Have you wondered what an accredited investor is? There are plenty of different types of real estate investors. Yet, someone who fits one of these conditions qualified as an accredited investor: An investor with an annual single income of $200,000 (If married, a combined income of $300,000) An investor with a net worth of at least $1M (excluding primary residence) Plus, the investor would be expected to make at least the same amount annually. Don't worry that you won't be able to get rich investing if you're not an accredited investor, the SEC lets companies and private funds skip the
Have you heard of the commercial mortgage term, "Debt Service Coverage Ratio?" It's the term to describe the ratio that lenders use to evaluate and qualify for the financing of a commercials structure. It shows the cash flow compared to debt service. DSCR For Commercial Properties In general, most banks will need a ratio of 1.5 - 1.35 (net operating income to annual debt service) before lending for commercial property. They just want to make sure you will have enough cash flow to cover the payments each month. Net operating income should include interest, principal, lease payments and sinking fund.
Have you heard the term, "Effective Gross Income?" If you're starting out in real estate investing in Georgia or the Carolinas, you may hear this term. Also called, "EGI," it's the income that you'd have when you subtract losses of income from vacancy, concessions, model units, legal fees, employees, and bad debt. The reason it's important to know an apartment complex's Effective Gross Income is extremely telling. You don't only want to consider the Gross Potential Income. You'll also want to add in revenue generated from other things like coin-operated laundry, parking, or concessions. In order to determine your property's
If you're just starting out as a real estate investor, you may have heard the term, "Gross Potential Rent." So, what exactly is that, and how is it calculated? Gross Potential Rent Gross Potential Rent, also known as "GPR," is the hypothetical amount of revenue that you could make from your apartment community, if it was fully leased all year round at market rental rates. It's the maximum amount of revenue you could bring in from rent on your apartment complex. Determining GPR GPR is important, because it lets you know how profitable the property could be. It's the most
If you're just thinking about becoming an investor, you may have heard the term, "Equity Investment." So, what is equity investment? Well, simply put, it's the share of cash that you put into an investment. If a company that you put money into has a profit, you can earn money on your investment through a dividend, right? This lets some of the company's profits get divided by shareholders. In trading, equity means your share of stock. In real estate, you could have an equity investment in a limited partnership or limited liability company. Also, real estate investment opportunities are often
Earlier, we discussed what a Proof of Funds letter was and why people need them. So, what qualifies as Proof of Funds and where do you get them? Anywhere your liquid assets are held can provide you with a proof of funds letter. Of course, this means that your bank can provide you with a proof of funds letter to show that you have money in your account. Plus, certain credit lines or money market accounts might qualify too when the funds can be readily accessed. These institutions can also provide you with a proof of funds letter. Unfortunately if
Proof of Funds Letters can help buyers get under contract quickly. They are a personalized statement that shows that you have funds set aside for a fix and flip real estate investment. A Proof of Funds letter proved that you have enough liquid cash to purchase your investment home. Why do sellers need a Proof of Funds letter? No seller would want to take a home off the market unless they know that a buyer can actually pay for their home. So, buyers must provide Proof of Funds letters. Even if getting financed, sellers will want to make sure you
Yesterday, we discussed the 70 percent rule as it applies to flipping houses. Check out that previous blog post if you aren't sure what the 70 percent rule is. Today's question is whether you should ever pay more than the 70 percent rule suggests. For example, some beginner investors think that it's OK to exceed the amount specified by the 70 percent rule in an appreciating market. After all, in a few months or by the time you finish your rehab, the After Repair Value should go up, right? Typically, but that's a big risk to take if it doesn't!
Have you ever heard of the 70 percent rule when it comes to flipping houses? If you're just starting to look into flipping houses, you might have heard of the 70 percent rule. This house flipping tip suggests that an investor should only pay 70 percent of the After Repair Value (ARV) of a property minus any needed repairs. The ARV is the value of the property after it's been completely repaired. So, once you've put all the repairs in, what would the house be worth? To follow the 70 percent rule, you'd take the amount that the home is
Are you considering investing in homes to flip them? Considering a hard money loan, but feel unsure about the process? Here's where you will need to start. Check out our hard money lending criteria. If your situation fits our criteria, just fill out the online loan application or download and fax it to us. When we get your application, we will check it out. We can get purchasers money much more quickly than traditional lenders. Keep in mind that we lend up to 65 percent of the ARV value of the collateral. Luckily, if the loan will be used in part for the renovation or