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What Are Investment Property Lenders and How to Find Them?

Investment property lenders are generally property lenders that loan you money when investing in property.

These lenders are better known as hard money lenders or private lenders.

Let me explain the difference between the two.

Hard money lenders usually are private lending institutions that will loan on investment property only. Which means you’ll be buying an investment property of sorts.

However, most hard money lenders will only loan you money for a short period of time.

It’s more than likely you’ll be using these types of loans for your real estate flips.

With that being said here are some of the fee’s you can expect to pay for hard money. Typically, these types of lenders will charge anywhere from 3 to 9 points plus your closing and repair costs upfront. Also, expect to pay a 10 to 15% interest rate for your loan.

It sounds expensive; I know but think about it for one second. If you’re going to be buying a property as a real estate flip, paying 10 to 15% interest for a loan that you received without any credit checks, is really not that bad.

Once you have established a relationship and have proved yourself with your lender you can negotiate for a much better rate and you can also try to roll over payments into the loan.

You can find a hard money-lender by conducting a search on the internet by simply typing in your city of choice followed by the word hard money lenders.

Another great way to find a loan on investment property is the use private lenders.

Private lenders can be just about anyone with capital to invest. There great because you can offer a safe, secure, guaranteed investment with returns of 8 to 15% and you don’t have to pay any points up front.

Having private lenders on your side can be a win, win for all parties involved.

Here are some helpful hints as to where to find private money lenders.

The first thing you must do is ask yourself “who do I know?”

Do you go to the doctors?

Do you go to the dentist?

Do you have an attorney?

Do you know someone in upper management?

These are just a couple of helpful ways to get you thinking about important people you might know.

Build a strong relationship with your investment property lenders and you’ll never have a problem getting an investment property loan.

Drowning in Student Loan Debt? Who Is to Blame?

What do you do when your child tries to make up her mind among different colleges she’s been accepted to? Would your conscience allow you to give up the best possible college for a cheaper college that wasn’t as good? Could you ever live with yourself in the knowledge that you didn’t give your child the best education you could? Isn’t an education an investment that will pay for itself many times over anyway? Perhaps that was how it used to be. Seeing education in this way is no longer something that can hold water though. There are many families today that find themselves in debt for close to $100,000 from having considered a child’s education an investment that can pay for itself. Many graduates who find themselves in a merciless job market that doesn’t pay a fraction of what they hoped it would, find themselves enrolling in night school three years just on the hope that they can keep creditors for their student loan debt at bay.

Does putting off paying your child’s student loan debt off really make sense? The longer you put it off, the more the interest accrues. Does all of this sound like déjà vu? This does sound like the mortgage crisis that brought on the recession two years ago. Just as homebuyers five years ago thought that they could just swing it buying a home that would appreciate in value and make it worth their investment, students and parents today are trying to buy an education that they really cannot afford. They just hope that the investment they make will appreciate in value and somehow bring them great returns. They’re finding out just as homeowners did a couple of years ago, that reality can be very different.

It’s all panning out exactly as it did with the housing loan crisis. Colleges are enrolling students no questions asked, for courses that cost $200,000 over the duration of four years. They bring on banks that will underwrite those loans, and they all hope just like that, that those students will graduate and go on to make fat paychecks. If the jobs market happens to be disappointing, they can’t just declare bankruptcy with student loan debt either the way they can with a home loan. Federal bankruptcy law makes sure of that. Far from opening doors, an education for these young people pushes them into years of debt they can’t possibly get out of.

Typically, families that get themselves into this kind of situation start off applying for a federal loan from Sallie Mae. But after a while, Sallie Mae by the time the child gets to the final year, rejects any further advances and directs parents to apply for a private student loan with a private bank. Typically, when an application for a loan s rejected on account of maxing out credit, that person should set red lights flashing. But it usually doesn’t, because parents naively see an education as something that is worth any kind of sacrifice. Perhaps more balance is called for.

Save My House – What Do You Do If You Can’t Afford A Loan Modification Specialist?

