When it comes to financing the purchase of real estate, many investors opt for hard money over traditional financing. The advantages of hard money include, quick closing, easy access to capital, minimal down payment based on the value of the asset and no credit check. The downside is high interest rates and it’s only a short term loan. While traditional financing offers lower rates and better terms, it is much tougher to qualify for a loan, and the process can take a months instead of a few weeks. When it comes to purchasing properties quickly hard money is your best option. Many investor use hard money to acquire properties and then refinance to a traditional loan if they plan on holding a property long term. It’s the best of both worlds.
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Boston Homes
Basic Skills Needed To Flip Houses
written by Robert Nichols
Many new investors gravitate to flipping houses because they think it is a quick way to make easy money, but in reality, there is nothing easy about it. Flipping homes starts with education and acquiring the skills you’ll need to be successful. These skills include, marketing to finding deals, financing, contract negotiations, construction management, design, analyzing deals, marketing a property to be sold and numerous other skills that will be required to overcome unforeseen obstacles along the way. There are tons of free resources online to get educated on the process and a good place to start is http://biggerpockets.com.
When it comes to flipping houses, the most important part of the process if cultivating your exit strategy. This will enable you to hedge your expectations and keep your emotions in check. It’s easy to get caught up in the hype and income potential, but thinking about your exit strategy will bring you back to reality. Working on your exit strategy will enable to think about both the best case scenario and the worst case scenario so that you are ready to handle any unforeseen circumstances. While its great when everything goes right, it’s even better to prepared when things go wrong. The last thing you wan to do is scramble around trying to figure things out on the fly. Plan ahead and proceed with confidence. This is one of the key principles to real estate investment success.
Real estate investing may seem like a business that only requires speed, high risk tactics and reckless abandonment, but one of the most important skills needed to be successful is patience. Patience enables you to wait for the right deals instead of chasing the wrong ones.
There several strategies to build a profitable real estate business. One of the best ways for beginners to start investing in real estate is to wholesale deals to other investors. There are two primary ways to do this, assignment contracts and acquiring a property and immediately reselling it. This enables you to make a quick profit with no construction experience required. The key is to leave enough meat on the bone to make the deal attractive to investors.
For first time home buyers, the process of buying a home can be quite intimidating. One area of concern is the Market/Appraised value vs the assessed value. In a seller’s market, where values are appreciating, buyers get concerned when they see an assessed value that is significantly below the list price. The reason this happens is because the assessed value always lags the market or appraised value. Assessed value is what your town or city feels your home is worth and taxes you on that value, not the appraised value. As a result, sometimes the assed value may be $100,000 or more below the market value in a seller’s market . This is actually a good thing for buyers and home owners, because you’re able to pay taxes based on a lower valuation until your property is re-assessed. In a declining market, assessed values are actually higher than the appraised value. In these instances, you should contact the assessors office to assess your home to get the assessed value in line with the market value so that your property taxes are appropriate. With this understanding, buyers should base their purchasing decision based on a Comparative Market Analysis to get an understanding of the Market/Appraised value.
When purchasing distressed investment property that is occupied by tenants or a previous owner that may have lost their home to foreclosure, one of the best ways to get them out is the cash for keys strategy. Cash for keys is basically offering the occupants money in exchange for the keys. While it sounds simple, the key to success has less to do with the money, and more to do with addressing the needs of a particular occupant. The first call they receive should not be from an attorney. Using your attorney too soon may cost your more money, time and aggravation down the line. You want to start by approaching them and figuring out what they need in order to successfully find a new place. They may just want help finding an apartment or may already have plans to leave. Have the conversation and get at the heart of their motivation. If yo can’t find common ground, then have you attorney take over. Typically, tenants want first month’s rent last month’s rent and the Security deposit for their new place. Previous owners can be a bit more challenging as they are looking for a fresh start and may need more time and more money depending on the situation. Cash for keys works but new investors should be careful purchasing occupied distressed properties where there is no rent or income being paid.
299 W 2nd Street has been under construction for about 8 weeks. There were some delays due to the permitting process, but the framing is almost complete. The property is an attached single family and includes approximately 1500 Sqft, three living levels, three bedrooms and 2.5 baths. The developer is also working on adding a parking space, but that is still in the works.
When I speak to new investors looking to buy and hold real estate, one of the first questions they ask is what type of properties they should buy first. While purchasing a property that provides income potential is a wise investment, purchasing a multifamily is even better. If you buy a condo or single family and lose your tenant, you have zero cash flow. With a multi family you can carry it easier if you lose a tenant because you have multiple tenants paying rent. It is also harder to qualify for an investment property one you own multiple properties, so make the first one count by purchasing a 3 or 4 family with as little as 3% down. After your first purchase you will typically need 20% down for any additional investment purchases.