6 Ways to Finance Your Real Estate Projects

So you found the perfect house flipping deal that you have been reading so much about. It’s exactly the kind of real estate deal you see on HGTV. You’ve called your realtor, toured the property, your neighbor who’s a contractor worked up a renovation estimate, you’ve looked at comparable properties and convinced yourself you have found the needle in the haystack. The perfect deal. Let’s look at some important factors before deciding how to finance your real estate investment.

Create A Strict Budget

The first thing you need to do is work up a strict budget. This is not something to draw out on the back of a napkin. Your potential real estate investors want to see that the investment follows a strict budget. A couple factors to consider when creating a strict budget for your new investment property are as follows.

• Closing & carry costs – insurance, utilities, interest, title insurance, survey, etc.

• Sales costs – commissions, home warranty, transfer stamps, etc. (usually they total about 8 percent).

Once you know your budget and you have made an offer and the seller accepted subject to financing, where will the capital come from?

Where Will the Capital Come From?

Will you use your own resources or will you be leveraging all or part of the project? If you’ve done your numbers, the more you finance the greater the return on every dollar you invest out-of-pocket. This example demonstrates the difference between using your own capital and financing:

Using Your Own Cash
Purchase Price: $100,000
Renovation Costs: $50,000
Cash Out Of Pocket: $150,000
Sales Price: $200,000
Profit Amount: $50,000
Return On Investment (ROI): 33%

Using 70% Financing
Purchase Price: $100,000
Renovation Costs: $50,000
Costs of Financing: $10,000
Cash Out Of Pocket: $55,000
Sales Price: $200,000
Profit Amount: $40,000
Return On Investment (ROI): 73%

In this example, while financing your project lowers your total profits, it increase your profit margin tremendously and, with only a fraction of cash invested, you are able to avoid locking your assets into individual projects and spread them across more investments.

Leveraging Your Assets

Even though you may have the ability to pay cash for your project that doesn’t mean you should. As shown in the example above, leveraging your assets increases your return on investment (ROI) and gives you the ability to spread your money and fund multiple projects, while lowering your risks.

Get Financing for Your Real Estate Investments

Traditional Lenders

Banks and credit unions are on the top of the traditional lender list. Traditional lenders typically carry the best rates available but be prepared for a proctology exam. Most traditional lenders require a credit score of 680 or more, full documentation of income and debts, full appraisal and inspection reports, background check, significant “skin-in-the-game” (down-payment) and upfront fees for underwriting the deal. The process can be painful, slow, and repetitive. But, if you have your ducks in a row and are willing to put in the effort, this could be a cost-effective strategy for you.

Seller Financing

This is an ideal scenario since very little documentation is required and it is a quick part of the negotiations. But be wary, because some sellers will offer financing only on the condition of a quick sale. This quick sale may hamper your “due diligence” by forcing a close before you can adequately perform recommended inspections. Sellers are less likely to accept this alternative unless they are either looking for an income stream, subject to taxation on the sale or simply hoping you default.

Hard Money

hard money lender

Get the most from your real estate investments

Hard money is a loan that is issued by private lenders. These loans are normally asset-backed loans that are short term and lent against the After Rehab Value (ARV). These are loan instruments that real estate investors can use to finance a quick fix and flip deal. But beware, quick and easy is not necessarily the best solution.

Hard money loans are not only expensive, but short term. You should expect fees going in and coming out as well as rates to be near usury.  Hard money loan terms are short, so don’t miss a payment or you risk losing the property. There are a lot of solid Hard Money lenders available, but you need to spend considerable time underwriting the issuers.

Family And Friends 

Approaching friends and family is also easy, and they need less convincing than other moneylenders. Have your plan together or, better yet, some portfolio to show and you should have little resistance building to your capital stack.

Keep in mind that family members tend to come with their own sets of complications, whereas with friends or associates, these kinds of emotional issues tend not to occur. Just know that whenever family is involved in business, things can get complicated.

Partners

Partnerships can be a great way to get started investing in real estate. Typically, a person might go to a private investor to get funding in exchange for doing the labor and management in preparation for the resale. You will end up splitting the profits in half, sometimes even more but it is a quick way to build momentum when investing in real estate.

