Where Can You Find Alternative Financing for Investment Properties?

If you need to obtain alternative financing for an investment property, I have a tool on my website that can help you.

The key to investing in real estate is to find the right property and the right financing. What if you

have the right property but need to find alternative financing, though?

For example, most of the properties that I have right now are so-called "good deals,” meaning they

are more or less scratched and dented. Let’s say you have a property with a single-family home in

front and a duplex in the back. The single-family home is in pretty good shape and you can pretty

much rent it out right away. The duplex in the back, however, is in a state of disrepair.

You can have good credit, good income, and a good down payment, but conventional lenders

like Freddie Mac and Fannie Mae won’t give you a loan because of the condition of that duplex. If

the kitchen is worn out or some essential appliances are missing from it, a conventional appraiser will

require that those deficiencies be fixed before closing.

However, in a situation like this, you cannot fix the place before you close. If you do that, you’re at risk because if it doesn’t close, you’ve wasted a lot

of money. Secondly, the seller wouldn’t allow you do to that because it would take time to fix that

property. There are also liability issues that could arise.

This is when you need to find alternative lending. How can you find alternative lending?

My website has an “Alternative Loan Search” tool on the left-hand side of the front page which

can direct you to the right type of financing for the property you’re seeking to invest in.  

For example, I recently had a friend ask me about obtaining financing for a vacant piece of land. If

you used my website to search for this type of financing, it would probably yield around 10 to 12

results for lenders who could help you and compare the pricing for building a home on that land. Later

on, you can always refinance on a conventional loan and use it for a few months or a few years.

This resource is similar to my “Finance Tools” link at the bottom of my website that allows you monitor

whether interest rates are going up or down for conventional loans so you can lock in the

best rate possible.

As always, if you have any questions about this topic or you’re thinking of buying or selling a home,

don’t hesitate to reach out to me. I’d be happy to help you. In the meantime, stay safe and stay happy.

Finding the Funds to Invest in Real Estate

You can find the funds to invest in real estate by using your retirement fund and putting it into a self-directed IRA.

In one of my previous videos, I discussed the seven reasons you should buy an investment property to forge a path of financial independence and perhaps even become a millionaire. 

Since then, I’ve received a lot of great feedback on this topic. One question I keep getting is from people who are interested in investing in real estate but don’t think they have the money to do so. 

Everybody’s circumstances are different, but there are ways you can invest in real estate even if you think you don’t have the means. 

Odds are you have a 401(k), a 403(b) if you’re a teacher, a deferred compensation plan, or an IRA. As I’ve mentioned before, our market has averaged a 6% appreciation every year for the past 30 years, and with a leverage of 20% to 25% and a 6% cash flow based on your rental, you should be able to produce a 30% return per year. 

If you have a child that’s about to attend college, I have a way for you to invest in real estate that I personally use. I recently purchased a home near where my son attends college at UC Riverside using my retirement fund. He shares the rooms with friends and classmates, which produces more than a 6% return annually. 

Using a self-directed IRA gives you total checkbook control.

Find the funds to invest in real estate by using your retirement fund and putting it into a self-directed IRA. This way, you have total checkbook control, you’re not dependent on a company you’re not familiar with, and you have total control over the property. You can also benefit from the tax write-offs that come with owning an investment property. 

If you want to know more about how to set up a self-directed IRA to invest in real estate or you have any other questions, please don’t hesitate to give me a call or send me an email. I’d be happy to speak with you.

7 Reasons Why Buying an Investment Property Is a Smart Move

Today I’m going over the top seven reasons why now is the best time to take advantage of an investment property.

In my last couple videos, we went over the market conditions to see if we are headed for a crash in next couple years. The answer is no. We are going to see a healthy market with a steady 5% to 6% appreciation instead. With that in mind, I want to share with you how to increase your wealth by investing in real estate.

There are seven reasons why now is the best time to take advantage of an investment property. 

1. Leverage. By putting the 25% down for an investment property, you have one-to-four leverage, or 25% controlling 100%.

2. Tax shelter. You have 27.5 years to depreciate the value of the building. Let’s say it’s a $1 million purchase and the building value is 80%. That 80% value divided by the 27.5 years gives you a $29,000 write-off. Even though the building is breaking even, that $29,000 write off offsets your other income.

3. Cash flow. With most of the properties you can buy right now, you will see 5% to 6% on the first year’s return. The next year, with a rent increase, you’ll see more.

Now is a great time to purchase an investment property.

4. Appreciation. Historically we have an annual appreciation rate of 6%. That means your $1 million building will be worth $60,000 more next year.

5. Inflation protection. This goes hand in hand with appreciation. The average depreciation has been 6% in California, while the average inflation has been 3% nationwide, so that’s great protection of your earnings and assets.

6. Mortgage paydown. The mortgage paydown is roughly 1.5% every year, and that will give you back the principle. You’ll pay that 1.5% each year for the first 10 years and it will add to your equity.

7. Tax deferred exchange. In real estate, you can protect your gains and move it to another property without having to pay a tax. 

If you have any questions about investing in real estate or if you are looking to buy or sell a home, feel free to give me a call or send me an email. I look forward to hearing from you.

A Great Rent-to-Own Program in Southern California

There's a great rent-to-own program available in the Southern California market that's new, innovative, and a great option for many different types of buyers and renters.

As a result of the housing crisis, there was a program built to help homeowners who lost their homes to foreclosures, short sales, and bankruptcy. Currently, this program has a good application for upwardly mobile people, as well as anyone looking to rent in the Southern California market. This is mostly because we're seeing very few opportunities in the Southern California market where people can rent a property with the option to purchase it at a later time.

