Hard Money Loans for Real Estate: How to Profit Wildly in Real Estate With Hard Money Loans

Hard money loans can help you make a fortune in real estate investing. Whether you’re just starting out or you have years of experience investing, you can definitely take advantage of the enormous leverage these special loans provide.

When you decide to use hard money loans to buy real estate for investment purposes, one of the first things you need to do early on is to think about your exit strategy.

Your exit strategy is essentially what you plan on doing with a particular investment deal in order to profit from it. For example, you might want to invest in a property so that you can fix it up and then sell it for a profit as soon as you have it ready. Another example of an exit strategy is investing in a property so you can hold onto it as a rental property for long term gains.

Once you’ve picked your exit strategy and decided you will be using a hard money loan to fund your deal, your next step is to crunch some numbers and complete your due diligence process. Like they say, “the money is in the deal,” so you want to “buy right” in order to make sure you profit.

You can find deals from motivated sellers in all kinds of situations — people facing foreclosure are a good example of motivated sellers, abandoned property owners are also likely to be motivated to sell and so are distressed out of town landlords.

Once you find your deal from a truly motivated seller. you want to negotiate and put it under contract because your hard money loan lender will definitely want to see that binding document before they can lend out any funds.

With your deal under contract, you will then need to find and contact a loan broker or lender who specializes in hard money loans for real estate. Hard money loans are typically not underwritten by conventional banks or credit unions like conventional real estate loans are.

After you get your funding and buy your investment property from a motivated seller, the next step is to get it fixed up so you can get it ready for the market. You can do this yourself or you can find independent contractors to help you with the repairs.

In most cases, hard money loans for real estate will make a provision for repair money. So going back to “buying right,” if you got your repair costs estimated correctly, then you shouldn’t have a lot of problems at this stage.You will have enough money to fund the repair costs.

The final stage of course is executing your exit strategy just like you planned at the very beginning of your project. Here’s where you put the deal on the market and either sell it to an end buyer or you hold onto it as a rental property.

As you can see, hard money loans for real estate can really help make the process of investing and profiting with real estate so much smoother. Take advantage of these special loans and use them whenever possible.

Investment Property Loans: Quick Answers to Your Questions

What is an investment property loan?

An investment property loan is a cash credit obtained for the purpose of purchasing a residential or commercial property wherein the property buyer plans to make an ongoing or long-term profit in the future. The money granted as loan may be used to purchase a vacation property, a piece of land, condominium unit, upper fixer property, apartment, single-family house and a single detached house. However, the money granted as loan cannot be used for other business purposes. There are three major types of investment loans, and they are those that require collateral, those that need a big down payment (higher than 20 percent) to get lower interest rates and the ones that either require the investor to pay the down payment cash or only a part of it.

What are the loan requirements?

To be able to obtain an investment property loan, you need to have a good credit score, enough cash reserve to make payments during months when your investment property has no income, at least 20 percent down payment, proof of income and most of all the property that you wish to purchase must pass the property appraisal. For those who do not have a very good credit score, there is still chance for you to get approval. You may consider getting an investment partner who has a very good credit rating. If you wish to get an investment property loan, it is important to strengthen your credit rating at least six months before your loan application. Paying off delinquent debts and closing old accounts only before getting a loan might negatively affect your chances for loan approval. If you have a low credit score, it is most helpful to get professional advice before you do any kind of measures.

What is the process of getting an investment property loan?

Assuming that you have already strengthened your credit score as a preliminary step, the first step is to aggressively shop around for lenders and compare their interest rates before making a decision. Aside from interest rates as your major consideration in choosing a lender, also scrutinize their lending requirements because there are some lenders that are less stringent than others. Then, file your application and you will be asked for your personal information such as your employer’s name and address, your social security number and many more. After you complete the application process, a verification process will be performed by the bank or lender. They will check your credit score and perform an income evaluation. After you pass the verification, the lender will check if you can afford to make a substantial down payment which would be around 20-35 percent depending on the lender you’ve chosen. Applying for investment property loans nowadays have become more strict compared to before, and to get approval you don’t only need enough down payment and proof of your excellent credit record, you also have to choose a property that is worth your investment property loan and that will be profitable in the future.

