Real Estate Investing is a great way to secure your financial future. And investing today is easier that you may think. For those with less than perfect credit or just breaking into the real estate market, you don’t have to lose out on a real deal do to credit issues. Hard money lenders, like SFR Ventures, Inc. can help you get the property of your dreams. Here are the 6 steps to financing your next great construction project.
Step 1: Choose the Right Project
When in the market for investing in real estate, make sure that you choice the right project. It’s important to do your research on the area and to determine your potential profit upon completion. It is important to build or renovate to the specifications of the neighborhood demographics. This also makes a private money construction lender able to make a quicker decision after all real estate is all about location, location and location.
Step 2: The End Game
This step is very important to securing your loan. It’s the planning stage of your project. Once you’ve contacted a contractor and have worked out a doable budget, you should then be in a position to know what your exit strategy is going to be. Remember that hard money loans are short-term, so you’ll need to understand your repayment schedule and the negotiate terms of your loan.
Step 3: Do Your Research
A key to a successful construction project is doing your research. You definitely want to know the demographics of the area before you purchase your property. It is a good idea to do comparables on projects similar to yours and see what they sold for. You should probably go back about 6 months to get a better idea of what the area can or cannot support in regards to completed projects. You should also search within a ½ of mile radius of the subject property. This is exactly how your construction loan underwriter is going to look at the project.
Step 4: A Good Contractor
Keeping your construction project on time and on budget is a key to the success or failure of your project. There will always be unforeseen issues that will come up. You have to make sure that you take in consideration new appliances, plumbing, flooring and other items that your property will need. It’s a good idea to have contingency money for those issues that may come up.
Your best bet and your best ally is to hire a qualified licensed contractor. Not only is working a contractor a key to a successful project, you contractor is also a great source of helping you with your budget and keeping your time line on track.
Step 5: The Right Documents
Once you are in the position to negotiate a hard money loan, make sure that you have all the right documents to make the process go faster and smoother. Even though credit scores are not as important, you will still be asked to show documentation regarding your income and assets.
One important aspect of this step is showing your willingness to put up your own finances for the project into the deal or at least 10-15% of cost. This is called “skin in the game”. It is a good idea to have a down payment that reflects you’re commitment to seeing the project completed.
Step 6: Bring Your Best to the Table
Now you are ready to negotiate a hard money loan. Show your lender that you have what it takes to see your project completed. Sell your lender on your dream and show that you are ready to get the project started. Once you’ve come to agreement, roll up your sleeves and get to work.
If you are in the market for a hard money loan in the San Francisco Bay Area, SFR Ventures, Inc. is able to answer any questions you have and to make the hard money loan process easy for you. SFR Ventures, Inc. is located and headquartered in Northern California, but we do lend throughout the state. Whatever type of loan you feel is right for you, call Beau Eckstein at 925-852-8261 or on the internet at http://reiloanpro.com.