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17 Terrible Mistakes Made by Real Estate Investors Turned into Useful Tips

17 Terrible Mistakes Made by Real Estate Investors Turned into Useful Tips

A wise man once said, one cannot become Mahatma Ghandi in a span of one day, not even Mahatma Ghandi himself. That proves to say that even in real estate investing, it is inevitable that you will most likely experience some mistakes that would either stumble you or motivate you into doing even better the next time. And that’s the thing about mistakes.

 

17 Terrible Mistakes Made by Real Estate Investors Turned into Useful Tips

 

You can turn something negative into positive by learning from it. But if you take a look at this list, well, you might save yourself a lot of mistakes in the future. Here are some useful tips and things every real estate investor should know:

1. Work with the Right People

Whether you are a beginner or a veteran at real estate investment, one thing will never change: no matter how dedicated you are, if you’re not working with the right people, everything will eventually fail. Partnering with reliable people will certainly save you from any untoward unfortunate financial circumstances. To avoid this, you have to know who you are working with not just with the words they say but with the credentials and deeds that they possess. A trusted network of experienced professionals with a legitimate track record of solid performance is beneficial to keep around. You would really want to go for those who actually walk the talk.

2. Choose the right location

Location is the key in real estate investing. It would say a lot as to what kind of property you should be getting. The key here is to do your research properly and choose the best location for your property. You have to be meticulous, if need be. Every single detail – big or small – must be taken into consideration. A sound judgment and a professional opinion would be very helpful in this kind of situation.

3. Choose the right property

No matter how fancy your location is, if the property itself that you chose is the wrong type, then everything will be in shambles. You have to remember to balance everything out, and just like in choosing the right location, you also have to be very observant regarding the property you are eyeing in order to save you from any unwanted regrets in the future. Since you are investing your money in real estate, might as well make sure you invest it well.

4. Good Financing

Good financing rids you one of the mistakes that you would never want to happen again. Failing to finance well is considered as a lethal mistake because some real estate investors have lost their money or went out of business because of failing to handle their finances well. This is where iFundRE.net’s real estate funding comes very handy. IFundRE.net is a real estate funding company that provides Real Estate Loans as quick and easy as possible to borrowers with both perfect and less than perfect credit, even hard money loans! The great thing about private financing is that you can negotiate almost everything. But the bottom line is, no matter what type of financing you use, you have to make sure that you negotiate hard and avoid the worst mistake.

5. Choose the right real estate investment strategy

The moment you know the right property to buy in the perfect location that you searched for, it follows that you already know what you want to do with it. The thing that you have to remember is that you have to make sure that you can afford it. Again, real estate funding becomes your friend in this type of situation. Take note that there are a lot of financing options in real estate – cash and mortgage are the popular ones at that. Make sure that you choose the perfect financing strategy for your particular situation.

6. Calculate your budget correctly

This goes hand in hand with the previous point. Alongside a great real estate investment strategy is the careful planning and calculating of your budget. One of the greatest mistakes real estate investors make is underestimating costs and overestimating income that will take a toll on the probability of generating a negative cash flow. That in itself is not an option in real estate investing.

7. Make an Exit Strategy

There is no definite assurance that everything you have planned would go accordingly to how you want it to be. Same as in investing in real estate, no matter how vivid your idea is of what you want to do with the property that you want to buy, your money will be wasted if things don’t work out as planned. It is crucial to have a safety net to fall on – an exit strategy as an option in case your original plan goes out of hand.

8. Manage Effectively

Once you have already moved forward with the investment, there are a lot of responsibilities that you must adhere to. You might need to drive by the property often and interact with some people and all that. For sure you are not a full time real estate investor. You have a family of your own, some friends, or loved ones who would want to share your time. You need to manage everything effectively and not compromise one thing for the sake of another. Balance is the key.

9. Delegate responsibilities

Unless you are vying to become a superhero or a saint, you need to step down the ladder and seek help if need be. What do moms hire when they can’t handle everything on their own? Exactly, a babysitter. Now, as a real estate investor, especially if you are new to the business, it pays to hire a property manager to manage your properties. If you try to do everything by yourself, the point above will be the result; it will lead to more problems, more costs, and more stress.

