How to Use a Hard Money Loan to Get Your Real Estate Property Ready to Sell

How Much Money Do You Need?

There are some basic things you need to know before you can get a hard money loan. First, you need to know how much you need to borrow and how much collateral you have. You begin by finding out how much your real property (house or apartment complex) is worth as is.1 Note the words “as is.” You can get this information from a real estate appraiser. Then you ask them to make a second estimate about how much more the property will be worth if obvious repairs are made.

IMG_00003652Next, get a remodeling contractor to give you a bid on the repairs and a plan or time frame the repairs will take. You might want to get several bids and choose the one that looks best to you.

How Much Collateral Do You Have?

Second, find out how much you owe on the property. The difference between the amount you owe and the appraised value of the property is your equity. It is the equity that will determine how much the lender will lend you.2 Compare the amount of the cost of the repairs to your equity after the repair is make. If your equity is larger than the repairs, you might be able to make a profit after paying off the loan.

IMG_00003655

The amount of money you need to borrow is the amount the repairs will cost plus a cushion of maybe 15 percent. The amount of collateral you can offer the lender is the equity in the real property. If the equity value of the real property is larger than the amount it will take to fix the property up, you have collateral to get a hard money loan.

Who Are the Lenders?

Hard money loans are typically issued by private investors (individuals or groups) lending their own money to borrowers with real property. The real property is their protection for making the loan and will be taken if the loan is not repaid. The primary basis for making a hard money loan is the liquidation value of the collateral backing the note.3  While the bank on the street corner will check basically everything before issuing a loan, including your credit scores, your income, the stability of your income, any missed payments, the amount of outstanding credit you have, and how the internal revenue service feels about you, the hard money lender will be are more interested in the value of your collateral than in your credit history. The hard money lender will determine the value of the property by getting an independent appraisal.

How Much Will It Cost Me?

Interest rates on a hard money loan will start at about 7.7 percent.1 The rate will depend on several things, including the liquidity of the asset. If the house you are repairing is in a bad neighborhood, it might be hard to sell even after it is remodeled and thus the interest rate on the loan will be higher. Broker fees also apply if a broker helped you find the funding source.

IMG_00003705_edit

The broker offers personal service to the borrower and administrative service to the lender. They give advice, do the paperwork, and make the phone calls involved in the transaction. They will also have the day-to-day experience and contacts to find the best rates for you. They then pass on the completed application to the lender.

Summary

In summary, if you are in a bad credit situation, have equity in real property you own, anticipate a project that will not take too long, and need money quickly, the hard money loan is probably for you.

If you find a deal, give me a call for a quick closing fix-n-flip rehabilitation loan. You can e-mail too.

Patrick@InvestorsLendingSource.com

Austin, Texas

512-213-2271

References

1. Hard Money Loans: A Complete Guide. California Hard Money Direct. Available at https://californiahardmoneydirect.net/2017/04/21/hard-money-loans-guide/. Retrieved November 2018.

2. Justine Pritchard, Hard Money Basics, How Hard Money Loans Work. Available online at https://www.thebalance.com/hard-money-basics-315413. Updated October 31, 2018. Accessed November 2018.

3. Wikipedia. Hard Money Loan. Available online at https://en.wikipedia.org/wiki/Hard_money_loan/. Accessed November 16, 2018.

 

 

 

Beautiful Fort Worth House in the News

The home of LeAnn Behrens and David Montague in Fort Worth’s Park Hill neighborhood appears in the Wall Street Journal (wsj) three times, in film, in article, and in photos. I enjoyed all three mediums. The film was made by Rob Alcaraz. The article written by Alina Dizik, and the photos taken by Casey Woods Maddeaux.

Rebuilding After a Fire

David and LeeAnn completed their home in 2017 to replace the one that was lost in a fire when the fire in an outside grill on the deck spread to the house. This house is on the site of the old house. Out of this tragedy, the couple started from a clean slate, with the help of architect Michael Bennett, to build a home where they could display their collections and live and entertain.

A Video Tour

In the video, David leads viewers on a tour of the home from the front door with a welcoming, “Hello I’m David, welcome to our house,” as he opens the front door. The house he describes as a perfect combination for them, combines living areas, art galleries, a library, and museum in 6,000 square feet with 4 bathrooms and plenty of areas to entertain in.

