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
Waiting for apartment buildings to go on sale is not always the best way to get a rental building. There are a number of ways to find apartment buildings before they go on sale. Here are a few ideas: Keep an eye on probate real estate - Fantastic deals are to be had in probate real estate. Contact apartment owners via a direct mailing - You never know who may be considering selling. Acquaint yourself with attorneys - Divorces, lawsuits, and financial changes can create a potential apartment building seller. Network with commercial real estate brokers - They generally have
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
So, yesterday, we discussed how some investors try to form an LLC in another state, because some states are just not small business friendly. Right? We cautioned you that if you want to form an LLC in another state, that you will need to get a registered agent who is a resident of that state to help you. That is with few exceptions. The logical next question you are probably asking yourself is about dual residency. Right? Well, you actually can be your own agent, but make absolutely sure that you can both meet the state's requirements and fulfill your
Sometimes distressed properties sold "As-is" come with some major problems. Do you know how to recognize them? If you intend to invest in a distressed property, these are important issues that you need to know about. Head into the bathroom. Bounce a little on the floor near the sink, tub and toilet. Is there any give? That can be a major indicator of water damage! Grab a high powered flashlights and check underneath the floor if possible. Look for stained wood or joists. Find out when and why that damage occurred and get your answers in writing if you can!
If you live in a state that is a bit unfriendly to small businesses, you might have considered just forming your LLC in a state that isn't. Investors do this frequently. Here's the thing though: If you intend to form your LLC in a state that is more friendly to small businesses like small real estate investment companies, you will need a registered agent. That's your legal obligation. What does that mean? Well, if your LLC is registered in another state, you have to have someone in that state to handle all of your LLC's legal and tax documents, and
Historic homes offer significant ambiance and beauty. Obviously there are downsides. The natural materials mean more maintenance. Depending on the time period in which the historic home was built, it could also feature hazards like asbestos or lead paint making DIY repairs a little more risky. Additionally, if the home is located in a historic district, you'll face limitations as to what kinds of upgrades you can even make. Sometimes, even window upgrades are restricted which means that your tenants may face higher heating bills. Still, people who are interested in living in historic homes generally expect that challenge. To