On the upside, this type of partnership isn’t necessary to draw up any formal agreement as you can work on a deal-by-deal basis. But, on the downside you are likely to lose some of the decision making and control over renovation and deal making.

Crowdfunding

Crowdfunding is a relatively new alternative to creative financing real estate acquisitions. The SEC passed a law in 2012, which opened the floodgates for open solicitation of investment opportunities as long as the investors qualify as an accredited investor. With crowdfunding, you can expect competitive rates, underwriting and unbelievable fast turn-around time.

Real estate crowdfunding companies sprung up overnight to raise capital through online portals for investors. Because of this rapid influx of real estate crowdfunding businesses, it is necessary to exercise caution as a majority of these companies are run by technology entrepreneurs and not industry experts. Real estate professionals have the experience and knowledge to properly advise when an investment deal will be viable and worthy to investors.

Finding a company with years of real estate experience that understands the intricacies of finance, development, asset management and acquisitions is very important to successfully financing your real estate endeavors. RealtyeVest has a team of real estate professionals that will assist you in raising capital and leverage your assets to increase ROI for each property you find.

So, if you are a real estate developer interested in leveraging your assets or raising capital for your real estate investment properties, register with RealtyeVest to learn more about becoming a sponsor today.

The post 6 Ways to Finance Your Real Estate Projects appeared first on RealtyeVest Crowdfunding News.

Source: realtyevest

On-Trend Real Estate Investing

One’s ability to seek trends, global or otherwise, is key to any prudent investing. Real estate investing supports an innate degree of risk along with an inherent level of reward. Thus, a real estate investor’s “risk aversion” is determined by the level of each of these requirements. This is considered to be a “rules-based” approach seeking knowledge to answer the question: “Why should I invest or not invest in this asset class?”

real estate market research fro investing

Make intelligent real estate investments

A key component in making sound real investment decisions is deciphering the misinformation from accurate statistical data. Conversations at the country club should not be a driver in the process. Investing should be viewed as a game of chess, not chance. The player/investor needs to be alert, aware of his or her weaknesses and strengths, mindful of the opposition and most decidedly enter the game with a plan.

Here is a look at some of the moving parts of the real estate investing market to help author an investment plan. Little in the U.S. macroeconomic data suggests overheating. GDP has settled in at about 2 percent and job growth is running at about 1.7 percent pace (2.5 million annually). The Fed has been overly cautious about raising rates due to volatility of data, financial markets and the geopolitical climate. Therefore, the veritable “punchbowl” remains.

“SKATE TO WHERE THE PUCK IS GOING, NOT TO WHERE IT IS” ~WAYNE GRETZKY

Now, let’s drill down a bit and look at a couple of cross sections of Americana. Jobs are no longer careers and Millennials are not yet looking for the commitment of owning a home. They are footloose in the job market and reticent to establishing roots in any community. Understanding this trend, developers are building “condo” quality rentals which, when the market dictates, can change in mid-stream and become a sales driven opportunity. Also being considered is the multigenerational developments that allow millennials and Baby Boomers to coexist. Both have similar amenity and size requirements, which generates huge development options.

With over 10,000 Baby Boomers retiring every day and understanding the related socioeconomics, asset classes that were once taboo are now becoming the investment of choice. Approximately 19 percent of retired Americans have more than $250,000 set aside for retirement, while 34 percent of retired Americans have less than $250,000 and 47 percent have zero savings set aside for retirement.  What we have here is an aging population that will mostly be dependent on Social Security and Medicare. This opens the floodgates for interesting chess moves.

Affordable Housing

Affordable Housing is probably the last bastion of home ownership. Developers are now recognizing this option and have begun aggressively acquiring and upgrading Parks across the United States. Warren Buffet, as an example, moved into this space by acquiring Clayton Homes, the world’s largest builder of mobile homes. This type of housing is affordable, new parks are clean, safe and loaded with amenities. Most importantly, however, is the limited supply of available Parks. There are only about 40,000 such parks left because many have been acquired and redeveloped as urbanization has overtaken rural America.

retirees enjoying their real estate crowdfunding investments

Retirees are lending power to the real estate market

Assisted Living

As we live longer and become more dependent on others for our daily care, seniors are in greater need of assistance with daily living activities. Assisted living includes meal preparation, medication management, house cleaning, laundry and bathing. Although many seniors value their independence, they may require help with some of their daily activities. Many do not have family available to help care for them or it might be a matter of location, time and commitment.