David shows viewers some of the artwork displayed in the house, his collection of books, and some of the building techniques they used on the back deck, like the burned wood siding, a technique he says is from Japan. The burned wood is proper because it reminds them that the original house that stood there burned down. Also, inspired by their survival of the file are the designed-in multiple decks and multiple ways to get out of the house.

exemple_shou-sugi-ban.jpg

“It Makes Sense to Us”

The art and books are all things David and LeeAnn like and have purchased. “It makes sense to us, even if it may not to anyone else,” says David when pointing out some of the art that is paired with one another in the living room. The central gallery space includes more than 20 masks and two Day of the Dead-themed portraits by multimedia artist Dolan Geiman along with a commanding bird sculpture from Africa. Photos of the house can be found at
https://www.wsj.com/articles/a-fort-worth-home-built-around-a-couples-collections/

4,000 Books

Did I mention already that David Montague collects books? His collection of 4,000 books had to be rebuilt from scratch after the fire. The two-story library in his new home includes a fire place with a white plaster representation of the Continental Divide by a local artist and comfortable places to read. In the film tour, David explains that he is collecting some of the original works about the fur trade written by the original mountain men and how that inspired the Continental Divide plaster relief that extends from the first floor of the library to the second floor.

Some of the other interesting features of the house are glass walkways in the upper floor to foster a sense of connections throughout the home, a second-floor coffee bar outside the couple’s master bedroom that opens up to a second floor living room that overlooks the pool in the backyard.

A Red Stove & Day of the Dead Portraits

The pieces that really caught my eye were the red Bertazonni range that gives color to the modern grey-toned kitchen, the 4,000 books (did I say that already?), the two Day of the Dead portraits in the entry hall, and the African Ship sculpture in the living room that is just calling out to be touched.

Okay to Touch

The home does not have a “no touch” policy according to David like a museum would. David says that the art is “pretty much indestructible—they were built for a tribal setting.” As a tactile explorer myself, I am happy to hear that.

Take a look at this beautiful Texas home on the media you like best, or like me, watch, read, and view all three.

This rebuild was way more radical than a standard fix-n-flip, but don’t forget that you too can make a comfortable beautiful home out of a house, one that will hold and display your or your buyer’s treasures. I’m always on the look out for ways to make a fix and flip house stand out.

Let me know if I can be of help to you this month. I can be reached at

Patrick@InvestorsLendingSource.com

512-213-2271

Austin, Texas

 

References:

Dizik, Alina, 2019, A Texas Home That’s Part Library, Part Gallery, wsj

Maddeaux, Casy Woods, 2019, A Fort Worth home Built Around a Couple’s Collections, wsj photo article.

Alcaraz, Rob, 2019, A Home Built to Be a Live-In Museum and Expansive library, wsj video

Photo credit: Caroistda [CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)%5D

 

 

The Media Room Must Have

Even though you might not be building or remodeling a 9,000-square-foot mansion in your next fix-n-flip or vacation rental property update, you might want to consider installing a multi-functional media room in the main part of the house you are working on. The WSJ article, “The New Mansion Must: A Media Room,” by Cecilie Rohwedder, says this multimedia room is the latest trend in home design and might include any number of huge flat screen TVs occupying the same space as a fireplace, picture windows, games tables, couches, and computer work stations, all situated a short walk from the refrigerator in the kitchen. This multifunctional room is making itself at home in the “open-concept” floorplan and replacing the dark, sound-proof basement home theatre.

Recessed and No Glare

Making multi-tasking all the more real, in some homes, this multifunctional room might include a bank of multiple recessed flat-screen TVs with anti-glare screens and hidden audio systems so a movie, a social media feed, the news, and a PowerPoint slide you are working on for your job can all be showing at the same time. There might also be large picture windows with automated shades that can be lowered to block out light.

Electrical Outlet Planning

To make all this convenient and easy on the eye, this will take some electrical outlet planning with your electrician before you start the project, even right up front when you are putting together your budget and loan request. (As cheap as flat-screen TVs have become, you might want to consider throwing in a few flat-screen TVs to make the remodeled house more sellable. The RV industry has started to do that.)

The wall where the flat screen or flat screens will appear would need an outlet behind the flat-screen TV (or TVs) so the cords don’t show. For the automated shades, you might want to put outlets along beams in the ceiling or high up on the walls next to the windows. If there is a fireplace in the room, you could plan outlets for either side of the mantel.