This program allows you to use the whole MLS and have all homes for sale at your disposal. It's a great option for people who are relocating, new to the area, people unsure of how long they'll be in the area, and millennials who like to be a lot more mobile. This option lets you try out the location and see if you want to stay longer.

It's a great option for anyone relocating to our area.

The program lets you rent with an option to buy and is backed by a big financial company. You can use the whole MLS to find a home or area you like, then engage a real estate agent to make an offer for you on behalf of the company. Then, the company buys the home of your choice in cash. After they buy it and go through the regular escrow period, you are then renting the property once it closes.

You'll sign an agreement in regards to the program, and once the property is purchased, you'll make a deposit for the rent when the down payment is made on the home. You then move in as a renter, but the good news is that you're not obligated to purchase the home after one year if you don't like it.

You can option up to five years as well. This makes the program especially appealing to upwardly mobile people because you can move after one year if you get a new job, for example.

It's a great program that I'd love to tell you more about. If you have any questions, don't hesitate to give me a call or send me an email. Until then, stay safe and stay happy!

How Can the Rule of 72 Help Your Next Southern California Investment Endeavor?

Buying a SoCal Home? Search all Homes for Sale

Selling a SoCal Home? Check out our FREE Home Value Report

Today, I want to share an important rule when it comes to real estate investing. This is the rule of 72. 

This rule states that if you divide the interest rate you get on an investment by 72, you will find out how many years it will take to double the rate of your investment. Additionally, if you divide the number of years by 72, you will find what type of rate of return will double your investment.

Right now, many people in Southern California think real estate is much too expensive. However, the average rate of return on real estate investments is around 5.5%-6.5%! In fact, if you leverage your money right, using the rule of 72, you can double your investment in less than three years.

If you have any questions about investment opportunities in the area, don't hesitate to reach out to me. I'm always available to help.

Helpful Tips for Securing a Mortgage in SoCal

Buying a SoCal Home? Search all Homes for Sale

Selling a SoCal Home? Check out our FREE Home Value Report

Today I want to talk about getting ready to buy this spring in Southern California. Any seller, including yourself, that has just signed a listing agreement, is now a buyer. Because of this, you'll want to make sure you get pre-approved for a mortgage as quickly as you can, so you don't waste any time when it comes to looking for the perfect home.

The first thing you will want to do when getting ready to secure a mortgage is check your credit. Here is where you can get each of your three scores, for free:

Equifax: quizzle.com
Experian: credit.com
Transunion: creditkarma.com

We have some good news for people moving from a condo into a single-family home. If your income limit does not exceed $67,000, there is a new down payment assistance grant that can give you up to 3-5% of the purchase price. This is a grant, not a loan, so it's something you don't have to pay back.

If you want to know a little more about how to get yourself ready to buy or sell this spring in Southern California, give me a call or send me an email. I'd love to help you get ready to take advantage of this market!

How Have Homes Become More Affordable?

There are many great San Gabriel Valley area homes for sale. Click here to perform a full home search, or if you're thinking of selling your home, click here for a FREE Home Price Evaluation so you know what buyers will pay for your home in today's market. You may also call me at (626) 643-7090 for a FREE home buying or selling consultation to answer any of your real estate questions.

Hey, everybody. I've got 2 great pieces of news for you today.

The first is that Fannie Mae and Freddie Mac have started new down payment programs, which will allow home buyers to purchase a home for only 3% down.

In addition to this, Fannie and Freddie have also reduced their mortgage insurance premiums to under 1%. Once your equity is built up more than 20%, you can cancel it at a 78% loan to value. FHA doesn't allow you to do this.

For buyers, the process of buying a home can be made easier when you include a renovation loan. This program is a private label, and incorporates 10% of the purchase price towards home upgrades, and it can close within 30 days. You can remodel the home how you want, and put all the TLC you want into it.

If you have any questions, I'm always here to help. Give me a call or send me an email to get in touch, and I look forward to hearing from you soon!

What Effect Can Taxes Have On Your Loan Amount?

There are many great San Gabriel Valley area homes for sale. Click here to perform a full home search, or if you're thinking of selling your home, click here for a FREE Home Price Evaluation so you know what buyers will pay for your home in today's market. You may also call me at (626) 643-7090 for a FREE home buying or selling consultation to answer any of your real estate questions.

 Hey everyone, thanks for joining me once again. Today I want to talk about the preparation involved when buying a home. Whether you are a first-time buyer or a sixth-time buyer, these tips will help anybody who is transitioning into a new home.

The first thing you want to look at is the neighborhood. Find a place with good schools that is also within a reasonable commute to work.

The next thing you will want to do is get pre-qualified. This is a very important step, as it will allow you to see what kind of home you can afford. Before you get pre-qualified however, you need to pay special attention to your tax return.

Most of the problems we see with tax returns and people getting pre-qualified is due to Form 2106: the un-reimbursed employee expense form. A lot of times accountants will be able to take thousands off of your tax expenses, but it will end up hurting you tremendously when buying a home.

Case in point: we had a client who got $18,000 in un-reimbursed employee expenses and ended up paying $3,600 less in taxes. However, that gave him $18,000 less to purchase with, and once the 4% interest rate was factored in, his affordability went way down. He went from being able to qualify for a $450,000 loan to barely qualifying for a $300,000 one.

So, take a look at your tax return, especially if you plan to buy in the next year. On your 2014 taxes, do a tax amendment eliminating the 2106 so when you purchase next year, you can afford more of a home.

If you have any questions, be sure to let me know. I look forward to hearing from you soon!