This creates a unique opportunity to serve this age group. There is a large and growing demand for quality, comfortable residential assisted group housing for the elderly that provides caring assistance for daily living. Assisted group housing in a residential home is an emerging trend throughout America.

Many families prefer an alternative to institutional type living facilities for their parents. Many are looking for a home-style group residence that is affordable, safe and comfortable. Residents enjoy 24-hour caregiver support, private bedrooms with attached baths, fantastic home-cooked, dietitian-approved meals, housekeeping and laundry services, social activities, physical and mental exercise opportunities, as well as the optimal staff-to-resident ratios in the industry. This solution provides for a vibrant, happy community.

MultiFamily

As more and more consumers are opting to rent or downsize and delay home ownership, the multifamily housing sector remains strong. According to CNBC, millennials especially are getting married later in life and delaying home ownership as well, despite rising rental costs.

These are just some of the ideas behind on-trend real estate investment. Remember to look at things both from a macro and a micro level. Look for real estate segments that have reasons to exist and flourish. Pay attention to the details.

The post On-Trend Real Estate Investing appeared first on RealtyeVest Crowdfunding News.

Source: realtyevest

On-Trend Investing: Affordable Housing

Warren Buffet provides one of the best answers as to whether investing in the mobile home community arena is worthwhile. He bought Clayton Homes more than a decade ago, seeing the housing crisis that was fixing to befall the nation. The foreclosure disaster is still affecting the market and causing former homeowners to scramble in search of affordable housing options.

Roots of the Mobile Home Market

The roots of the affordable housing market

The roots of the affordable housing market

The modern mobile home began as a travel trailer used by wealthy people to live comfortably as they roamed the countryside on family vacations. The military grabbed onto the usefulness by stationing these temporary housing units near factories that were producing products for the troops away in combat. They continued use for GI’s that returned and decided to go to college with their earned benefits. By the 1950’s, mobile housing was finding a permanent spot in the American landscape of affordable housing options.

The mobile homes of today are nearly unrecognizable to the predecessors. Most have pitched roofing, high-levels of insulation and stylish interiors. A few offer built-in storage areas, kitchen islands, fireplaces and garden tubs. They can be moved from one park to another, but it is generally cost-prohibitive to do this. Most tenants look for a great park to call home and stay planted there to avoid a $3,000 or more charge to move.

The popularity of mobile home park living has increased for several reasons. The housing bubble and foreclosure waves left many people with no housing and decimated credit scores. Those on annual fixed incomes can rarely afford the rental prices of traditional homes or apartments. Many people enjoy the feel of community and like the idea that they do not have to deal with lawn care and maintenance. The idea that once the mobile home is paid for, all they are responsible for are lot fees and utilities. This is something that is incredibly appealing for growing families. The 2013 census showed that there were 8.6 million mobile homes scattered in a variety of locations across the United States.

The affordable housing market today

The affordable housing market today

Who Lives in Mobile Home Parks?
Mobile home communities come in many varieties. There are more luxurious areas that offer clubhouses, pools and community centers, while there are also bare-bones parks that have been neglected and remain in poor condition. A well-managed park moves out the older trailers and sets rules and regulations to control disruptive activities or behaviors from tenants.

The primary residents of mobile home communities are those that are at or below the national poverty levels. They are generally the ones that are unable to afford down payments for traditional home ownership. The 2016 U.S. Census Bureau statistics show that 14.8 percent of Americans live at or below the poverty level of $24,300 dollars for a family of four. This translates to 46.7 million people. This leaves a lot of potential growth in the market for affordable housing options.