Visualizing that work, study, and socializing might also be going on in this room, outlets in the floor where a desk or game table might go will prevent cords from being stretched everywhere, and outlets a little above desk height in the corners will be handy for charging devices or plugging in computers, and you won’t have to crawl around on the floor to reach the plug ins.

img_00003781-1.jpg

Invisible

Now that you are on the road to becoming your own media installation contractor, you might be interested to know that according to Admit One CEO Lance Anderson (interviewed in the WSJ article) the job of the media installation contractor is to “not be an ‘eye sore’ blackening someone else’s design.” You need to make the electronics behind the entertainment invisible. Jason Barth of Premier Group in Carmel, Indiana says, the media system should be experienced, not seen.”

If I can help you with a loan, please call.  I have funding for fix-n-flip projects.

 

Pat St. Cin

Patrick@InvestorsLendingSource.com

512-213-2271

Austin, Texas

 

References: Rohwedder, C. “The New Mansion Must: A Media Room,” (2019) WSJ

Finding Houses to Buy and Owners to Sell — Strategy #1

When you are looking for properties to buy and owners that are ready to sell, there is nothing like getting in the car and driving around your town to see what is really there. Even with all the real estate marketing sites on the internet, when it comes to finding homes you might want to fix up and resell for a profit, you need to be your own detective and look for deals that might not be on the websites. It could be the owners are not internet savvy or the properties themselves are too droopy to lend themselves to pictures and video marketing.—

Driving for Dollars

Start by driving through nearby neighborhoods and mobile home parks. Look for vacant, run-down housing or vacant apartment units. Look for un-mown lawns, mail and newspapers piling up, closed curtains, un-watered grass, siding and trim that needs paint, as well as roofs in bad repair. If you are interested in commercial real estate, you can also look for retail and business space that looks like it has not been used for a while. Maybe the blinds are cracked, there is a tarp over the front door, and the windows never have any light in them.

Fixer-Upper_(8676229431)

FOR SALE—For LEASE

“For Sale By Owner” signs are also something to watch for. These are signs that the owner may not be taping into the web market. “For Rent” and “For Lease” signs may also be pointing to owners that really wanted to sell but couldn’t find a buyer. Look for estate sales signs and yard sale signs. Sometimes owners start clearing out their stuff because they are getting ready to sell. At the sale, ask the home owner if they will be selling soon.

Knock On the Door

When you find a home that looks promising, knock on the door. Knock on the neighbor’s door too. If no one answers, ask about what is going on with the property. Leave behind your business card. Write down the addresses and research the property from your computer. Keep a journal of prospects and follow up every month. You can keep an online journal too, photographing the house and making notes to help you remember to follow up.

In the case of commercial business space, the same strategy would apply. Try the door. Knock. Talk to the owners of nearby businesses and find out who owns the building and if they have shared their plans.

One tool that you can make for yourself is a door hangar. It can be something simple that you make yourself with a hole punch and rubber band, or something you more polished that you order form an online printer. It should say something like, “We buy houses. Call 512-555-1212.” If no one answers when you knock, leave one of your door hangars.

If you find a deal, give me a call for a fix-n-flip rehabilitation loan. You can e-mail too.

Pat St. Cin

Patrick@InvestorsLendingSource.com

512-213-2271

Austin, Texas

 

 

Decorating a Rental

Clean & Presentable

Rob B. and Rob D., founders of the investor forum and advice website, The Property Hub, share decorating choices that every landlord needs to know on housebeautiful.com.

Although the larger housebeautiful.com website tells us that matte black is the latest color choice for home decorating, Rob B. and Rob D. recommend that decorating a rental property should not be about personal expression but about appealing to “everyone and anyone,” durability, and cost effectiveness.

No Dog Shower

A rental is not a flip. Keep it simple is the rule. There is no need to go overboard buying the latest luxury fixtures or fittings. You also don’t need to gut the kitchen if it is functional. That means the dog shower in the laundry room that they are talking about over on the sweetwaterliving.com blog is not on your shopping list for the rental property even if you want to put one in your own mudroom. In case you are wondering where that came from

, a dog shower is one of the other latest interior design trends we can expect to see in 2019. However, your goal for the rental is to make the property clean and presentable. You might not even allow dogs.

No White Carpet

Decorating a rental is very straight forward. For the floor, opt for laminate in the kitchens, bathrooms, and hallways because it is easy to clean and if you get decent quality laminate, it should not rip or tear. Laminate is easier to clean than carpet and it will not look dirty or worn as quickly as a light-colored carpet would. Rob and Rob advise that if you must put down carpet, put down dark colors with a good underlay.

