Hard Money Loans What You Need to Know

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Have you heard of house flipping? It is a term that has become more popular in part because of T.V. episodes that show exactly what it entails, albeit with better editing than real life. Commercial real estate investing is not as easy as these shows make it seem. What enables people to do so with some success is most often due to having investment property mortgage lenders backing them. In other words, someone else foots the bill. You shouldn’t be discouraged. To find out more about commercial real estate investing basics, read below.

What Are Some Reasons to Invest in Commercial Real Estate?

There are a few reasons real estate is seen as a good investment.

    1. Appreciation: Other than the odd bubble bust, property prices rise.
    2. Returns: people like that it is a tangible asset.
    3. Diversification: Your financial advisor will like that you are diversifying your assets.
    4. Inflation hedging.

Are you ready to seek out investment property mortgage lenders? You should know about the funding process first.

So, How Do You Get the Money to Buy Some Land?

As stated in Gone With the Wind, “Land is the only thing worth working for,…because it’s the only thing that lasts.” It seems not many would disagree, as owners of lots of land are generally regarded as very wealthy. Do you have to have money to make money, as the old adage goes? Not always, if you know the right people.

The typical business loan offered by banks has a few requirements: the borrower must have been in the business for at least two years, have great personal and business credit, be cash flow positive, and pull in at least $250,000 annually in revenue. There are plenty of people who fit that requirement, and double that who do not but would still like to buy, renovate, and sell a house for profit. Investment property mortgage lenders, or hard money lenders, can step in.

What is a Hard Money Loan, and Is It Even Legal?

There is nothing wrong with seeking a hard money loan, it is simply that most people would rather deal with a public lender, rather than a private one. The lender is putting up their own money for the house to be fixed up. Renovation lending, as it is sometimes called, follows the simple process of buying a cheap, somewhat run down house, and through renovation dramatically raising the value. These hard money loans are well protected, as the equity on the house must be somewhere between 30 to 50%.

Is real estate investing something that interests you? It is not outside the realm of possibility. Hard money loans are not for everyone. But they do make it much easier for many people to get into house flipping. Who doesn’t want to start making more money, that much faster?

7 Tips to Help You Get Started in Commercial Real Estate Investing

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Are you looking to change up your investment strategy? Do you own your own home? Have you considered commercial property investing? Whether you have thought about it or not, there are a lot of reasons to invest in commercial real estate. If you are not sure how to get into this area, here are some tips to help get you started.

  1. Commercial real estate investing success relies on planning. People who are not involved in commercial real estate investing look at people who do well and may think, “that person is very lucky.” While that may be true, the simple fact of the matter is that success in this area is really more about property preparation and planning and less about luck. This is one of the commercial real estate investing basics.
  2. Look for areas that are being developed. When you are looking at commercial real estate investing opportunities, it makes a lot of sense to look at up and coming areas and less to established neighborhoods. For example, a decade ago, the Anacostia section of Washington, DC was probably the toughest part of town. Today, it is one of the trendiest parts of town. If you were looking to invest in an area of the nation’s capital and you invested in this part of town, you would be in great shape. Look to these areas that may develop. This is something you can research and you can find trends to give you an idea of what areas may be on the verge of renewal.
  3. Keep an open mind about the kinds of properties you look at. It is easy to look only at retail space for instance but when you have your blinders on, you may miss great opportunities in apartment buildings or office parks. Commercial real estate investing is not limited to one kind of building or business. You may have a preference for what kind of buildings you want when you start the process but do not let that limit your options or blind you to other opportunities.
  4. Go big or go home. Well, not really but if you are looking at apartment buildings, do not limit yourself to smaller buildings, for instance. Whether you are renting to retail tenants, residential tenants or office space, if you have 20 units that are as easy to manage as if you had only 10. The main difference is the amount of money you will make every month. Again, be open to new ideas as you scour the commercial property investing sector for new opportunities.
  5. Get advice from someone “in the know.” If you are new to the world of commercial real estate investing, you should by all means talk to someone who is not. Find someone you trust and see if you can pick their brain about the market and your ideas. Be prepared to get some news you do not like. Do not be offended by that. Just take it in stride and listen to the advice.
  6. Consider taking on a partner or two. The really big deals are not made by one person, for the most part. If you are looking to get started in this, it is a good idea to take your thoughts to someone who is more experienced with commercial property investing and see if they will partner with you. There are a few good reasons to do this. On a human level, you will have someone to talk things over with and vent to. On a more practical level, you may find that you have more access to needed financing or real estate secured lending when you have a partner. Remember, two heads are usually better than one.
  7. Patience is absolutely your friend. You may have bought residential real estate but the process of buying commercial real estate is very different. In the first place, it will take you a whole lot longer to get the commercial property investing deal finished and done than it does to buy a house. If you go into the process with that in mind, you will be much less frustrated and will be more sane when it is over and done.