10. Drive away fear with confidence

The only thing stronger than fear is hope. And that is something many real estate investors fail to acquire. They can never truly experience all the great things real estate investing can do for them and their finances because of some fears – failure, loss, and risk. These things are holding them back. But the great part about that is you can overcome those fears with knowledge, and with knowledge comes hope, and with hope comes confidence. In order to not be afraid of the dark, you have to learn how create light. Indeed, in real estate investing, you have to learn topics that you are not familiar with – that is how you create light.

11. Starting with a humble beginning

The thought of owning a property might overwhelm you. However, do not let that moment become a path for an impulse decision of pushing through a huge first investment that you might not be able to handle properly. In the long run, it is inevitable that you will go bankrupt right away. Just as a massive tree starts from a tiny seed, so shall be your investments. Begin to plant a seed first – start small and eventually, there will be investment opportunities for you to grow it into amazing lengths.

12. Set aside emotions in decision-making

The key here is to become a professional who makes credible decisions based on research, knowledge, and evidence. Real estate investing is purely business matters. If you think with your heart instead with your head, then you might be luring yourself into trouble. Your investments are your assets. Don’t let your emotions ever cripple the decisions that you make.

13. Learn from previous mistakes

No matter how cliche it may sound, we really do learn from our mistakes. But if you get to fall for the same mistake again, you have to question your own judgment. Surely, there is room from improvement. Do not get swallowed by your loss or your failure, instead draw the right conclusions from it and learn the lessons so you won’t do the same mistakes again in the future.

14. Be patient

When it comes to real estate investor virtues, patience holds one of the highest places. Indeed, a well-rounded investor is patient as he is wise. No matter what kind of investment you have gone with, always know that it takes time and effort before you reap the fruit of your labor.

15. Treating Real Estate as a business

Owning a property is not a joke, nor is it a hobby. Real estate investing is straight up business. Some investors might treat their properties as something that they do for fun, but at the end of the day, they sit down and wonder where all their stress, pain, and financial loss come from. In order to not make it feel like a hobby, you have to create systems that would increase efficiency of your business.

16. Keep records religiously

You can hire a bookkeeper to keep track of your records. This can be a very straining thing to do if you fail to start it at the very beginning. Every documentation and transaction that has happened in your investment must be kept so as to keep everything in order.

17. Start investing now

If you’re looking for a sign when to start investing, well, this is it. This is your sign. People think that investing is best once you have enough money to pay for your property in full. Little do they know that there are trusted real estate funding, such as the iFundRE.net, which gives the best fundings for any real estate venture. Investing in real estate is learned through doing it. What better way to learn than by doing it as early as possible.

 

Be familiar with these mistakes and you will never tread on the same path as these; although you may walk on your own path of wrongs. But always remember that all mistakes are stepping stones to doing things right the second try. The thing about these real estate investing mistakes is that you have a way out of it! And one helpful way to that is through real estate funding. iFundRE.net is a trusted team who looks to design a loan that meets all of your Commercial & Residential Loan needs. As it is said in the points above, do not be held back by fear, instead take risks and you will reap what you sow.

Interested to Invest in Real Estate? Here’s Everything You Need to Know and More!

Let’s face it – you want to invest in real estate but you have little-to-no clue about how or where to start. You have heard about the profits people get from it when the market is right.

You have heard about people earning long-term income just by note & deed investing and JV partnerships.

Now, you want to test the waters before diving in. Let us save you the trouble of drowning. We have swam across the waters and in this article, you will find some of the best tips for investing in real estate to help you stay afloat.

Investing in real estate

1. Know why you are investing.

Investing in real estate is not an impulsive action; it involves a long and well-thought-of days of decision-making and planning. Remember that you are putting your finances on the line and that is not something you want to take lightly. You have to have the clear understanding of why you are investing so as to stand your ground firmly once you’ve started.

2. Know your local investors.

Keep your friends close, your enemies closer, and your local real estate investors closest. That’s right, learn from those with experience. It’s one thing to read about investing online and it’s another to hear it directly from those who have already walked the road you are about to tread on. You might need to take notes while you’re at it.

3. Sacrifice to prioritize.

You heard that right. You must be willing to sacrifice some luxuries in order to prioritize your future financial freedom. Maybe from a vacation of once a month, you can cut it down to twice a year, from eating out at expensive restaurants every pay day, maybe you can save it strictly for special occasions and celebrations. The key is to look at what’s ahead of you.

