved by also making a compelling offer. The last thing you want is to be scrambling to get the funds necessary to buy your investment property.

By keeping these points in mind, not only will you be set up for success and have the ability to make a strong and solid offer, but you’ll have access to the funding you need to back up your offer. As a premier hard money lender, we’ve helped thousands of fix and flip real estate investors secure the financing they need to reach their investment goals. We’re proud to help investors throughout the Los Angeles area and surrounding communities. So if you’re looking to get pre-approved and make an offer on a property in need of repair, now’s the time to talk to us to learn more about how our financing options can help you reach your fix and flip goals.

Value-Add Multifamily Investing: What are the Advantages?

Real estate investors rejoice! One of the best opportunities for investing right now is in value-add multi-family properties (ranging from $1 million – $10 million). As more and more people move toward renting, especially in large cities, investors are pouncing on the opportunity that’s presented by the socioeconomic winds of change.

Value-add multifamily investing can earn you returns through a property’s net operating income, also known as its NOI. With higher rents and lower operating expenses, profits can be realized. As profits are realized, the property’s market value increases — a win-win for real estate investors.

So what are some of the most important advantages of value add multifamily investing and how do you get started? Let’s take a closer look:

Flexible Financing

If you’re looking to buy a property in need of repair or rehab (or you already own one), you may not realize that the equity built up in your property can be tapped into in order to fund this rehab. This cash-efficient strategy can also be used to buy a new value add project which can in turn enhance your portfolio. A Los Angeles hard money lender will be able to educate you on the best financing options and strategies.

Improved Cash Flow

Let’s face it, who couldn’t benefit from increased cash flow? No matter how long you intend to hold onto a property or what your business strategy is, an increased cash flow improves investor returns while reducing risk — yet another win-win.

Investors looking to capitalize on value-add projects as either a short term or long term hold.

Long term holders generally invest in stabilized properties. Of course, long-term property real estate investors want a portfolio full of properties that create strong cash flow, but the question to ask yourself on these types of assets is whether or not the adjusted return and the inherent risk will lend themselves to the possibility to buy an already-stabilized property or build your own.

Structural Features of the Loan

Another point to remember about value add loans is that they’re made up of more parts than a typical property bank loan. Both buyers and lenders have to understand the key sensitivity points from the point of view of the other party. This can create a climate between them that causes failures, in terms of things like:

• Prepayment penalties
• Recourse vs. non-recourse
• DSCR Requirement
• Class C Property Eligibility
• Secondary and Tertiary Market Lending Ability
• Occupancy Requirements

As you can see, value-add multifamily investing allows for risk-adjusted profiles that work with both short and long term asset holding periods. There are a range of hard money financing options including real estate funds, partnerships and more. But it’s important to remember that there are several points to keep in mind that can cause friction or failure in the process. By being aware of these, you can take steps to help increase your cash flow, the smart way!

How Does an Appraisal Affect a Hard Money Loan?

If your credit history or other factors are preventing you from getting a traditional loan from a conventional loan, you may wonder how the loan requirements for hard money loans can help. But one thing many people don’t realize is that loan requirements for hard money loans are different. There are different requirements and a great deal of the weight of approval rests in how much the appraisal is worth.

Whether you want funding in order to fix and flip a home, or you want to invest in commercial property, making sure your appraisal is correct is very important. Understanding how a home appraisal affects your ability to get a hard money loan is part of the overall process, so let’s take a closer look:

What is the Hard Money Loan Process Like?

When you need fast cash to flip a property or you want to invest in commercial property that’s prime for development, you’ll discover that waiting around with a branch manager at a bank is the last thing you really want to deal with. Not only will you need solid credit scores, but the bank is going to go through your documentation and paperwork with painstaking attention to detail.

By the time the bank decides whether or not your loan is approved, the opportunity to invest or flip the home may have long since passed you by.

A hard money loan can help. Unlike with a conventional loan from a traditional bank, the most important feature in getting approved for a hard money loan is the appraisal on the property you want to put up as collateral.

Banks are different in that they look primarily at you, the borrower. They want to look at your creditworthiness and pore over your credit history carefully. Hard money investors are interested in how much your property is worth now (if it’s a fix and flip property) as well as what it will be after repairs, known as the ARV or After Repair Value.