Benefits of Staying in a Mobile Home Park
The reasons people choose to stay in a mobile home park are individual, but most revolve around housing stability, economic factors and a feeling of community. If an individual or family has sought out affordable housing and found a solution, they are reluctant to try reaching forward to more expensive options right away. Having housing that is affordable and leaves a little money at the end of the month becomes a dependable way of life. Long-term tenancy breeds familiarity. People get to know one another and tend to look out for each other. The sense of community is tight in an enclosed park environment.

 

Growth Potential for the Mobile Home Park Market

affordable housing developments

Growth potential for affordable housing developments

With 8.6 million mobile homes in the U.S. as of 2013 and the estimated 46.7 million people at, or under the poverty level, the potential for continued growth is astounding. As baby boomers continue to age, retirement can mean living on a fixed-income, which is often shockingly low. There are plenty of available mobile home parks that are in desperate need of upgrades, whether it’s in plumbing, interior work or trailer upgrades. Creating a pleasant and affordable housing option will always bring back a great return on your investment.

There is no time like the present to get out there and explore your options in mobile home park ownership. Visit parks that are already functioning well. This will give you an idea of the goal mark to reach when purchasing ones that need a little extra TLC.

Dollar-for-dollar, mobile home parks are one of the easiest real estate housing markets to invest in, offering quick and steady returns. This is an option you should fully explore if you like the idea of a more hands-off approach to tenancy and property upkeep.

The post On-Trend Investing: Affordable Housing appeared first on RealtyeVest Crowdfunding News.

Source: realtyevest

10 Tips for Successful Real Estate Investing in 2017

Profits can always be made with the right balance of discipline during a real estate market slowdown, stagnation or depression. This article shows you the top ten tips that real estate investors apply to ensure success from their investments.

1.  Slow and Steady

Take the necessary time to learn about potential investment properties. Peruse the MLS, speak with realtors that are keen in the area you are interested in, research the comparable properties and prioritize making friends with a realtor that specializes in income properties. Spending time on research can keep you informed and ready for lucrative investment opportunities.

2.  Everything is Negotiable

Remember the age-old adage: “Everything’s negotiable?”  Well, there’s truth in that. Successful negotiating means being assertive enough to go after the deal you want, but insistent enough to always be willing to walk away from the negotiations that aren’t giving you those “warm fuzzies.” Make that sweetheart of a offer that the seller(s) look for in order to secure your deal. If it’s attractive to you, make it just as attractive to the seller and you will seal the deal!

3.  Never Stop Learning

Investment strategies, especially in real estate are ever-changing. Market trends go up and down like a seesaw on steroids. The best way to stay ahead of the game, or at least in the game, is by staying up to date on the newest and latest tactics.

4.  Discipline!

Carve out your budget. And stick to it. No matter what, a strict budget is top of the list in investing. Carefully set your parameters, do the math, research the market and set your budget in stone. Stick to properties that meet your budget and don’t compromise your budget to meet your needs.

5.  Consistent Progressive Cash Flow is the Goal

Despite anyone’s best efforts, an upbeat market can take a downturn just as it did in 2007-2008, leaving an investor drowning in depreciated real estate. In this case, while a loss is inevitable, you can minimize your loss and avoid financial ruins by focusing on investing in properties that maintain a confident cash flow monthly. Optimistic or positive cash flow does not rely on rent income or market values to increase. From the start of a potential deal, if the numbers don’t add up, start subtracting by removing your interest and funds from the table. Invest elsewhere.

6.  Make it Count

Starting off, be discriminative. Until your real estate investment portfolio grows, it may not be practical to purchase the distressed property in the historic area of town. You need time to gain a steady and positive cash flow on your investments. Less is not always more when starting out in real estate investing. That first property might cost a little more than what you imagined.

7.  In the Beginning, One is More than Enough

In the beginning, choose a category of investing and test it for a year.  For example, do you want to flip real estate and sell it? Or would you rather prefer renovating and renting? Once you have mastered that area with expertise, then start looking to take on another.

8.  Don’t Try to Boil the Ocean

Start small. It’s literally an ocean out there and one wrong decision could cause you to drown before you even start to swim. You may even want to start with your primary residence and rent a portion of it in order to get some capital flowing.

