Investor money is the physical capital utilized by any person or other entity (such as a firm or mutual fund) who commits said capital with the expectation of receiving financial returns. Investors use their money to give themselves a future income during retirement, such as with an annuity.
How to Approach Investors for Money
Money and profits are the reasons for any business venture and the fact is that at one time or another you may need an outside infusion of capital and have the need to approach an investor to raise the proper capital. The raising of capital is often times a difficult road and one would be nuts to think that as soon as you found what you feel is the right investor, they would flip their check book out without a second thought.
One must have the proper plan, a business plan in place where it specifies in big bold letters the amount of funding required for the project you propose. Then one must prepare a short list of investors and start working them to find who will have the best terms and conditions.
How to Ask Investors for Money
Would-be real estate investors fail at attracting one of their biggest critical needs which is arm’s length investors to help get the money to get their businesses off the ground. Remember, before ever pitching your idea to an investor, do some basic research. Using PowerPoint or pitch template may go a long way to get you started putting together a professional-looking presentation.
And remember, investors invest in people before the actual ideas, so you want to impress them. Let them know why you’re the right person with the right property and obtainable return.
How to Attract Investors for Your New Business
Real estate investors tend to like flippers with proven track records. If you’re starting out, attracting investors might be a little tricky considering you don’t have an existing track record. A good place to start would be to research potential investors, angel inventors and REI groups (Real Estate Investor) and find those whose beliefs and portfolio align with yours. Finding a like-minded investor may drastically increase your chances of success.
You can also attract investors with a strong social media presence. Build up your web presence on multiple social media platforms, as well as your website.
Funding Options for Your Projects
When searching for a hard money resources one place to start would be online but keep in mind many want experienced flippers. As an example, if completed up to one flip in the past 24 months you may have an origination fee of around 3.5% and an interest rate of +/- 12%. With two to four flips under your belt terms begin to get better and so on.
Borrowers with credit scores lower than 680 will be able to borrow slightly less and will pay the highest costs. The minimum credit score is 630. Down payments require a 10% down typically and repayment terms up to 13 months.
Other options would be to get in touch with local REI groups and obtain referrals there for local private lenders, or to locate a brick-and-mortar private investor or lender.
What are the different types of real estate investors?
The next step is to locate an investment niche by taking a closer look at the various types of real estate investors. With that in mind, read each overview to get a better idea of what each distinct investment strategy entails.
REIT investor
A (REIT) is a trust and is the most passive form of real estate investing available. With this method, you will invest similarly to the way one would invest in the stock market. Here, you will buy shares of a real estate investment company and receive dividends when the company pays out its profits.
Buy-and-hold investor
The biggest benefit of this strategy is that it creates the opportunity to achieve stable long term returns. Landlords can become accustomed to count on the same amount of revenue from their rental income every month. If you hire a property management company, you may be able to turn this into a more passive investment.
Fix-and-flip investor
This is the quickest return on time and money, which is the main benefit of this type of real estate investing. Assuming you locate the right property in the right niche you could obtain a quick sale and possibly the highest return on your investment.
Wholesaling
This is a passive real estate investment strategy. Here a real estate wholesaler will act as a middleman between a property owner and an end buyer. The focus is to locate an underpriced piece of real estate then flip it to an interested buyer at a profit without rehabbing it first.
Types of Investments
• Unoccupied Single Family
• Multi Family
• Commercial
• Property
How Much Private Loan Money Do I Need?
At times, it is not how much money do I need but more so how much can I get. Lending money for any type of construction, particularly new construction, is riskier than many other types of lending.
While buying, fixing, and reselling existing properties can be more lucrative, it can also take more money to flip a house than it does to buy a house in which you want to live. Not only do you need the money to become the property owner, but you also need renovation funds and the means to cover property taxes, utilities, and homeowners’ insurance from the day the sale closes through the rehab work and until the day it sells. Short-term capital gains tax rates of 10% to 37%, depending on your federal income tax bracket, will cut into any profits you earn on properties you flip within one year or less.
Also, if you have no cash of your own to invest, getting started in house-flipping is not an easy proposition. Even if you qualify for a loan with a down payment, you are highly likely to pay more when you are borrowing to finance a flip or investment home than when you are borrowing to buy a primary residence. This all because traditional lenders see flipping as a riskier proposition.