Investors are willing to loan you money often regardless of your credit history because if a property demonstrates that it will be worth considerably more after the work is done, they’re much more likely to recoup their investment and thus are more likely to loan you the money you need.

What Gets Mentioned in Your Appraisal?

There are lots of different points that can be mentioned in the appraisal itself. If you haven’t had an appraisal done before, you may be wondering what different terms mean.

For example, the appraisal itself will detail what comparable properties in the area have sold for, as well as include photos of them. It analyzes the property data to support the valuation.

Another term you may come across is the BPO or Broker’s Price Opinion. It is shorter and it is often a good idea to find a broker that will review your property and give it an unbiased assessment.

You can even pay another appraiser to, essentially appraise the appraisal you’ve had done to verify its accuracy and legitimacy.

If the property has a few points of value, you’ll want to get involved with what’s known as “driving the comps”, essentially this is a collection of sold comps, pending comps and active comps which are all incorporated into an assessment of what you think the property could be worth.

Hard money lenders also look at the location of a property before they’ll consider approving the loan. Commercial lenders will look at things like parking spots.

And finally, hard money lenders want to be sure that you have filed the necessary paperwork and obtained permits. Depending on the project, you may need to update those permits or get new ones. Property inspectors in the past have required investors to have whole buildings brought back up to code simply because the codes have changed.

It’s also a good idea to consider past uses of the property, and having a Phase I or Phase II environmental study done if it hasn’t been done already.

How To Make Your Property Stand Out

As hard money lenders often see many promising properties and there’s a lot of competition for private funding, there are a couple of things you can do to make your property stand out. The first is providing lenders with realistic projections of the income you expect to make. The value of rental properties is generally determined as a multiple of your net operating income.

And finally, you’ll want to check out similar properties and see if their own financial analysis is correct — an item known as the Vacancy Factor.

In short, investors are going to want to understandably lower their risk. As such, by taking steps to have the home properly appraised and valued before approaching a hard money lender is a smart way to get the funding you need as well as demonstrate that you’ve done the necessary legwork to ensure that the property is a lucrative investment for everyone involved. If you need more information regarding hard money lending, please call a hard money lender in Los Angeles today.

Here’s How a Private Equity Loan Can Help Your Buyer Get the Funding They Need

Many brokerages prefer to focus their time and effort on getting borrowers approved for “A” paper loans from traditional banks and lending institutions.

But there are times when even a borrower that seems to have met all the requirements can run into trouble — necessitating the option of a private equity loan.

When does it make sense for you to suggest that your borrower consider a private equity loan?

There are Issues with the Borrower’s Credit

Credit issues, including a poor credit score or past-due and delinquent mortgage payments are unacceptable to traditional banks and lenders, and can cause a borrower to be denied a mortgage loan.

There are Issues with the Borrower’s Income Verification

The borrower could have limited income documentation or none at all, which immediately raises a red flag in the eyes of the bank and other “A” paper lending institutions.

Oftentimes, individuals in service industries, such as food service, seasonal industries, or other industries like freelancers have difficulty documenting their income because of tips or slower seasons where less income is made. These can all cause banks to deny the application even if overall, there is enough income to be approved.

There are Issues with the Condition of the Property

Banks and other lenders will wholeheartedly refuse to loan money on a fixer-upper, or a home in need of major repair. The allure of “fix-and-flip”-type TV shows can lead anyone to believe that with just a little elbow grease, they can turn a run-down home or property into a lucrative investment, but banks aren’t buying any of it.

If they see an applications for a loan to buy a fix-and-flip style home, they’ll likely turn it down, even if the buyer has enough income for approval.

There are other types of property that banks won’t touch either, including churches, gas stations, auto repair facilities and vacant land, to name a few. Like with fix-and-flip properties, alternative lending may be able to help the borrower get the financing they need for these types of properties.

The Borrower Needs Money Urgently

In some extremely hot property markets, homes and properties rarely come up for sale, but if they do, they’re snapped up in an instant. Obviously, preference is given to buyers who have cash-in-hand, and let’s be honest, this isn’t always possible when dealing with banks and other traditional lenders.