For the walls, choose white and light grey throughout and opt for water resistant eggshell or acrylic paint in the kitchen and bathroom. If you own many rentals, use the same color in all of them so you have some around for touchups.

For the bathroom, install a shower over a bathtub rather than a shower over a shower tray and try to put in at least a second toilet, if not a second complete bathroom, so if something breaks it is not such an emergency.

For the kitchen (here is where it is most tempting to overdo it), try to update only the work surfaces and cupboard doors first. That might be enough.

green wooden chair on white surface

No Furniture

Furnishing is something Rob and Rob recommend we avoid. It costs a lot and renters who bring their own furniture are more likely to stay for the long term.

Simple, clean, & durable, that is what it takes. That is what is likely to please most everyone.

If you are thinking of investing in rental property and need funds for the purchase or the remodeling project, send me an e-mail.

Pat St. Cin

Patrick@InvestorsLendingSource.com

512-213-2271

Austin, Texas

 

 

References:

https://www.housebeautiful.com/uk/renovate/refurbish/a23424169/landlords-decorating-rental-property/

https://www.thepropertyhub.net/

 

How to Use a Hard Money Loan to Get Your Real Estate Property Ready to Sell

How Much Money Do You Need?

There are some basic things you need to know before you can get a hard money loan. First, you need to know how much you need to borrow and how much collateral you have. You begin by finding out how much your real property (house or apartment complex) is worth as is.1 Note the words “as is.” You can get this information from a real estate appraiser. Then you ask them to make a second estimate about how much more the property will be worth if obvious repairs are made.

IMG_00003652Next, get a remodeling contractor to give you a bid on the repairs and a plan or time frame the repairs will take. You might want to get several bids and choose the one that looks best to you.

How Much Collateral Do You Have?

Second, find out how much you owe on the property. The difference between the amount you owe and the appraised value of the property is your equity. It is the equity that will determine how much the lender will lend you.2 Compare the amount of the cost of the repairs to your equity after the repair is make. If your equity is larger than the repairs, you might be able to make a profit after paying off the loan.

IMG_00003655

The amount of money you need to borrow is the amount the repairs will cost plus a cushion of maybe 15 percent. The amount of collateral you can offer the lender is the equity in the real property. If the equity value of the real property is larger than the amount it will take to fix the property up, you have collateral to get a hard money loan.

Who Are the Lenders?

Hard money loans are typically issued by private investors (individuals or groups) lending their own money to borrowers with real property. The real property is their protection for making the loan and will be taken if the loan is not repaid. The primary basis for making a hard money loan is the liquidation value of the collateral backing the note.3  While the bank on the street corner will check basically everything before issuing a loan, including your credit scores, your income, the stability of your income, any missed payments, the amount of outstanding credit you have, and how the internal revenue service feels about you, the hard money lender will be are more interested in the value of your collateral than in your credit history. The hard money lender will determine the value of the property by getting an independent appraisal.

How Much Will It Cost Me?

Interest rates on a hard money loan will start at about 7.7 percent.1 The rate will depend on several things, including the liquidity of the asset. If the house you are repairing is in a bad neighborhood, it might be hard to sell even after it is remodeled and thus the interest rate on the loan will be higher. Broker fees also apply if a broker helped you find the funding source.

IMG_00003705_edit

The broker offers personal service to the borrower and administrative service to the lender. They give advice, do the paperwork, and make the phone calls involved in the transaction. They will also have the day-to-day experience and contacts to find the best rates for you. They then pass on the completed application to the lender.

Summary

In summary, if you are in a bad credit situation, have equity in real property you own, anticipate a project that will not take too long, and need money quickly, the hard money loan is probably for you.

If you find a deal, give me a call for a quick closing fix-n-flip rehabilitation loan. You can e-mail too.

Patrick@InvestorsLendingSource.com

Austin, Texas

512-213-2271

References

1. Hard Money Loans: A Complete Guide. California Hard Money Direct. Available at https://californiahardmoneydirect.net/2017/04/21/hard-money-loans-guide/. Retrieved November 2018.

2. Justine Pritchard, Hard Money Basics, How Hard Money Loans Work. Available online at https://www.thebalance.com/hard-money-basics-315413. Updated October 31, 2018. Accessed November 2018.

3. Wikipedia. Hard Money Loan. Available online at https://en.wikipedia.org/wiki/Hard_money_loan/. Accessed November 16, 2018.