4. Every great things started out small.

No one becomes Bill Gates in a day; not even Bill Gates himself. Having said that, there’s nothing wrong with starting out small. You don’t have to purchase an entire building right off the bat. For all you know, your house might be your first small investment, and eventually it will lead you to the best real estate investments in the near future.

5. Be open to possible resources.

There are moments when you know it’s the perfect time to make an investment but your financial situation says so otherwise. This is where real estate funding comes very handy. There are loans that suit your needs when it comes to investing. Take your chances and know that it will pay off in the end.

Here are some reasons why you should consider real estate funding:

  • When you invest in a real estate funding, you’re putting your funds into secured mortgage, that is, loans which are secured by notes and deeds of trust.
  • You can also have the choice of having a joint venture investment where you would have shared ownership, shared returns and risks, and shared governance.
  • When you want higher returns, you also have the choice of becoming a higher risk investor.

6. Do bookkeeping as early as possible.

The moment you start investing, organizing your financial records will really help you in the long run. You can, perhaps, seek help from a lawyer and an accountant to help you keep track of your financial transactions, legal holding status, taxes, etc.

7. Recall your basic Math lessons.

Don’t worry, this doesn’t concern calculus or algebra; just plain and simple adding and subtracting. The thing here is that you need to be familiar of how to calculate your income, expenses, and cash flow. Although you need to have an accountant for that, it pays to be able to understand the math behind these matters.

8. Do your research. Read more about investing in real estate.

Never think that you have it all figured out. There are still more things you will need to discover when it comes to investing. The more you know, the better you are in handling your investments.

Want to invest with us? Call us at (925) 268 – 8012 for investment assessment.

What is a Blanket Loan? ~ Getting under the blanket!

What is a Blanket Loan? ~ Getting under the blanket!

It’s a simple term referencing as a blanket covers everything (or everyone) under it, in the world of mortgage finance when a single loan is secured by more than 1 property, then those multiple properties, it could be said, are covered by that blanket loan.

Wrapped in a blanket all warm, cozy and snuggled in. hmmm, Here is another simple analogy. The multiple properties are wrapped in that one blanket loan.

The variety of entities that can benefit from this specific loan product is diverse. From Mom & Pop with a couple rental houses or commercial place of business and a rental or two. Investors with rental properties whether a few or great many properties (This is portfolio lending), Real estate trusts, investors, corporations, developers who subdivide land into parcels and the list goes on. The largest of these players in the real estate field lately are the ones who have scooped up thousands of single family properties at auctions and in bulk from banks and Freddie Mac / Fannie Mae caused by the most recent real estate meltdown and turned them into rentals.

So who will finance these blanket / wrap loans?

Here we have another diverse list: Your local savings and loan bank for mom & pop, to local commercial banks for their relationship clients all the way up to wall street money for the big guys (and girls).

Now it’s not just residential properties and land these will cover!

Multi-family apartment buildings to commercial properties are also prime candidates.

Benefits and drawbacks come with the territory so stay awake under that nice warm blanket for a moment longer while we touch on some of these topics. First of all, it takes some investigating and doing your homework before you go and get under one. Its always smart to consider if you getting under a blanket alone! Because once you put multiple properties under one loan with partners or loved ones, it has even more implications.

While some lending sources require that the properties be held in an entity such as an LLC or Corporation it’s not always the case. And don’t forget to ask, “recourse”? *personally liable* or non-recourse *hey man, don’t look at me if it all goes to hell!

As with any financial decision, you should get good council after you do your first round of inquiries on your own with an experienced loan person (banker &/or broker) your tax person and a real estate attorney so the end result is not a SURPRISE! Some of the simple benefits are the fact that you only have one escrow, and loan to pay for and keep track of. Grouping multiple properties can also benefit to allow to cross collateralize in purchase and refinance situations allowing a or properties with more equity overcome shortfalls of equity poor properties or even reduce / eliminate the need for a down payment on the purchase of additional property. And yes, you can combine a refinance with a purchase simultaneously. Fun stuff huh? But on the other side of the coin, once you put properties together, unless you have predesigned release clauses in the note and deed you may find one or more properties stuck together in the wrapper (pun intended) when you want one or some out!