Even in the best of situations, they tend to shuffle their feet and let the loan application process drag on, which means that prized property can be snatched right out from under the prospective buyer’s eyes!

A private equity loan can help them avoid that by giving them the cash they need at a reasonable interest rate.

Getting Started with a Private Equity Loan

You should make your borrower aware that in the case of a private equity loan, interest rates can be higher than traditional loans, but the trade-off is that they have their money sooner and with less rigid requirements.

Either way, the borrower should have a plan in place to pay back the loan. They may even be able to get a private equity loan to buy the property, then refinance into a traditional loan and use that money to pay off the first loan. Either way, you would receive a commission from both the referral for the private equity loan as well as the institutional loan — a win-win for mortgage brokers.

What’s more, private equity loans are typically approved much sooner than traditional loans. Pre-approval can be done in as little as five minutes, while official approval can take around a week or two.  There are times when the process can take longer, but that generally only happens if the buyer has not disclosed something and more time is needed to verify or otherwise deal with the issue.

Call Us Today and Learn More about the Benefits of Private Equity Lending

If you’d like to learn more about how offering private equity loans to your borrowers can help them get started in real estate investment, buy a fix-or-flip home or even get their first mortgage, we’d be delighted to speak with you. Simply give us a call and our private equity lending professionals will work with you and your borrower to understand their unique situation and determine the best course of action for their specific needs.

Private equity loan referrals can be a great way to help borrowers in need while helping you to create a brokerage that helps close more deals with more clients. We’re more than happy to answer all of your questions and walk you through the process, so give us a call today and let’s discuss more about working together!

Getting Too Attached: When to Walk Away from a Real Estate Deal

It’s no secret that dealing with real estate can stir up a lot of emotions. There are, however, some red flags to keep in mind in order to enjoy more excitement (and profits) than anxiety (and losses). If a deal sounds too good to be true, it may very well be.

Here’s what to look for:

There’s No Immediate Income Potential

Ideally, you’ll want to invest in a property that will bring you a steady stream of reliable income rather than one that promises a higher payout at some point in the future. That point may never happen – leaving you out of money and out of a way to recoup your investment quickly.

There’s Little to No Income Documentation

Don’t invest in a property based on vague estimates for things like rental rates, year-to-year profits or vacancy numbers. You want the seller to prove hard statistics, otherwise it might not be as profitable as they claim and you won’t see the return on investment that you were expecting.

The Property is in a Poor Neighborhood

The best real estate deals are those made in growing neighborhoods where property values are poised to grow. The last thing you want to do is invest in a neighborhood with a bad reputation, high crime rates, properties in disrepair and overall decline. It’s possible that the property itself may be in good condition or offered at a considerable discount, but if it’s surrounded by other properties which are lackluster or it’s located in a less-than-desirable area, you probably won’t realize much profit on it.

The Property Needs an Infusion of Cash Upfront

If the property you’re considering has a lot of buyers competing for it (something that often occurs in ultra-competitive areas), or it needs a lot of cash in order to fix or renovate it and make it more appealing to tenants, it might not work out as an investment or bring you the kinds of returns you’re looking for.

The Property is a Development Deal

Development deals made for prospective construction for either residential or commercial plans can be complicated, long and drawn-out processes. It’s also possible that even with the best development plans, the end result never happens. Unless you have prior experience making these kinds of deals or you can learn from an experienced partner or team, it’s best to look elsewhere as development deals can be too high-risk for the average investor.

The Property is Located in Another Country

International law, particularly property low, is a murky area that requires highly-knowledgeable and experienced legal counsel. Unless you understand another country’s property laws to the letter, international real estate may not be for you. There are greater risks and complexities involved, in addition to fluctuations in that country’s economy and currency.

Since there’s no way to guarantee that every property will net you a profit, it’s wise to stay away from those where you have less experience or those that will require a lot of work or time to realize the results. That being said, however, real estate investments can be a great way to diversify your investment portfolio. You’ll want to carefully weigh the pros and cons and invest in properties that are most likely to give you the best possible return.

And if you’re looking to secure funding for your real estate investments and don’t have time to wait for the bank to get you approved, a hard money loan may help. Call us at (818) 584-2424 to learn more about hard money lending and discover how our California private money lenders may help you get the financing you need for your real estate investments.