The Advantages of Private Rehab Hard Money Lenders

Not too long ago , real estate investors were able to get bank and mortgage company loans on investment property

easily. Even for rehab… Loans were flowing like oil No DOC… State Income…680 Middle Credit Score…Some banks had 3, 5, even 10 properties limit…minimum seasoning requirements and on purchase and refinancing …80/20 loans that eliminated down payments…Pay option ARMS starting at 1% interest….Broker appraisals and 100% LTV loans….And even real estate investor loans with cash out .

That was the Wall Street bundled mortgage security era ….those days are over and people who engineered those collateralized debt obligation securities may wind up serving time And where does that leave you, when you need funding for your deals in today’s market ? Today, A few real estate investor loan programs exist but the requirements are stringent:

Gone are the days of no doc loans

700 + credit scores

And banks are not approving tarnished credit loan applications …

severe one property limit and RIGID lender guidelines and loan SCRUTINY by oversightagencies.

Seasoning required-minimum 90 days, usually 1 year .

Conservative bank appraisal.

Larger down payments are required

Low interest rates for homeowners and high interest reates for investors …bye-bye Pay Option ARM, no interest only payments.

Higher origination fees and points …

No Rehab Money ….

and no cash out .

Application, processing, and approval process that takes 3 to 4 weeks and longer and usually just “sputters out”, with no other explanation than, “things are tough”. in the meantime, private hard money lenders have continued to loan money to real estate investors Even during the tough economic times.

Higher amounts of private hard money loans on investment property are being made than ever before!

Just evaluate the bedrock of a private hard money loan to the Conventional loan requirements .

Private lenders :

Minimal credit or low credit scores okay

Loans up to 100% of purchase price with LTV’s ranging up to 75%

Somewhat higher interest rate than a bank or mortgage company rate (if a bank or mortgage company was REALLY lending)

Flexible Private Lender guidelines with no “oversight committee”

Some private hard money lenders accept Tax Valuations as evidence of value and don’t require paid appraisal or Do the appraisal themselves by driving the neighborhood .

Fewer restrictions on how many properties as the rehab hard money lender does repeated deals with the private investors .

No property seasoning requirement to fund.

Bankruptcy and even foreclosures and even some collections permitted with explanation.

Higher interest rate, and points.

Alternative ways to structure payments including interest-only and sometimes monthly-payments are not required for the length of the loan.

Options and alternatives to cash-down

Flexible terms.

Even rehab hard money to improve the value and equity in your property with is a real advantage in the REO market.

Processing, approval and funding in 48 to 72 hours and in some cases as quickly as 24 hours.

And then you can get on with your next deal!

It is evident that hard money lenders are exactly what today’s successful real estate investors need. All you need to know is–who the private hard money lenders are, what their programs are, how to contact them and how to issue a loan package compliant with the lenders program .

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Real estate investors don’t need to waste hundreds of hours of time trying to figure it out where to place their loans. The Private Money Lenders Source was originally created by www.OPMCredit.com by studying the needs of private investors needing private hard money loans. It now has the 300 best private money lenders including rehab hard money, who loan on residential and commercial investment property, across the country, regionally, and locally. Real estate investors are able to deal direct even for rehab hard money from these private sources

The bottom line of successful real estate investing in today’s market is to know the hard money lenders programs and conditions. And few other sources details the lender programs whereas the Private Money Lenders Source does. As a resource it is the key source for private hard money lenders for both seasoned and novice investors for all types of investing.

Source: http://easyinternetincome.net

Why Using Other People's Money in Fix and Flips is Beneficial

One of the beautiful truisms about real estate is that it is a highly acceptable form of collateral for lenders. The question many fix and flippers have is this: should I fund the project myself or borrow funding? The answer is determined by your level of risk tolerance and your return on investment (ROI) requirements.

We'll analyze two examples to illustrate. Example one has the investor funding the entire project with his own financing. He has $125k in savings and wants to invest. Example two has the investor leveraging a private money lender. He too has $125k in savings and wants to invest. The basics of the deal are simple: Purchase price is $75k. Repair / holding / closing costs are $25k. ARV is $125k. Profit margin is $25k. This transaction should be profitable. Is it better for the investor to use his own funds or borrow?

