Hard Money

ReCasa Financial Group

Hard money can be a great solution for real estate investors that cannot qualify for cheaper loan options, but are confident that they have found a great project that will yield a good profit despite the higher cost of the hard money loan.

It is imperative that the investor truly understands the “Terms and Conditions” of the loan.  It is highly important to know if interest is calculated on the outstanding loan balance or commitment amount, what type of fees will you be charged if loan is not paid off at end of initial maturity, what is reported on your credit report, what inspection, release, application and other fees are there associated with the loan, and what happens if you cannot get loan paid off in a year or more.

We always advise clients to ask many questions to know what will happen if the project goes as expected and the loan is paid off in agreed upon time frame.  However, it is even more important to understand what happens if there are delays or bumps in the road.

Read this article to learn about hard money lenders versus hard money partners.

Hard Money Lenders vs. Hard Money Partners

Getting a Mortgage When You Are Self Employed

Getting a mortgage when you are self employed brings extra challenges to the borrower. The amount of documentation and paperwork requested may seem excessive. All the paperwork is intended to verify that you can operate a business, cover expenses, and still make an acceptable enough profit to pay personal debts. When you are self employed, you get paid last and everyone else gets paid first.

Mortgage Tips

The first and best practice self employed individuals can implement is not to co-mingle funds or debts. Business credit cards often appear on personal credit reports, which may be unavoidable.   To help avoid this, make certain that the card is used only for business purposes and only paid by the business.  This simplifies things for IRS and mortgage reasons, and thus simplifies the world. Also, with proof of 12 payments from the business, personal debt on the credit report is not considered in the debt ratio as the business is actually the one paying.

Second, keep good records.  You will be required to verify the last two years income plus a year to date income report. Invest in an accounting program and this sort of financial report will be very easy to do.  The accounting programs today follow a checkbook lay out. If you can work a checkbook, you can learn to work a business accounting program. Be ready for lots of questions and verifications as to whose debt is whose, the borrower or the business.

If there are onetime expenses, whether an unanticipated cost or large capital investment, be sure to break these out from general expenses on your taxes. It does not change the tax liability at all, but it clearly shows to an underwriter that it was an isolated expense/investment. Since it is not an operating cost, it is not held against the income of the business. Repeat costs, operating expenses, and recurring capital improvements are what matters when determining the income generated from the business.

Some expenses are paper costs only, such as depreciation, business use of home, amortization, and depletion.  The self employed borrower should maximize these expenses when filing tax returns for the maximum extent possible.

Be ready to prove and document when you enter the process.  With some patience and persistence, credit worthy self employed borrowers, no matter how complicated their situation, do finally close. For those self employed, the only documentation used to prove income today are federal tax returns.  If you did not claim, you did not make it.

What other tips do you have for getting a mortgage when you are self employed?

I Paid Cash, How Do I Get My Money Back?

As I meet and speak with real estate investors across the country, I have the same conversation over and over again about how does an investor get his/her cash Getting Money Out of a Real Estate Purchase or Rehab Projectout of a home after purchase and/or rehabilitation. There is hope, and there are ways.  One option is an Investor Bridge Loan. Lenders, like ReCasa, will consider extending an interim, or investor bridge loan, for a free and clear property. It is a quick way to recoup your cash that is stuck in a property.

Other investors pay cash for housing if the home requires renovation before it can be occupied.  FHA will not do investor rehab loans; Fannie Mae’s HomePath is cumbersome for investors to use. Many real estate investors are not aware that investment rehab lenders, like ReCasa Financial Group, still exist and allow the buyer to acquire homes that need work, with a mortgage so that when rented and ready for permanent financing, the loan is NOT cash out, but a rate/term refinance.

Wealthy House Hunters Are Using Delayed Financing to Beat The Competition

Help! I Paid Cash! How Do I Get My Money Back?

Blanket Mortgages and Investor Bridge Loans

Issues Impacting Real Estate Industry

There are many factors that are out of a real estate investors control that can

Real Estate Industry Issues - Real Estate Financing

impact the values, demand and ultimately prices for properties and rents.

Successful real estate investors focus on what they can control.

Targeting stable neighborhoods and working harder to find properties at a price that they can make money and build wealth.

Read the article below and let us know which issue is having the most impact on you.

Issues Impacting Real Estate Industry