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.

Learn From Your Investment Mistakes

Every one makes investment mistakes. From the time we were born, we learned from the mistakes we made. As investors, we need to learn from our investment mistakes by recognizing when we make them and make the appropriate adjustments to our investing discipline. When we make a losing investment, do we recognize our investing mistake and learn from it, or do we attribute it to some outside factor, like bad luck or the market? To make money from your investments and beat the market, we must recognize our investing mistakes and then learn from them. Unfortunately, learning from these investing mistakes is much harder than it seems.

Some of you may have heard of this experiment. It is an example of a failure to learn from investing mistakes during a simple game devised by Antoine Bechara. Each player received $20. They had to make a decision on each round of the game: invest $1 or not invest. If the decision was not to invest, the task advanced to the next round. If the decision was to invest, players would hand over one dollar to the experimenter. The experimenter would then toss a coin in view of the players. If the outcome was heads, the player lost the dollar. If the outcome landed tails up then $2.50 was added to the player’s account. The task would then move to the next round. Overall, 20 rounds were played.

In this study there was no evidence of learning as the game went on. As the game progressed, the number of players who elected to play another round fell to just over 50%. If players learned over time, they would have realized that it was optimal to invest in all rounds. However, as the game went on, fewer and fewer players made decisions to invest. They were actually becoming worse with each round. When they lost, they assumed they made an investing mistake and decided to not play the next time.

So how do we learn from our investing mistakes? What techniques can we use to overcome our “bad” behavior and become better investors? The major reason we don’t learn from our mistakes (or the mistakes of others) is that we simply don’t recognize them as such. We have a gamut of mental devices set up to protect us from the terrible truth that we regularly make mistakes. We also become afraid to invest, when we have a losing experience, as in the experiment above. Let’s look at several of the investing mistake behaviors we need to overcome.

I Knew That

Hindsight is a wonderful thing. As a Monday morning quarterback, we can always say we would have made the right decision. Looking again at the experiment mentioned above, it is easy to say, “I knew that, so I would have invested on each flip of the dice”. So why didn’t everyone do just that? In my opinion, they let their emotions rule over logical decision-making. Maybe their last several trades were losers, so they decided it was an investing mistake and they become afraid to experience another losing trade.

The advantage of hindsight is we can employ logic as we evaluate the decision we should have made. This allows us to avoid the emotion that gets in our way. Emotion is one of the most common investing mistake and it is the worst enemy of any good investor. To help overcome this emotion, I recommend that every investor write down the reason you are making the decision to invest. Documenting the logic used to make an investment decision goes a long way to remove the emotion that leads to investment mistakes. To me the idea is to get into the position where you can say “I know that” rather than I knew that. By removing the emotion from your decision, you are using the logic you typically use in hindsight to your advantage.

Self Congratulations

Whenever we make a winning investment, we congratulate ourselves for making such a good decision based on our investing prowess. However, if the investment goes bad, then we often blame it on bad luck. According to psychologists, this is a natural mechanism that we, as humans possess. As investors, it is a bad trait to have as it leads to additional investing mistakes.

To combat this unfortunate human trait, I have found that I must document each of my trades, especially the reason I am making the decision. I can then assess my decisions based on the outcome. Was I right for the right reason? If so, then I can claim some skill, it could still be luck, but at least I can claim skill. Was I right for some spurious reason? In which case I will keep the result because it makes me a profit, but I shouldn’t fool myself into thinking that I really knew what I was doing. I need to analyze what I missed.

Was I wrong for the wrong reason? I made an investing mistake, I need to learn from it, or was I wrong for the right reason? After all, bad luck does occur. Only by analyzing my investment decisions and the reasons for those decisions, can I hope to learn from my investing mistakes. This is an important step toward building genuine investment skill.

Luck Becomes Insight

The market is comprised of a series of cause and effect actions, which are not always transparent. This cause and effect has created some interesting behaviors by some very successful people. For example, some baseball pitchers are known to not step on the white chalk line when they are playing. I am sure you have heard of many “superstitions” that people hold to be true to help them perform well.

In an experiment by Koichi Ono’s in 1987, subjects were asked to earn points in response to a signal light. They could pull three levers, though they were not told to do anything in particular. They could see their score on a counter, but did not know that points were awarded completely independent of what they did. Nothing they did influenced the outcome in terms of points awarded. During the experiment, they observed some odd behavior as the participants tried to make the most points possible. Most subjects developed superstitious behavior, mainly in patterns of lever pulling, but in some cases, they performed elaborate or even strenuous actions. Each of these superstitions began with a coincidence. In some cases, the participants would pull levers in a particular sequence. In other cases, even more odd behavior was observed, including a person who jumped off a table and then later jumped up to touch the ceiling to “score” points. Keep in mind the points were awarded either on a fixed time schedule or on a variable time schedule, not based on the action of the participant.