Example 1- Investor uses $100k of his own funds to fund the project. What is the risk level? If during the project, an unexpected expense, such as foundation problems, electrical problems, HVAC, vandalism, or plumbing arises, where do the additional funds come from? If the holding costs go over expected timeframe, where do the funds come from? What if the investor loses his job during the fix and flip and needs to rely on his savings for survival? The point is that the money is tied up in the deal. If anything goes wrong with the deal, the investor is out $100k plus. This type of risk is the worst kind of risk.

The second part of this question is the Return on Investment (ROI) and for the sake of this example, let's assume that the simplified transaction goes as planned. The investor, 4 months later, closes on the property for $125k and receives a check for $125k, and deposits the profit of $25k in his bank account, netting him a 25% ROI ($25k return / $100 investment=25%). By most measures, this ROI is a success. But was the risk of $100k worth only a 25% return?

Example 2- investor invests only $10k of his money and leverages a $90k loan at a 12% rate, adding an additional $3600 to his holding costs. The total investment from the investor in this example is only $13,600 rather than $100,000. What is the risk level? If more money is needed, the investor still has $115k in savings from which to draw. And if the deal goes south, the investor is out only the initial $10k plus holding costs rather than all $100k as in the first example. Plus, he has significant savings to live off of should any of life's little emergencies occur. Leveraging others significantly reduces risk for the investor.

But let's assume the simplified transaction goes as planned. The investor, 4 months later, closes on the property for $125k. After paying the lender back $90k, the investor deposits a profit of $35k. Subtract the initial investment of $10k and the additional holding costs of $3600, and the investor netted $21,400. What is the Return on Investment? The investor invested a total of $13,600 to net a return of $21,400, which is an ROI of 157%!

As if the risk reduction and 600% improvement on ROI weren't already enough justification for leveraging funds of others, let's visit the concept of opportunity cost. Opportunity costs, in economic terms, is the opportunities forgone in the choice of one expenditure over others. In example 1, an investor used the majority of their life savings and risked $100,000 for a 25% return. What if another fix and flip opportunity came to this investor? Due to all funds being tied up, he would have had to pass on the opportunity. However, the investor in example two had only utilized $13,600 from his savings. He could perform 8 more fix and flips before using $100k of his own money. That could be the difference in over $160k of profit!

In summary, the benefits of using other people's money when performing fix and flips is that you greatly minimize your financial risk, you increase your ROI, and minimize your opportunity costs to perform multiple transactions at one time. Given that you know what you are doing it is generally optimal to borrow money to minimize the amount of cash you have in the project to increase your returns using whatever set of metrics that you deem as appropriate.

Article Source: http://EzineArticles.com/?expert=Tom_Bukacek

Exceptional Way to Invest in Real Estate

Discover an exceptional way to invest in real estate as nationally acclaimed real estate speaker Larry Harbolt discusses the basics of real estate investing and creative seller financing. Uncover the secrets to buying great investment properties and learn the best, the shortest, and the most creative way to a home seller’s heart. Having trouble asking the “right questions” to a seller?

Check http://rehab-real-estate.com/html/lp_media and http://reiwired.com for more details.

Watch this video now and be amazed as Larry Harbolt teaches you how you can be the one in control during negotiations. He will also share vital details that every real estate investor should know before finding a deal. Want to know the types of properties that would appeal to all kinds of home buyers? Then get your pen and paper ready and watch this video now.

Learn tons of Information while doing a Rehab project - John Lentz and Greg Wagman

College buddies John Lentz and Greg Wagman show a classic example of how rehabbers can have fun and learn tons of information while doing a rehab project. In this video, the dynamic duo will teach you lots of practical and neat tips on transforming an ugly home into a work of art as these young investors go over and present exclusive and actual footages of each and every house that they have rehabbed.

Check http://www.reiwired.com and http://rehab-real-estate.com/html/lp_media for more details.

Find out when the perfect time is to buy a property that you can fix and flip and learn how you can sell a rehabbed home at any time of the year. John Lentz and Greg Wagman will also share with you an important lesson on dealing and working with contractors.