Hard Money Loans for Real Estate: How to Profit Wildly in Real Estate With Hard Money Loans

Hard money loans can help you make a fortune in real estate investing. Whether you’re just starting out or you have years of experience investing, you can definitely take advantage of the enormous leverage these special loans provide.

When you decide to use hard money loans to buy real estate for investment purposes, one of the first things you need to do early on is to think about your exit strategy.

Your exit strategy is essentially what you plan on doing with a particular investment deal in order to profit from it. For example, you might want to invest in a property so that you can fix it up and then sell it for a profit as soon as you have it ready. Another example of an exit strategy is investing in a property so you can hold onto it as a rental property for long term gains.

Once you’ve picked your exit strategy and decided you will be using a hard money loan to fund your deal, your next step is to crunch some numbers and complete your due diligence process. Like they say, “the money is in the deal,” so you want to “buy right” in order to make sure you profit.

You can find deals from motivated sellers in all kinds of situations — people facing foreclosure are a good example of motivated sellers, abandoned property owners are also likely to be motivated to sell and so are distressed out of town landlords.

Once you find your deal from a truly motivated seller. you want to negotiate and put it under contract because your hard money loan lender will definitely want to see that binding document before they can lend out any funds.

With your deal under contract, you will then need to find and contact a loan broker or lender who specializes in hard money loans for real estate. Hard money loans are typically not underwritten by conventional banks or credit unions like conventional real estate loans are.

After you get your funding and buy your investment property from a motivated seller, the next step is to get it fixed up so you can get it ready for the market. You can do this yourself or you can find independent contractors to help you with the repairs.

In most cases, hard money loans for real estate will make a provision for repair money. So going back to “buying right,” if you got your repair costs estimated correctly, then you shouldn’t have a lot of problems at this stage.You will have enough money to fund the repair costs.

The final stage of course is executing your exit strategy just like you planned at the very beginning of your project. Here’s where you put the deal on the market and either sell it to an end buyer or you hold onto it as a rental property.

As you can see, hard money loans for real estate can really help make the process of investing and profiting with real estate so much smoother. Take advantage of these special loans and use them whenever possible.

Prosper Loans – Peer-To-Peer Lending Creates Opportunity

Many people assume there is only one source of borrowing. This source would, of course, be a traditional bank. While banks truly are a major source of lending, there are other opportunities for borrowing. One such method would be peer-to-peer lending. Among the common peer-to-peer lenders, Prosper remains an increasing popular provider.

Prosper Loans (Prosper.com) is a company that also does offer something unique to the financial market. It provides a means in which investors can a nontraditional and potentially profitable vehicle for their money. How so? Investors become lenders and reap the interest on the financing they provide.

The numbers tell the tale. There are over 1.1 million members and they have borrowed $264 million in funds. Such figures clearly show that this is a well established and serious lender. How does the program designed by Prosper work? The answer to this is found in the answer to what exactly peer-to-peer lending entails.

Basically, the process eliminates the traditional lending institution by connecting borrowers with those that are looking for viable vehicles in which to invest their money. New and innovative investment vehicles will always be popular which is why this company is raising eyebrows in financial circles.

The actual borrowing/lending/investing process is a rather streamlined one. A borrower merely needs to determine a loan amount along with a stated purpose for the loan. Immediately thereafter, the borrower will post a classified ad promoting a loan listing. Those interested in investing via funding loans will examine the classified listing.

Investors are not under any obligation to cover any loan. However, if the investor sees a loan listing that meets his or her risk level, the investor may wish to fund such a loan. Again, there is no obligation for the lender to accept a loan offer so no one is locked into funding weak loan offers.

As soon as a loan is approved, the borrower will make repayments in the same manner they would to any other lending source. They will make fixed monthly payments which will go to cover the loan and the interest.

