Many “Shots on Goal” is How to Score in Real Estate Investing
If you are looking into investing in real estate, you are likely trying to get the best deals in the least amount of time and effort. While there are guidelines to make a smart buying decision, “many shots on goal” is a key component to consistently making good buys.
The more opportunities you have, the more likely you will find a great bargain. Professional wholesale real estate buyers make 3 or more offers per day, 5 days a week, and hope to make 3 good buys a month. How many offers per day are you making? Whatever the number, it will be directly proportional to the number of great buys you make each month.
How to Make Your Offers More Effective
Although quantity is king, there are several things to keep in mind to make your offers more effective:
Asking price: should be reasonable and ideally below other comparable properties in the market. By the way, if you feel too confident about the amount you offered, you probably offered too much. Make sure your offer is “just enough” to be considered.
Repairs: Estimating repair costs is necessary before submitting an offer. This will also come in handy if you need to apply for private money or conventional financing.
Sellers: Having a motivated seller who is willing to work with you (if you need to ask for an extension to close the property, for example) is a valuable advantage.
Liens: Take the time to search for any liens the property may have. You can find this in public records or directly with the seller. Any liens found can be a game changer for your financing options and your profit margin.
At the end of the day, the only bad offer is the one that is never made. “Many shots on goal” is the key component to sustainable success in real estate investing. You will be surprised how many goals you can score.
One Simple Tip to Make Your Rental Property Investments More Efficient
You have probably heard the old adage: “There are three things that matter in an investment property: location, location, location”. I can’t tell you how important this is for a healthy and manageable investment portfolio.
In this post, we are going to take a look at how location affects residential real estate investing.
You want to be buying houses in a very specific area, especially when you are buying, fixing and renting. As a hard money lender, I talk to real estate investors every day that are relatively new to the industry and are looking for a rental property loan. Sometimes they tell me about a house they are looking at in Orlando, or another one that they have in Tampa, and another one in Jacksonville… If this sounds like you, it’s time to re-evaluate your strategy. Here’s why…
The first rule about renting investment properties and building a nice portfolio is to look for houses in the same location. In my view, if you can’t stand in the center of where the houses are and, figuratively speaking, throw a rock and hit every house, you have the wrong plan. A rental house in Orlando, another one in Tampa, and another one in Jacksonville is a recipe for disaster.
Why should you buy rental houses in the same location?
There are 2 reasons to buy rental houses within close proximity:
To know what you are buying – Buying properties within the same neighbourhood will help you understand the challenges and advantages of a specific investment property (appreciation, crime rate, etc).
To create synergy between the properties – Houses within the same area are usually of the same kind. This can be beneficial in many cases. For example, you can hire a local handyman and he will know exactly how to fix maintenance issues in that kind of house. This is much more efficient than sending a handyman to a house in Orlando that was built in 1963 and another handyman to a house that was built in 2001 in Tampa, or Jacksonville.
Know What to Look For in Your Residential Real Estate Investments
In the following weeks, we will be focusing on the art of purchasing wholesale investment properties. We will be covering topics such as how to find wholesale investment opportunities, negotiating, contracting, and closing.
Today, we will start with the first step, which is a discussion about specifically what type of properties to look for.
Here are a few, of the most important property features to will help you find the best rental properties:
Single Family Homes
Detached
Conforming-zoning
Established subdivision
Standard Construction
Deferred Maintenance “Handyman Special”
Solid, middle class and up neighbourhoods with good appreciation prospects.
It’s often said that it’s much easier to find something if you know exactly what you are looking for. The same is true when you are trying to find wholesale investment properties. There are 2 primary strategies for real estate investors: One is to buy, fix, and sell (“flip”), and the other is to buy, fix, and rent. Previously, we analyzed the profit potential for these two strategies. Some houses are much better suited for long-term rentals and some are better suited for short-term flips.
Generally speaking, a long-term hold property should offer excellent prospects for appreciation and be in the type of neighbourhood that will attract quality tenants. Many beginning investors look at the cash flow from very cheap, small houses in distressed neighbourhoods and believe this is the most important characteristic of a rental. The problem with this strategy is, that small, cheap houses in distressed neighbourhoods do not appreciate at the rate of larger homes in better neighbourhoods. It is also difficult to attract and keep quality tenants in these small, cheap houses. Therefore, if you are looking for wholesale investment properties to hold as rentals focus on solid 3/2, 4/2 middle-income homes in quality areas. I like to focus on what I term “upward-transitional areas”. Try to buy quality homes cheap in C+ neighbourhoods that are in an upward transition to “B” and eventually “A” neighbourhoods. This specific type of property for a long-term hold strategy has created many real estate millionaires.
If your plan is to buy, fix and sell then focus your search in areas where homes are selling quickly. It is fairly easy to determine what the average days on market is in any specific zip code. Access to the MLS database, either directly or through a Realtor friend can quickly give you the data you need to find these fast-sell neighborhoods. I would recommend working with middle-income and up houses. Small, cheap houses in distressed neighborhoods are very hard to sell.
There are many misconceptions in the marketplace about the meaning of the term “hard money loans”. In the real estate industry, funding from a hard money lender is so-called hard money lending because of the high points and interest rates. While the conventional mortgage loan from banks floats around 3%, a hard money loan can stand at around 12% APR.
Although the loan terms can be strict and the interest rates can be high, a hard money loan is usually worth the cost for the average real estate entrepreneur needing a quick source of cash to fund their deals. While conventional loans can take weeks, if not months, to close a loan, hard money lenders only need 7 days or less. Income and employment verifications, credit checks, background checks and all the qualification parameters that are present in conventional loan processing, are not required for a hard money loan, which makes the process not only faster but easier for the investor as well.
As a way of example, let’s say you have $150,000 to invest and you want to buy a single-family detached home for $130,000 that needs $20,000 worth of rehab. You would have just enough cash to do the deal, but you will not have enough cash for other deals until you have accumulated enough capital. On the other hand, if you qualify for a loan with BridgeWell, you would only need to fund as little as 10% of the total project cost, which includes purchase price, closing costs and rehab costs. You could then use the other portion of your investment capital to fund other deals and multiply your profits.
Therefore, hard money loans allow real estate investors to quickly fund their deals, do more business and boost their profits. If you would like to know more about our programs click here or submit a funding application.
In the real estate financing industry, private money refers to the funds an individual or organization invests with a real estate entrepreneur in exchange for a return on the investment. While a private money loan can take place when friends and family lend you money for your start-up business, it most commonly originates from a financial institution like BridgeWell Capital. BridgeWell Capital uses the money of private investors to service loans to real estate entrepreneurs. In this case, the financial institution receives a promissory note —a mortgage on the property to secure the investment— and collects an interest on the loan. The real estate investor can make interest-only or amortized monthly payments over 5 years with unlimited options to renew —whichever works best for the deal.
You may be wondering why a private money loan from Bridgewell Capital makes sense for your business. The primary benefit of private money is that it allows you to do more deals. Many novice real estate investors struggle with other sources of money such as conventional mortgages and lines of credit. They may close a few deals but they eventually realize how easy it would be if they had used private money in the first place.
For experienced investors, private money is useful to close larger deals. A solid real estate investing experience, a highly appraised property as collateral along with a high estimated profit margin are important factors for BridgeWell Capital to fund larger deals.
In today’s real estate market, private money is key. There has never been a better time and a better way to boost your investments than with private money. It doesn’t matter what strategy you use for your investments; whether you want to buy, fix and sell or buy, fix and rent single-family houses, using a private money loan from BridgeWell is a huge investment opportunity to propel your investing to the next level.