Whatever the term’s origins, hard money loans typically have terms of less than one year and interest rates of 12% to 18%, plus two to five points. (A point being equal to 1% of the loan amount).
Hard money lenders typically base the amount you can borrow on the home’s after-repaired value (ARV). If a home costs $80,000 but the ARV is $160,000 and you can borrow up to 70% of ARV, then you can borrow $112,000. After paying the $80,000 purchase price, you will have $32,000 left for closing costs (though you might be able to negotiate for the home’s seller to pay them), lender fees, rehab, carrying costs, and selling expenses such as staging, marketing, and real estate agent commissions. If you can stick to that budget, you will not need any money to flip the home.
Why It Can Pay Off for Real Estate Investors to Let Us Manage Their Loan Applications and Loan Portfolio
The reason why it would pay off for a real estate investor to use us to manage their loans and loan portfolios is due to our knowledge and ability to locate, facilitate and nurture your relationship with our funding resources.
Working with Us to Automate Funding for Real Estate Investors
I’LL LET YOU COME UP WITH THIS ONE
Focusing on the Next Project
By utilizing our experience and resources you can free up time, imagination, to work on investing your money to pursue and obtain the next investment property. Our passion is the knowledge in knowing we are helping you facilitate the growth of your personal wealth and financial well-being.
Maximizing Return on Investments
Every real estate investor enters the real estate investing world for one reason and that is to make a profit on their investment. Little doubt real estate investing is very lucrative but only when you are getting the best possible return on investment. More profits can be generated faster by investing your money through real estate then just about any other resource. However, due to the high number of buyers and shortage of homes for sale, it can be hard to get the best return on investment even for the most experienced investors.
There are ways to maximize your return on investment and greatly increase your chances of success. The first thing you need to be aware of is ROI and how it is calculated.
What is a return on investment?
The rate of return on investment for your rental property is the amount of profit you receive from your property over a period. It is calculated and presented in a form of a percentage. You always want to aim for a high return on investment when searching for a rental property to buy.
Before you begin your search for investment options that may offer a high return, you may need to also consider how much risk you are willing to take on. The best real estate investments for generating a high return on investment also carry the highest risks. It involves a lot of work to manage a rental property and keep up with tenants. However, if you follow these tips, you can boost your return on investment in no time.
Tips for maximizing the ROI for your rental property
• Make sure your property is rent ready
• Market your property well
• Carefully screen your tenants
• Conduct regular inspections
• Avoid tenant turnover
• Collect rent on time
• Reduce maintenance costs
Take the time to choose the best maintenance vendors and contractors. You do not want to select randomly. Do your homework and search for a group of people who can work with you. This is important because having high maintenance costs can drastically lower your return on investment.
Growing Your Investment Property Portfolio
For real estate investors, understanding how to build a real estate portfolio is vital to their success. A real estate investment portfolio is a collection of different investment assets that are maintained and managed to achieve a financial goal.
Steps to build a real estate portfolio from scratch!
• Start Right by Learning About Real Estate Investing
• Create a Real Estate Business Plan
• Buy Your First Investment Property
• Use Real Estate Analytics and Investment Tools
• Start Acquiring More Investment Properties
• Set up a Team of Real Estate Professionals
• Diversify Your Real Estate Portfolio
Benefits to Making More Money in This Industry
It is important to know the pros and cons of investing in real estate before you begin. It is a riskier type of investment, and as is the case with most risky investments, the rewards can be great if everything goes according to plan, or it can become a horrible mistake if the plan goes awry. Here are some things to consider.
• Make a Quick Profit
• Learn the ins and outs about Construction
• Understand the Local Market
• Develop Buyer Insights
• Learn About Real Estate
• Build your Net worth
Cash Out Refinance
A cash-out refinance is a mortgage refinancing choice where the new mortgage is for a larger amount than the existing loan to convert home equity into cash.
Is there a waiting period for a cash out mortgage refinance?
Although allowed, be aware that unless the property was inherited or legally awarded to you in a divorce or separation, a waiting period will typically apply of at least six months.