9.  Follow the Money

Follow the money trail. If there is a property in an area that can generate cash flow, you should jump on it like bears to honey! Whether your investment volume is big or small, get into sound investing and build your real estate dynasty one property at a time.

10.  Don’t be Shy when it Comes to Taking on New Challenges

If you are already in the real estate investment game, expand your horizon and broaden your territory by taking on new and different investment opportunities. Minimize the risks, but without making any hasty investment decisions. And by all means, go for something new.

The executive team at  RealtyeVest leads a group of expert analysts who acquire, manage, negotiate and purchase real estate acquisitions.

Built on a foundation of complete transparency, honesty and accountability, RealtyeVest delivers results to maintain a steady leading edge in real estate investing that yields profitable results.

The post 10 Tips for Successful Real Estate Investing in 2017 appeared first on RealtyeVest Crowdfunding News.

Source: realtyevest

10 Tips for Successful Real Estate Investing in 2017

Profits can always be made with the right balance of discipline during a real estate market slowdown, stagnation or depression. This article shows you the top ten tips that real estate investors apply to ensure success from their investments.

1.  Slow and Steady

Take the necessary time to learn about potential investment properties. Peruse the MLS, speak with realtors that are keen in the area you are interested in, research the comparable properties and prioritize making friends with a realtor that specializes in income properties. Spending time on research can keep you informed and ready for lucrative investment opportunities.

2.  Everything is Negotiable

Remember the age-old adage: “Everything’s negotiable?”  Well, there’s truth in that. Successful negotiating means being assertive enough to go after the deal you want, but insistent enough to always be willing to walk away from the negotiations that aren’t giving you those “warm fuzzies.” Make that sweetheart of a offer that the seller(s) look for in order to secure your deal. If it’s attractive to you, make it just as attractive to the seller and you will seal the deal!

3.  Never Stop Learning

Investment strategies, especially in real estate are ever-changing. Market trends go up and down like a seesaw on steroids. The best way to stay ahead of the game, or at least in the game, is by staying up to date on the newest and latest tactics.

4.  Discipline!

Carve out your budget. And stick to it. No matter what, a strict budget is top of the list in investing. Carefully set your parameters, do the math, research the market and set your budget in stone. Stick to properties that meet your budget and don’t compromise your budget to meet your needs.

5.  Consistent Progressive Cash Flow is the Goal

Despite anyone’s best efforts, an upbeat market can take a downturn just as it did in 2007-2008, leaving an investor drowning in depreciated real estate. In this case, while a loss is inevitable, you can minimize your loss and avoid financial ruins by focusing on investing in properties that maintain a confident cash flow monthly. Optimistic or positive cash flow does not rely on rent income or market values to increase. From the start of a potential deal, if the numbers don’t add up, start subtracting by removing your interest and funds from the table. Invest elsewhere.

6.  Make it Count

Starting off, be discriminative. Until your real estate investment portfolio grows, it may not be practical to purchase the distressed property in the historic area of town. You need time to gain a steady and positive cash flow on your investments. Less is not always more when starting out in real estate investing. That first property might cost a little more than what you imagined.

7.  In the Beginning, One is More than Enough

In the beginning, choose a category of investing and test it for a year.  For example, do you want to flip real estate and sell it? Or would you rather prefer renovating and renting? Once you have mastered that area with expertise, then start looking to take on another.

8.  Don’t Try to Boil the Ocean

Start small. It’s literally an ocean out there and one wrong decision could cause you to drown before you even start to swim. You may even want to start with your primary residence and rent a portion of it in order to get some capital flowing.

9.  Follow the Money

Follow the money trail. If there is a property in an area that can generate cash flow, you should jump on it like bears to honey! Whether your investment volume is big or small, get into sound investing and build your real estate dynasty one property at a time.

10.  Don’t be Shy when it Comes to Taking on New Challenges

If you are already in the real estate investment game, expand your horizon and broaden your territory by taking on new and different investment opportunities. Minimize the risks, but without making any hasty investment decisions. And by all means, go for something new.

The executive team at  RealtyeVest leads a group of expert analysts who acquire, manage, negotiate and purchase real estate acquisitions.