Need a blanket loan? I’m here to help solve your real estate financing! Please visit my website @ ifundre.net or contact me directly via email- paul@ifundre.net.

Greenridge is a JV opportunity

Greenridge Terrace Development

Eight Estate Lot Analysis

Total After Entitlements     8 Lots 36 Acres

Cost of Property                                              $5,200,000.00

Cost of Development                                        $2,600,000.00

Total Cost Lots only                                          $7,800,000.00

Retail Selling Lots only                                    $20,000,000.00

 Gross Profit Lots Only                                         $12,200,000.00

Cost of Property & Entitlements                          $7,800,000.00

8 Spec Houses Construction Cost                       $24,000,000.00

Total Cost with Houses                                    $31,800,000.00

Retail Sale of 8 spec homes @ $7M ea. $ 56,000,000

Gross Projected Profit if build out all 8 spec houses         $ 24,200,000.00

                                                               

7 Tips for Boosting Your Credit Score before Applying for a Home Loan

When applying for a home loan, lending institutions will look into your capacity to pay for such loan. Banks and other private money lenders do not just give away their money when you need capital for a home loan. They will require so many things from you and it is important that you comply with these requirements to be able to qualify for such loan. One of the things banks and private lenders look into is your credit score.

What is Credit Score?

Credit score is a numerical expression that represents the creditworthiness of an individual. This is important to lenders because the credit score predicts the person’s capability to pay for a loan. Credit scores also reveal an individual’s potential risks.

Credit scores are calculated by various businesses. If you are applying for a home loan from a private lender, the company will gather all information related to your credit history or credit report. Details in your credit report are gathered and compiled by credit bureaus (Equifax, Experian, and TransUnion) which are then used by lenders to calculate your creditworthiness (usually under the FICO method).

How to Improve your Credit Score?

As mentioned, banks and private money lenders look into your credit reputation before you can apply for a home loan. These institutions want to know that you are good in settling obligations. It is important to them that you have the capabilities to pay such loan without delay. To know more about improving your credit score, here is how lenders calculate your creditworthiness.

  • Payment History (35%) – This shows lenders how prompt you are at settling debt obligations. If you pay on time, you’ll get a good score. If you have been paying late and at one point you declared bankruptcy, you’ll get a bad rating.
  • Outstanding Debt (30%) – This category looks into your outstanding debts. If you own several credit cards, the lender will look into your credit history to know about any debts unsettled.
  • Credit Age (15%) – Lenders also consider the age of your credit file. The older the credit report, the more stable it is.
  • Account Diversity (10%) – In this category, lenders look into the types of credit you have.
  • Credit Inquiries (10%) – Each time a lender inquires about your credit, the inquiry will be included in the individual’s credit file. There are two types of inquiry, soft and hard inquiry. These inquiries especially the hard inquiries affect credit score.

Based on that information, it is really easy to boost your credit score. Here are 7 tips that will give you a good credit rating.

  1. Pay Your Loan on Time – This is the most important thing to do to boost credit score. If you currently have obligations from lenders, it is important that you settle your obligations as scheduled. Your payment history will be forwarded in your credit file therefore, it is critical that you have paid lenders on time so your future lender will trust you when you apply for a home loan in the future.
  2. Avoid Maxing Credit Card Debt – When you use credit card to pay for your bills and other things, it is important that you do not max your credit card. A maxed out credit card shows poor handling of credit. Lenders see this as a red flag. As such try to lower your obligations by settling your balances.
  3. Keep Old Credit Accounts – Creditors look at the debt-to-credit limit ratio and the average age of your accounts.
  4. Do Not Allow Anyone to Make an Inquiry Unless it is Important – Remember each inquiry goes to your credit file. More inquiries from lenders especially hard inquiries create a negative impression. If inquiries can’t be avoided, make sure that the inquiries are performed within a week so these will be perceived as one inquiry.
  5. Pay Past Due Bills, Judgments, and Collections – Pay your outstanding obligations.
  6. Check Errors in Your Credit Report – One of the things that create low credit score is error in the report. Review your report well. If there are errors, see to it that the errors are corrected.
  7. Don’t Open New Lines of Credit – If you are applying for a home loan, do not open a new line of credit because this will have a negative impact.