I hear a lot of people say “I’d really like to save my house” but it’s just not going to happen. These are good folk who have invested their lives in their homes. They didn’t buy it as a speculation to make money, they bought it because it was their dream. This is the home they wanted and never thought they could have. This is the home they thought they would raise their family in. This is the house they thought they would grow old together in. If it hadn’t been for the recession, most of them never planned to leave. What happened?

There are a lot of good folk out there that could care less if they owe more for the home than it’s currently worth. Most people don’t buy a home for its investment value, they bought it because they wanted it. The recession may have stunted their plans. They may have lost an income stream or not gotten promotions they were promised. Had everything remained the same, they could and would still be making the payments on time.

If you are in this situation, you already qualify for a home loan modification.

The key here was something changed that affected your ability to make the payments. Your first step is to write the story. Start with this is where you were financially when you bought the home. Explain why you assumed you would be able to meet the payment schedule. Then explain what changed to make the home unaffordable. Did your spouse get laid off? Did you know the payments were going to go up? Did your hours get cut back at work? Use anything you can think of and verify it with paystubs, W-2′s, P&L statements if you are self-employed, etc. What you have just done is to write a hardship letter.

You are well on your way to saving your home.

My advice would be to get someone familiar with home loans and specifically home loan modifications to help you. Bankers do have a type of code-speak all their own. It is paramount that you or the person you choose to represent you knows the lingo and the rules. You are trying to save an asset that is valued in the hundreds of thousands of dollars. If it was in cash, I’m sure you would trust it to an uneducated person to invest for you, why would you trust your home to someone who doesn’t know what they are doing (you)?

Unfortunately good loan modification specialist don’t work free. You probably wouldn’t want to use someone who works for free anyway would you? What’s in it for them if you get approved? Nothing. So why would they work hard for you?

On the other hand, many people are in so deep they can’t afford a specialist. If you are in this category, at least invest in a course to teach you the basics. You want to arm yourself as well as possible if you are going into battle.

Begin Investing Right and Effective

In a volatile and unstable global economy, it is very important to build your nest egg. Saving up for the rainy days entails either keeping your money in a secured location within your vault or just a cash box in your home, or depositing it in the bank in a savings account. Depositing in the bank gains a favourable nod between those two savings options.

More often than not those bank savings sit idly, earning a modest interest, less any appertaining withholding tax charged against your interest income. For those who does not need their savings immediately, it is more desirable to take your savings to a higher level of which is investing.

Investing one’s money basically has its own corresponding risks and rewards. The riskier the investments are, the higher the monetary rewards. Before making investment decisions, here are some questions that you should be asking yourself first:

What is my purpose in investing?

The question why in investing decisions is as critical and as important as any other questions. You must ask yourself your reasons for your investment decisions; whether you consider it as a profitable venture with which you can gain income that you will use now, or if you just have excess money in the bank that you wish to earn more. The answer to your investment will determine your willingness to take investment risks.

How much risk am I willing to take?

Now that you know your purpose in investing, you can now decide how much risk you are willing to take. Your risk appetite or your willingness to accept risk will determine the profitability of your investments. The more you need the income, the more aggressive you will become in investing. The riskiest type of investment is stock trading. The value of your investment fluctuates on a daily, even on trading-hours basis. You must practice sound judgement in procuring the types of stocks that you will purchase because this can empty or build your nest egg in one day.

Less risky type of investments includes mutual funds. This is a combination of stocks and bonds being handled by a fund manager. This combines the riskiness of the stocks, and the safety of fixed-income pay-out of bonds. Money market placements also have significantly lower investment risks. Literally risk-free are bonds, notes payable, term deposits, and savings deposits. They guarantee the pay-out of interest income, but the investment returns on this type is significantly lower than in stock trading, mutual funds and money market placements.

How much am I going to invest?

It is very important to assess how much of your savings is really a savings that is not intended for immediate use. Determination of the amount for investment will depend on your desired amount of returns, in combination with your risk appetite. If you want a high-yield on your investments, you need to invest a significant amount on high-risk investment type like stocks. There were cases of investors with a significant bulk of cash; who invested the same in a low-yield, secured investment like term deposits, and practically lived in style using the annuities without touching the principal amount of their investments.

