There are many ways to start investing in real estate. We are going to focus on a way to start investing in real estate with the least amount of cash and what we feel is the safest investment in real estate today. Fix and flip or fix to rent real estate investing.The first providing a larger return faster and the second, Fix To Rent providing a path to build wealth in real estate investing. Many investors start with Fix and Flip to build a cash reserve and/or refinance or cash out refinance into a long term rental loan. CambridgeHomeLoan.com has provided these services for over 33years and can help you get started today.
How To Invest In Real Estate in just 3 Steps
. a. Setup an LLC. You can go to any “create a company” site online and create an LLC for your acquisition. An LLC will help shield you from liability in many situations and even if your state allows you to invest in real estate in your personal name, I would advise against it. You will need a copy of your formation documents, operating agreement and EIN number
b. Find a realtor or area expert. – Realtors are a great resource to help locate your first investment and to help find resources in the neighborhood to help with construction, painting, plumbing, etc.. They also know the area , can tell you where things are selling for and help you determine how to best maximize value in the area you are investing. Ex. Add a bathroom, bedroom, pool or just paint and landscaping. You need to know what houses sold with what features/square footage in the past 6 months witihin a mile or less from your investment home to know your ARV (as renovated value).
c. Check your FICO credit score. Today you will want at least a 620 FICO mid score. We can lend without a good FICO but terms are not as good.
d. Save your deposit. Although we can provide 100% of the purchase and 100% of the rehab you will need over a 680 FICO and have to show reserves in the bank so that your are not using your last dollar to invest in the event of delays or any mishaps.
2, Go into contract on your investment property.
When you find a property that you think will work lock it down and get it into contract fast. thats right pull the trigger. Even if you do not have all of the property data you need yet by going into contract you become the new contract owner of the property and are on your way. .
Side note: How do you know if it’s the right property?
I’ll give you a way to quickly determine a good investment property. Be sure that the rehab will be under 50% of the purchase price. If the purchase price is $250,000, you do not want repairs to be more than $125,000, which would be a total loan amount of $375,000. Once you are experienced this can change. Be sure that the total loan amount is no more than 70% of the ARV (as renovated value) market value if you were to put the property back on the market. Once renovated if the market value was only $450 x70%=$315,000. Your total loan was $375,000 and this would not be a good investment.
If you purchased the home for $250,000 and your rehab was mostly cosmetic $30k your total loan would be $280,000. With an ARV of $450,000, your profit would be $65,000 less fees making you a profit. If you plan to refinance to rent or the market prices go down you may be better off refinancing for a long term loan. Most bank and private equity lines require 25-30% equity invested. With the 2nd scenario you would not have to bring any additional money to the table when you refinance.Feel free to call one of our customer service representatives to discuss your scenario or to understand these calculations.
A. Go into contract
B. Review the opportunity with a realtor or contractor and with your CambridgeHomeLoan.com finance agent. What gives you the most upside for that house in that neighborhood? Should I add a pool? Finish the basement? Re-do the kitchen, Add a Bathroom? Remember the least you need to do to increase the ARV and the faster, the better off you are. Also the less construction the better. Investment flip loans do not have a prepayment penalty so the faster you finish and get it back on the market the less interest you will pay and the more money you will make.
C. Send the contract, company documents and repair budget to email@example.com Fill out a short form application here. https://www.cambridgehomeloan.com/flipapplication/
We will provide you with a list of due diligence documents that are required for processing to get your loan started. Many of our loans do not require a formal appraisal and in many cases we can close in 5-7 days. Fast closings are great for properties that you are purchasing either from a wholesaler or where you would like to negotiate a better price. See below some useful forms
Fix and flip Due Diligence checklist –Click Here! to see what a due diligence checklist looks like.
Scope of Work Typeover form –Click Here! to download a sample form
Schedule of real estate owned (if any) For experienced investors filling this out will lower your rate and increase your leverage. Click here for a sample schedule of real estate form.
From your first property to your 50th, Single family, portfolio, multifamily or commercial investment real estate deals, CambridgeHomeLoan can help you grow your portfolio and your real estate wealth. Feel free to call with any questions about investing in real estate. From first time borrowers to experienced investors.
Fix and Flip, Fix to Rent, 1-4 family to 400 units, Ground up construction, multifamily and commercial real estate loans. Purchase, Refinance, Cash out refinance.
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CambridgeHomeLoan.com takes an active part in helping our customers achieve their long term goals. Fast closings as fast as 5 days and refinancing into better rates (30 year terms) when it matters. Feel free to contact us with your loan scenario at 800-826-5077.
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Real Estate Finance Blog
With the volatility of the markets, rates, and prices of real estate, you may be asking yourself, “Is now the right time to buy or