The point of this is that as humans we tend to think that luck is insight. We fail to analyze effectively the situation and the real reason for our success or failure. In investing this behavior will lead to ruin. To help overcome our natural tendency, we must document our investing decisions and then assess the results. This assessment process helps us learn from our success and from our failures and is critical for each of us if we hope to become successful investors.

Learn from Investment Mistakes

To help avoid investing mistakes, what should you document before you make an trade? I like to look at three categories regarding a stock I am considering. First, I look at a series of fundamental information such as earnings yield, return on capital, revenue growth, insider holdings, sector, and free cash flow. The fundamental information helps me identify if this is a good company with growing earnings, good management and has potential. After reviewing the appropriate financial information including SEC documents, I identify the risks inherent in the company. These risks might include competition, market share, insider transactions, and any litigation that the company is experiencing. Here one needs to try to identify every possible risk and assess them critically. Finally, I look at the chart of the stock, seeking to identify support and resistance zones. This gives me potential entry points, exit targets, and the trailing stop loss. I complete these sections with a written trading strategy describing how I expect to make my trades. All these investment factors should be documented before making a trade. Once the trade is complete, I review them to see what I can learn so I can avoid any investing mistakes in the future.

To learn from our investing mistakes, we need to document our actions before we make the decision. We also need to be honest with ourselves when assessing our results. As we have seen, it is quite easy for each of us to put on rose-colored glasses and think we are better investors than we really are. We need to assess critically our investing abilities without distorting the feedback we receive from our decisions. Those of us who are able to learn this valuable skill will benefit greatly. Those of us who are unable to apply this learning will be destined to mediocrity at best and likely lose much of their capital before they quite investing.

Beginner Stock Market Investing Tips

There is no certain time that a person should decide on when deciding to start investing even with the the economy getting worse and worse. There is also no particular product that you start investing your time and money is right away. The best thing a person could do is sit down and look at all the options that are offered and choose the one that fits you and your budget the best. The number one thing a person looking to getting started in investing could do is to first learn the stock market investing basics and get as much information as possible from different very well known sources.

The longer you spend in investing, the more you will come to know about the ins and out of investing. Beginner stock market investing is listed on tons of great website’s that can help you along the way. The best thing a person could do for themselves would be to start very simple. It is a good idea to start investing in smaller funds first and then expand when you feel comfortable. There are so many different avenues to take when investing in the stock market so choosing the right one for you is the best route to go.

The first thing that a beginner in stock market investing should do would be to sit down and figure out what your investment goals are – be it big or small. Some questions that you may want to ask yourself are:

  • Are you going to be investing in the short term or the medium term?
  • Are you doing the investing for your retirement?
  • Do you need to invest to get money before your retire?
  • Are you saving for your children’s college?

Those are just a few questions a person may want to ask themselves before diving right in. There are also many different types of investment accounts that you may want to start investing your money is when starting such as:

  • Certificates deposit
  • Discount Brokerage
  • Full Service Brokerage
  • 401K or 403B
  • Traditional IRA

Again those are only a sampling of what is out there for investing purposes. Be sure to take a closer look at all options before beginning your investments.

Once your investment accounts are open and you have put your finances in, it is time to depart on the investing process. Some great stock market tips that you may want to follow would be to:

  1. Choose your levels that you want to invest in.
  2. You will want to choose your asset class to invest in. Such as money market accounts or CDs.

Once you’ve pegged down how you would like to invest then it is time to determine the actual investments. Shopping and looking around for the highest percent possible on your CDs will help you gain the most money possible. It’s a good idea to see which firm is offering the best deals by visiting a few brokerage firms or banks. The most popular investment is to trade stocks. Starting with mutual funds is always a great idea for investment beginners. You should look into investing in Bond Funds if you are nearing retirement age. You can of course use them if you are young but they are mostly done by the older generation.

Taking the time to sit down and determine the best things about investing will benefit and make you more money than upright jumping right in. It is very important to remember that the stock market is very risky and there is no guarantee that you will make any money. It is very possible that you may lose all your money in your investments. For someone who is a novice in stock market investing you may desire to talk to a few banks or brokerage firms. If you need help just ask – they all have people who would be willing to help you. The stock market can be a very rewarding thing just take time to learn as much as possible so you will be sure to benefit from it in the end.