Built on a foundation of complete transparency, honesty and accountability, RealtyeVest delivers results to maintain a steady leading edge in real estate investing that yields profitable results.

The post 10 Tips for Successful Real Estate Investing in 2017 appeared first on RealtyeVest Crowdfunding News.

Source: realtyevest

Crowdfunding and Self-Directed IRA Real Estate Investments

Crowdfunding for real estate is the collected efforts of many individuals to pool money to invest in a piece of property. Typically, these properties are larger buildings, such as a shopping plaza or an apartment building.

While these investments can cost a single investor an astronomical amount of money, real estate crowdfunding allows potential investors to diversify their portfolios with many smaller investments, and the benefits don’t end there.

For many choosing to participate in real estate crowdfunding, a self-directed IRA is the easiest way to go about the investment process. Traditional IRAs limit individuals on the types of investments they make, but self-directed IRAs are much different. A self-directed IRA is uniquely structured with the barrier of an LLC, where the individual is the sole managing member of the said entity. As a result, the managing member can make the decisions about where the investments are made. In a typical self-directed IRA, existing IRA or 401(k) funds roll over into a new self-directed account fully-managed by the LLC, whose sole managing member is the investor, themselves.

The Guidelines

There are a few basic rules set by the IRS regarding the types of investments that are allowed to be made, but a self-directed IRA holder does have the ability to invest in things like real estate crowdfunding. Because one of the stipulations regarding real estate investing using a self-directed IRA involves needing the property to be a commercial building, investors are also able to see a much higher return on their investment than in personal property.

Crowdfunding With SDIRA

What does this mean in real estate crowdfunding? First of all, it means that someone investing in real estate with a self-directed IRA isn’t using a dollar out of their own pocket for the investment. Potential real estate crowdfunding investors only need to identify a custodian to make the investments for them, open a new account and transfer the funds.

Diversifying Your Investment Portfolio

RealtyeVest accepts self-directed IRAs to invest in equity and debt offerings with as little as $5,000 in certain opportunities. This is a great way to make intelligent investments in real estate without “putting all your eggs in one basket.”

 

The post Crowdfunding and Self-Directed IRA Real Estate Investments appeared first on RealtyeVest Crowdfunding News.

Source: realtyevest

Crowdfunding and Self-Directed IRA Real Estate Investments

Crowdfunding for real estate is the collected efforts of many individuals to pool money to invest in a piece of property. Typically, these properties are larger buildings, such as a shopping plaza or an apartment building.

While these investments can cost a single investor an astronomical amount of money, real estate crowdfunding allows potential investors to diversify their portfolios with many smaller investments, and the benefits don’t end there.

For many choosing to participate in real estate crowdfunding, a self-directed IRA is the easiest way to go about the investment process. Traditional IRAs limit individuals on the types of investments they make, but self-directed IRAs are much different. A self-directed IRA is uniquely structured with the barrier of an LLC, where the individual is the sole managing member of the said entity. As a result, the managing member can make the decisions about where the investments are made. In a typical self-directed IRA, existing IRA or 401(k) funds roll over into a new self-directed account fully-managed by the LLC, whose sole managing member is the investor, themselves.

The Guidelines

There are a few basic rules set by the IRS regarding the types of investments that are allowed to be made, but a self-directed IRA holder does have the ability to invest in things like real estate crowdfunding. Because one of the stipulations regarding real estate investing using a self-directed IRA involves needing the property to be a commercial building, investors are also able to see a much higher return on their investment than in personal property.

Crowdfunding With SDIRA

What does this mean in real estate crowdfunding? First of all, it means that someone investing in real estate with a self-directed IRA isn’t using a dollar out of their own pocket for the investment. Potential real estate crowdfunding investors only need to identify a custodian to make the investments for them, open a new account and transfer the funds.

Diversifying Your Investment Portfolio

RealtyeVest accepts self-directed IRAs to invest in equity and debt offerings with as little as $5,000 in certain opportunities. This is a great way to make intelligent investments in real estate without “putting all your eggs in one basket.”

 

The post Crowdfunding and Self-Directed IRA Real Estate Investments appeared first on RealtyeVest Crowdfunding News.

Source: realtyevest