Stock Market Investing 101 – Buy Mutual Funds and ETF’s And Avoid Stocks

Don’t Invest In Stocks! The “Kramerheads” and day traders will certainly flame me for that comment. Thankfully my job isn’t to make friends with “Kramerheads” and day traders. My job is to help investors build and maintain wealth.

I’ve advised thousands of clients over the last 17 years for some of Wall Streets largest firms. I’ve seen a lot of things and a lot of different client situations. One thing I haven’t seen is a lot of happiness from stock investors. In fact I’ve seen far more discontent and anxiety.

The best stock investment advice is don’t invest in stocks! Instead opt for no-load mutual funds and exchange traded funds. Preferably mutual funds and exchange traded funds (ETF’s) with low expenses and broad diversification – such as passive or index funds.

Mutual funds and ETF’s are broadly diversified pools of investment assets. The mutual fund and ETF managers combine investment dollars to achieve a stated investment goal, such as growth, income, or a balanced approach of both.

Mutual funds and ETF’s may invest in stocks, bonds or other assets like commodities. They save investors the headache and frustration of investing in those individual securities on their own. Knowing which securities to invest in, when to buy and when to sell is overwhelming at best.

It’s A Matter Of Perspective. When I tell clients not to invest in individual stocks, the first question is “Why not?”. The fact is it’s a matter of perspective and life choice in a lot of ways (though it can easily be argued it’s a matter of statistics and actual investment results). If you feel as an investor that peace of mind and sleeping at night is more important than trying to hit the lottery with a lucky stock pick, then your perspective definitely lends itself to mutual fund and ETF investing.

It’s been clear to me over the years. Clients with diversified mutual fund and ETF portfolios have enjoyed a greater quality of life (specifically due to their investment experience). They sleep better at night, they don’t have as much stress and they generally have a greater focus on enjoying life than trying to beat the market! There’s nothing quite like not worrying about APPLE’s next earnings report, government regulations on the health care industry or shifts in consumer behavior.

The mutual fund managers on the cover of Money magazine, the funds on the Forbes Honor Roll, or the highest Morningstar rated funds statistically have a difficult time repeating that performance. I never recommend chasing mutual fund performance. It’s a fools errand and almost always ends up in frustration over time.

As a veteran financial advisor, it boils down to the risk you’re willing to take as an investor. To achieve an investment goal, there’s the risk you must take and the risk you choose to take.

The risk you must take is the systematic (also called undiversifiable or market risk) risk associated with a particular asset class. That risk you can diversify in large part through the use of mutual funds and exchange traded funds. The stock market goes up, down, sideways – that’s systematic risk. It’s a normal part of investing.

The risk that’s ADDITIONAL to an entire asset class is called UNsystematic risk. UNsystematic risk is also called diversifiable or specific risk. It’s the risk associated with individual stock (or other security) investing.

Individual companies are more susceptible to regulations, taxes, changes in consumer desires, labor issues and other factors (including accounting irregularities and fraud for example ENRON!). That risk can be mitigated by investing through mutual funds and ETF’s (diversified away). Individual stocks fluctuate with the entire market AND with changes (both positive and negative) to their specific situation.

You may be thinking “but my cousin bought (insert a stock such as Chico’s or Hansen Natural) and got rich and so can I!”. True, you can hit it big. But look at how many people LOST on similar stock bets.

For example Qualcomm when it collapsed with the dotcom meltdown. The stock went from almost $90 a share to about $13 a share two years later. You may have been in early and made a ton of money – only to see it evaporate. And if you were late to the ball you may have been completely wiped out!

Investors are compensated for the systematic risk that comes with investing in the stock market over a long period of time. They are not compensated for the EXTRA risk associated with individual securities. If you’re not compensated for the additional risk – why would you subject your portfolio to it?

Buying stocks is more like speculating than investing! My wealth management firm is located in Las Vegas. There are plenty of things to gamble on here. Individual stocks shouldn’t be one of them.

Investing is a long process of defining your financial plan and how your investment management fits into it. There’s no need to gamble with your financial plan. Investing is a marathon, not a sprint! Treat it as such and your chances for achieving your financial goals will soar!