The money that is paid back will cover both the investor’s actual investment although a portion of the payments will go to Prosper.com. This should be considered a given because the service does have to make money in order for it to remain solvent. That is just basic common business sense. This is where certain misconceptions arise where the service is dubbed fraudulent. Accepting fees for providing a lending and investing service is perfectly understandable. The key here is that the service does what is needed to do to provide all parties with a viable means of seeing both their needs met. Accepting a nominal fee in order to provide such a service is logical.

Prosper.com does offer a unique peer-to-peer lending and investing service which can help all parties involved. Many are seeking a viable means of acquiring lending when other forms of lending have been cut off. The same can be said that there is a need for effective investment vehicles as well.

Investment Property Loans: Quick Answers to Your Questions

What is an investment property loan?

An investment property loan is a cash credit obtained for the purpose of purchasing a residential or commercial property wherein the property buyer plans to make an ongoing or long-term profit in the future. The money granted as loan may be used to purchase a vacation property, a piece of land, condominium unit, upper fixer property, apartment, single-family house and a single detached house. However, the money granted as loan cannot be used for other business purposes. There are three major types of investment loans, and they are those that require collateral, those that need a big down payment (higher than 20 percent) to get lower interest rates and the ones that either require the investor to pay the down payment cash or only a part of it.

What are the loan requirements?

To be able to obtain an investment property loan, you need to have a good credit score, enough cash reserve to make payments during months when your investment property has no income, at least 20 percent down payment, proof of income and most of all the property that you wish to purchase must pass the property appraisal. For those who do not have a very good credit score, there is still chance for you to get approval. You may consider getting an investment partner who has a very good credit rating. If you wish to get an investment property loan, it is important to strengthen your credit rating at least six months before your loan application. Paying off delinquent debts and closing old accounts only before getting a loan might negatively affect your chances for loan approval. If you have a low credit score, it is most helpful to get professional advice before you do any kind of measures.

What is the process of getting an investment property loan?

Assuming that you have already strengthened your credit score as a preliminary step, the first step is to aggressively shop around for lenders and compare their interest rates before making a decision. Aside from interest rates as your major consideration in choosing a lender, also scrutinize their lending requirements because there are some lenders that are less stringent than others. Then, file your application and you will be asked for your personal information such as your employer’s name and address, your social security number and many more. After you complete the application process, a verification process will be performed by the bank or lender. They will check your credit score and perform an income evaluation. After you pass the verification, the lender will check if you can afford to make a substantial down payment which would be around 20-35 percent depending on the lender you’ve chosen. Applying for investment property loans nowadays have become more strict compared to before, and to get approval you don’t only need enough down payment and proof of your excellent credit record, you also have to choose a property that is worth your investment property loan and that will be profitable in the future.

Gold, One of the Safest Ways to Invest

The precious metals market has always been one of the best ways to invest for virtually every investor. Gold stands at the head of the precious metals market as the most covered and easiest investment to get into. Here are just a few of the ways that gold can protect and build your wealth.

- There are more ways to invest in gold than many other kinds of securities.

The safe-haven investor is made even more safe because of the many ways that there are to invest in the metal. This ensures a high volume on the metal, and the high volume in turn secures a more stable price for the investments of everyone.

You can invest directly in gold bullion in most countries; however, you will need a professional partner in order to protect your investment from the government. If you do not feel like going through this hassle, then you can invest in many derivatives of gold such as exchange traded funds and mutual funds that include gold. These investments may be slightly off of the true value of gold; the derivative investments tend to be affected by the short term attitudes in the market more than gold bullion direct investments. All of these investments are still safer than other securities because they respond much less to short term movements in the market.

In order to decide between the ways to invest in gold, you should consult a professional financial advisor whom you trust. If you want to protect and build your wealth, then you must be sure that you deal with an investment that is within your budget as well as the one that is right for your portfolio.

- The safe-haven investor invests in gold for the long term.

If you are looking for investment that you can keep for a while without having to monitor it, then gold is definitely the investment for you. Most people do not have the time to look over their investments on a day-to-day basis. However, the only investments that truly make money outside of the precious metals market require a great deal of personal management in order to succeed. You get the best of both worlds when you invest in gold – the safety of a precious metal along with the ability to create wealth for yourself while saving time.