FOREX Investing Made Simple – What Is Forex? – Maverick Investing Series

Forex is the world’s largest trading platform with close to four (4) trillion dollars a day traded. It is a high risk investment market but can be mastered through proper education, accurate advice, and some experience.

The Foreign Exchange Market (Forex, FX, or currency market) is a form of exchange for the global decentralized trading of international currencies.

Amazingly, after presenting it as a high risk investment platform, it can be a very safe investment vehicle if you have access to insider information. We define insider information as “looking over the shoulder of Forex investors that have verifiable high income producing success rates. But let’s explain some of the basics of Forex investment and really, explaining its pros and cons.

WHAT IS THE FOREX MARKET?

It is the trading platform enabling investors to exchange currencies of one country for another’s. For example, if the US Dollar is high, and the Australian dollar is at a low level, you may desire to exchange USD (U S Dollars) for Australian dollars.

You would make this currency exchange hoping the value of the Australian currency would rise. The lowers the exchange rate differential (called the “spread”) between the USD and the AUD (Australian Dollar). If the USD was valued at $1.00 and in comparison, the AUD was valued at $.80 in comparison, there would be a $0.20 spread.

If the AUD went up in value to say $.90 compared to the USD (still valued at $1.00 here), you could realize a $0.10 profit for each dollar you traded if you closed out your trade now. That would be a $100.00 profit for each $1,000 you invested.

Simply put, you’re buying a cheaper currency at a low rate hoping it will increase in value like any other product. If it goes up, you make a profit. If it goes down you lose money.

The Forex market assists international trade and investment by enabling currency conversion.

For example, it permits a business in one country, say Canada, to import goods from the Europe, especially Eurozone members, and pay Euros, even though its currency is in Canadian (or the purchasing countries) currency. It also supports direct speculation in the value of currencies, speculation based on the interest rate differential between two currencies

Some primary tools you’ll use

You’ll need a Forex account for your investment deposits which you would setup with a broker. Usually, a small deposit of $100 or $200 is the starting amount for beginners, though you can invest as much as you want. Typically, the deposits increase as you gain experience and confidence in you investment ability.

Set up a free practice account

The smart approach to learning this investment medium is to setup your own free practice (or demo) account. You are issued “virtual” or fake money (like Monopoly money) to invest. This allows you to learn, gain some experience, and determine when you are ready to start investing real money. All this is free.

You’ll need to familiarize yourself with the accounts investment platform, the software enabling you to access the online Forex marketplace. This is usually free too. And you’ll likely want to take a brief Forex course explaining the terminology and investing basics of Forex.

Our next article in the Maverick Investments Forex Series will cover the pros and cons of Forex investing.

The Basics Of Institutional Investment

Investors or investment funds that do not belong to the country in which they are currently investing are called foreign institutional investors. Such investors are from another country, or are registered in a country outside the country in which the investing is being done. Insurance companies, mutual funds, hedge funds and pension funds are all examples of institutions that are involved in foreign institutional investments.

Institutional investors are companies that collect and invest large sums of money, into assets like securities, property and other such investments. Operating companies that choose to invest a part of their profits into such assets are also called institutional investors. There are six basic kinds of institutional investors. They are pension funds, endowment funds, insurance companies, commercial banks, mutual funds and hedge funds.

They perform the duty of highly specialized investors acting on behalf of others. For example, let’s say a salaried individual will get a pension from his employer. The employer hands that employee’s pension contribution to a fund. The fund uses the pension amount to purchase shares, or another kind of financial product in a company. Such funds are valuable because they have a vast investment portfolio in numerous companies. The benefit of this is that the risk gets spread. This means that if one company fails, only a very minor part of the entire fund’s investment will be at stake.

