Real Estate Investment: Setting Yourself Up for the Marathon

Real Estate Investment: Setting Yourself Up for the Marathon

For many, real estate investing is a short-term game. You get in, invest, make more money, and get out—pretty much like a sprint race. However, those who are willing to ride the changing tides of the market and navigate their way through the cut-throat competition; for them, real estate investing is a more long-term opportunity. They view it as a marathon. Naturally, their gains and returns are also stronger and higher than their sprinting peers. What type of real estate investor do you aspire to be: a sprinter or a marathon-runner? The latter? Great! Of course, like every good marathon runner, we’re sure you’ll be preparing yourself in advance for the big, long race, right? If so, we believe you’ll find the following tips helpful in achieving your objectives. Integrate them into your business strategy if you haven’t already done so. Master one sector at a time Real estate investing is a diverse field with many facets. Speaking of primary categories, there are residential, commercial and industrial property investment opportunities. Dissecting each primary investment category further, there are multiple other investment opportunities. As a long-term real estate investor, your approach should be to perfect one investment category at a time. Once you’ve mastered one category, you can then move to the next. Step by step, you’ll eventually be able to build a well-rounded skill set and prime yourself with the required knowledge and experience to establish an impressive and profitable investment portfolio. Focus on building a dependable team of experts You’re committing to a long marathon, and there’s no way you can run this marathon alone. To be successful,...
Understanding the Costs of a Hard Money Loan

Understanding the Costs of a Hard Money Loan

Those who’re looking to refurbish worn out property and sell it for profit can use hard money loans to finance those projects. Companies that offer hard money loans gather private investors who want high-interests on the funds they provide and rehab borrowers that fix and flip properties. Generally, when the real-estate market is improving, there is a splurge of rehabbers who turn to hard money loans to fund projects. How do Hard Money Loans Work Hard money loans are offered on a short-term period; they usually run for 6-24 months. Before the loan period ends, the borrower is expected to make a balloon payment that consists of the interest amount and the principal too. The funding received from hard money loans covers 60-80% of the final value of the property after repairs have been made. Compared to conventional loans, hard money loans have higher interest rates along with greater lender fees and extra charges. There are two cost-components you’ll need to consider in hard money loans: interest rates and up-front points. Interest Rates As mentioned above, interest rates on hard money loans are substantially higher than on loans that are given by traditional institutions. Because hard money loan lenders are taking a greater risk by offering a large sum of money, they require a larger amount of interest in return—the larger the loan, the greater the interest. Hard money loans usually start at an interest rate of 7%; on average, they are offered with a 10% interest rate but this can increase depending on how big the financial risk is. Up-Front Points When it comes to hard money loans,...