- Gold can maintain your portfolio even when the market is going down.

One of the main reasons that people invest in gold is the ability of the precious metal to maintain value and even go up in value during a bear market or recession. Gold is usually the investment that people look to when the dollar is falling. This means that you can actually reverse some of the negative effects of a recession including higher interest rates and a higher cost of living. Once the recession is over, precious metals tend to retain their value. This means that you do not have to sell your holdings once the recession is over – you can keep them as an addition to your net worth.

As one of the safest ways to invest, gold is quickly becoming a staple in the portfolios of many people. In order to get the most value out of the investment, you should start to invest in the product before people begin to truly understand what gold does. Once the general public is made aware of the true nature of the precious metals market, those people will likely flood the market and drive up the price. If you get in ahead of them, then you will reap the benefits of your good decision without having to pay a premium.

Try to invest in gold at a basic level if you can. The upfront cost of time that you will have to put in for bullion is well worth it. You will get the safest investment of all gold investments.

UK EIS Investments

The Enterprise Investment Scheme (EIS) has been designed by the UK Government to encourage private investment into small, high risk trading companies by offering a range of tax incentives.

Providing the underlying investments made by the EIS are held for at least three years (for Income Tax relief and tax free growth), the current tax reliefs available for UK investors are:

30% upfront Income Tax relief up to maximum investment of £1 million, which can be carried back to the previous tax year

100% Inheritance Tax relief (provided the investments have been held for at least 2 years at time of death)

Capital gains tax deferral for the life of the investment

Tax-free growth

Tax relief from investment losses

If you are looking to invest across a range of EIS managers and would like a simple way of administering your investments, the scheme has been designed with you in mind.

EIS may be right for you if any of the following statements apply:

· You have significant savings and want to diversify your investments while benefiting from the tax incentives

· You are keen to benefit from the growth potential offered by investment in smaller companies

· You would like to reduce the potential Inheritance Tax due on your estate

· You would like to reduce your Income Tax liability

· You want to defer a capital gain

· You have a significant pension fund but are now exposed to the Annual Pension and/or Lifetime Allowance

· You have elected for Pension Enhanced Protection or Fixed Protection

· You want a tax efficient savings vehicle without the restrictions attached to pensions

· You are a UK resident non domicile and would like to remit overseas income and capital gains tax free

We believe that EIS/SEIS portfolios are the investment of choice if you want to make larger contributions to fund your retirement in a tax efficient manner.

However, the tax benefits of investing should be your secondary and not primary reason for investing. EIS (and SEIS) is designed to provide an excellent investment opportunity in its own right.

Direct Application:

Investors can choose to invest via an offer to purchase new shares directly into an EIS qualifying company. The biggest benefit of this option is that the investor has direct control over the investment. However, not many people have the skills needed to carry out the necessary due diligence needed and the lack of thorough due diligence carries exceptionally high risk.

Investors who are seeking a more diverse portfolio may find this investment option a little less attractive as “all their eggs will be in one basket”. Additionally, the same benefit (more control) can also be a drawback as investors will not have the benefits of working with professional advisers.

A discretionary service:

This option allows investors to invest their EIS/SEIS money through a discretionary manager. For most investors the attractive aspect of this option is access to professional advice and information via trained and qualified personnel and recommended by a financial adviser. An adviser will likely simplify the investment process by handling special paperwork and dealing with other details.

However, as with a direct investment, the client is likely to be invested in a small number of companies and very exposed to the fluctuation in valuation

A platform:

You can use a platform offering EIS/SEIS solutions for EIS/SEIS investors, helping to simplify the EIS investment process. From those looking at longer term investment (perhaps for those considering inheritance tax (IHT)) to those looking for more “asset focused” investments, to those considering Seed EIS investment.

With the availability of a wide range of managers, clients and advisers can significantly reduce risk with greater diversification all within one application form.