Investments made through institutional investors have a number of benefits for a retail investor. These benefits are:

• The investments are able to influence the solvency of a company.
• An investment by a large institution acts as an anchor investment for other institutions to invest in that particular company/stock, thus increasing its value.
• The institutional investments are safer as there is a wide range of domain knowledge used before making such investments and also such investments are diversified into several companies or asset classes.
• The risk of such investments is not as high as that of investments made by non-institutional investors, as the investment portfolio is vast and diversified. In case of corrosion in value of one asset class, the entire corpus would not be greatly affected.
• The corporate governance is better enforced by institutional investors.

A lot of institutional investors are very interested in private equity as an asset class. This is because private equity has promising benefits in terms of diversification. The returns of private equity can be higher than that of other investments, but they are also more risky and are high beta investments. Institutional investors usually carry out very different and varied investment strategies for private equity. Because of the high level of market confidentiality as well as the limited amount of academic scrutiny, not much is known about the performance and basis of these investment strategies.

Where to Invest and How to Invest Your Money Now for 2013-2014

Knowing where to invest and how to invest money has never been more difficult then it COULD be as 2013 and 2014 unfold. Making money as an investor is tough when times change, so let’s take a look at how to and where to invest money… to avoid heavy losses if the economic world takes a turn for the worse.

Before 2013, the answer to where to invest money was simple: buy stock funds and bond funds, if you are an average investor. Bond funds provided high income and relative safety, while money in stock funds was the answer to was how to invest for growth and higher returns (from early 2009 to early 2013). Then, in June of 2013, the money game got serious as interest rates threatened to rise significantly and ruin the party for everyone.

Stock funds and bond funds are still the average investor’s answer to where to invest most of their money. But if interest rates really take off, you’ll want to own the best bond funds and best stock funds. Let’s look at bonds and the bond market first.

When interest rates go up significantly, bonds and bond fund investors ALWAYS lose money. Long term bond funds get clobbered, as prices (values) take heavy hits in the bond market. Shorter-term funds are hurt much less. How to invest: look for short to intermediate-term corporate bond funds, with low expense ratios and NO sales charges (no-load). These are the best bond funds today because they pay a reasonable dividend with less interest rate risk, and they are low-cost.

Now let’s take a look at the stock market and how higher interest rates can affect stock prices and stock funds. IF rates take off across the board, stocks are likely to take a hit as well. Note: With bonds, losses WILL occur. With stocks, losses are likely (depending on how far and fast rates climb). Where to invest in stock funds: the best stock funds will be conservative EQUITY INCOME funds paying 2% or more in dividends. Once again, look for expense ratios of less 1%, with NO sales charges (no-load). This can save you 5% off the top and 1% or more a year.

Now let’s look at where to invest money if interest rates REALLY take off. In 2007 vs. early 2013: rates dropped about 4 percentage points. In early 2013 bank CDs and money markets were paying LESS than 1% vs. 4% to 5% in 2007. If rates go up 4 points from here: mortgage rates could hit 7% or more, and long-term bond funds could lose one-third or more of their value. If we go back to 1981 interest rates, mortgages went for 14%, while CDs and money markets paid 15% or more. If we revisit these rates, it will be an absolute economic nightmare, especially for bond investors.

Where to invest money in mutual funds if interest rates zoom: money market funds are the safest and best funds in this scenario. They pay virtually ZIP now, but THIS IS NOT NORMAL. In 1981 they approached 20% returns, with high safety. Before the financial crisis of 2008 they were returning 4% to 5%. When interest rates go up across the board… money market interest rates (short-term rates) go up as well.

I’ve spent the past 40 years following the markets, investing money and learning how to invest and where to invest to avoid big losses. There’s an old line that says that NOW is always the hardest time to invest money. Well, now is 2013 and 2014… and investing money could be a BEAR. Don’t get aggressive now.