Archive for the ‘Investing’ category

Hard Loans – A Must Read for All Real Estate Investors

November 29th, 2011

I have decided today that I would like to do something new. We usually get lots of questions everyday and sometimes it become impossible for us to answer them all.

In order to answer most of these questions, I would be putting up a weekly post to address some of these frequently asked questions.

I want to start by talking about hard loans. This topic deals more with the newbies who are planning of getting into real estate investment business.

The question, which we come across every other day, is: How much interest rate do you charge on an average lending?

This made me think…do these investors believe that to be successful, they just need hard loans with low interest rates?

Let me tell you the basic thing about hard money loans. They are lent for a short period of time and that’s why the interest rate doesn’t matter a lot.

The interest rate becomes extremely important if you will have a mortgage of 30 years but it doesn’t matter much for a 6-month loan.

Now, don’t take me wrong. I don’t mean that you just forget about the interest rates because whatever rates you’ll pay, it will directly influence the final profits after you’ve completed a successful deal.

Making a successful deal means that you were able to pay your loan off on time and the most important thing is the profit which you have made.

There are many investors who just focus on interest rates and they are trying hard to get a discount of one or two points, whereas they should be focusing on getting things done on time.

Getting work done on a property and selling it on time will have a major effect on your profit margins rather than the interest rates. On the other hand, if you want to look for low-interest hard loans, then you should build a team, which should focus on getting the project done on time.

Basically, it depends upon they way you approach things and that’s the only thing which make all the difference. You need to keep in mind that it’s not your typical mortgage but you are investing in real estate here. » Read more: Hard Loans – A Must Read for All Real Estate Investors

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All You Want To Know About Creative Real Estate Investing

November 29th, 2011

With creative real estate investing, you can make money from property in ways which are quite different from the conventional routine of getting a mortgage in order to purchase a house and then selling it when you get a right price for it.

The most important thing to note about creative real estate investing is that it does not generally carry the negative connotations. One of the primary examples of this kind of investing is an option. This works in an identical manner to options employed for less tangible financial assets like stocks.

When dealing with an option, there is an involvement of an agent and property owner. As a property owner, you sell the right to purchase a house on or before the deadline at a set price. The purchaser of such an option would hope that there is going to be an increase in the market prices before the deadline arrives, giving him an opportunity to conduct the option and then instantly sell the house to book a profit. If you happen to be the seller of the option, you are at risk of missing out on a bigger price.

On the other side of the coin, wholesaling is all about purchasing three or four properties at a time and then selling it once the market condition is in your favor. For this purpose, you may need to get involved in the bulk buying houses that financial institution has got through foreclosure. After buying it in bulk, you need to sell these houses on an individual basis at a low price. In such scenario, you will find that the individual sale price is going to be lot less than the current market value. As a wholesaler, your profit is going to come from the fact that the financial institution will have approved an even lower price to give discount for bulk buying.

Another common source of creative real estate investing are tax liens. The whole concept is based on the fact that a county government has a power to automatically get an interest in a property, widely been regarded as a lien, if the property holder does not able to pay property taxes on time. Number of counties will sell such liens to investors. From that moment onward, the investor gets a right to get the outstanding tax money in addition to interest, along with the possibility that homeowner may not be able to pay. » Read more: All You Want To Know About Creative Real Estate Investing

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