INVEST R A Think Realty Publication SPONSORED CONTENT
JULY-AUGUST 2023 | THINKREALTY.COM
MITCHELL ZAGRODNIK RCN Capital
THOMAS EDDY Spartan Investment Group
Broker Power: A Key to Investors’ Success BY BEN FERTIG, PRESIDENT OF CONSTRUCTIVE CAPITAL
MATTHEW SCHLEGEL Temple View Capital
NEIL TIMMINS Legacy Impact Investors
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R eal estate investment can be a lucrative venture, but it requires a significant amount of capital. Whether you are a sea - soned real estate investor or a first-time homebuyer, you’ll want to consider different financing options depending on the type of property you want to invest in. If you require financing immediately or need advice on finding the best financing options for you, speak to our team at REI News. Our specialists discuss your requirements and pair you with only the most relevant, affordable, and reliable lenders.
A Guide to Real Estate Financing Options Depending on the property type, some funding vehicles may be better suited to your project than others.
by Damon Riehl
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interest rates than conventional loans. The basic default criteria for a VA loan include a good credit score (although there is no minimum score requirement), a debt-to-income ratio of no more than 41%, and a certificate of eligibility from the VA. USDA loans. The U.S. Department of Agriculture guarantees USDA loans for borrowers in rural areas. These loans require no down payment and have lower interest rates than conventional loans. The basic default criteria for a USDA loan include a credit score of at least 640, a debt-to-income ratio of no more than 41%, and a property located in a qualifying rural area. Home equity loans. Home equity loans are secured loans that allow homeowners to borrow against the equity in their homes. Equity is the difference between the home’s current value minus the remaining mortgage or any liens on the prop - erty. Home equity loans are typically used for significant expenses like home renovations, medical bills, or debt consolidation. These loans have fixed interest rates and are suitable for homeowners who need a large amount of money upfront. To be eligible for a home equity loan, homeowners must have a certain amount of equity in their property. Lenders usually require a minimum of 15-20% equity in the home. Additionally, lenders will consider the homeowner’s credit score, income, and debt-to- income ratio to determine their eligibility for a home equity loan. Home equity lines of credit (HELOCs). HELOCs are similar to home equity loans but are a revolving line of credit. These loans have variable interest rates and are suitable
because it involves the purchase of undeveloped land, commonly held for appreciation purposes.
FINANCING OPTIONS Let’s examine the main financing options available for the three property types and the common criteria used to evaluate investors. Conventional loans. Conventional loans are the most popular type of mortgage loan. These loans are not guaranteed or insured by the government. The interest rate for conventional loans depends on the borrower’s credit score and debt-to- income ratio. The basic default cri - teria for a conventional loan include a good credit score (typically 620 or higher), a low debt-to-income ratio, and a down payment of at least 3%. Federal Housing Administration (FHA) loans. These loans are insured by the FHA and are suitable for low-to-moderate-income borrowers. The loans require a down payment as low as 3.5% and have more lenient credit scores and debt-to-income ratio requirements than conventional loans. FHA loans are designed to help first-time homebuyers, those with lower credit scores, or those needing to make smaller down payments to buy a home. The basic default criteria for an FHA loan include a credit score of at least 500 (although a higher score is recommended), a debt-to-income ratio of no more than 43%, and a down payment of at least 3.5%. Veteran Affairs (VA) loans. VA loans are guaranteed by the Department of Veterans Affairs and are available to eligible veterans, active-duty military personnel, and surviving spouses. These loans require no down payment and have lower
THE MAIN PROPERTY TYPES There are three main real estate investment property types: 1. R esidential properties. These include single-family homes, condominiums, townhouses, and multifamily homes with up to four units. 2. C ommercial properties . These include office buildings, retail spaces, industrial properties, and multifamily homes with five or more units. 3. L and acquisition . This category differs from residential and commercial property financing
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for homeowners who need to access money over an extended period. Instead of receiving a lump sum of cash, borrowers are given a line of credit that they can draw from as needed. HELOCs are often used for home renovations, education expenses, or other large purchases. To be eligible for a HELOC, homeowners must have a certain amount of equity in their property. Lenders typically require a minimum of 15%-20% equity in the home. Additionally, lenders will consider the homeowner’s credit score, income, and debt-to-income ratio to determine their eligibility for a HELOC. Unlike a home equity loan, a HELOC allows borrowers to withdraw funds on an as-needed basis up to a certain credit limit. The borrower can then repay the borrowed amount over time with interest. HELOCs also typically have a variable interest rate, meaning the interest rate can fluctuate over time. Private lenders. Private lender financing in real estate refers to loans that are provided by individuals or private companies instead of traditional banks or financial institutions. These lenders often provide financing for real estate investments like fix-and-flip properties or rental properties. The eligibility criteria for private lender financing varies depending on the lender, but they typically do not have as strict an eligibility criterion as conventional loans. They would likely evaluate credit score, a low debt-to-income ratio, and a track record of successful real estate investments. Private lenders may also require borrowers to have a certain amount of cash reserves or collateral to secure the loan.
to capital. These loans are typically provided by private investors or companies that
Private lender financing can be a good option for real estate investors who may not meet the strict requirements of traditional banks or who need quick access to funding. However, private lender financing often comes with higher interest rates and fees than conventional loans. Additionally, because loans from private lenders are not governed by strict regulations, it is important to read the fine print, terms, and conditions in detail before accepting a private lender loan. It’s essential to ensure the lender is reputable and has a track record of successful lending. If you’re interested in private loans, speak to our REI News team. Our experts are specialized in pairing investors with reputable lenders who are afford - able to specific investment needs. Hard money loans. Hard money financing is usually a short-term loan often used by real estate investors who need quick access
specialize in real estate lending. Eligibility criteria for hard money loans can vary depending on the lender, but they generally require collateral in the form of real estate (e.g., a property the borrower is purchasing or an existing property they own). Lenders may also require a minimum credit score or proof of income to ensure the borrower has the ability to repay the loan. Hard money loans typically have higher interest rates and fees compared to traditional loans, but they offer several benefits. For example, hard money loans can be funded more quickly than traditional loans, allowing investors to take advantage of time-sensitive oppor - tunities. Additionally, hard money lenders may be more willing to work with borrowers who have a lower credit score or a higher risk profile. Overall, hard money financing
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can be a useful tool for real estate investors who need quick access to capital and are willing to pay higher interest rates and fees for the convenience and flexibility of these loans. SBA loans. SBA financing for real estate refers to loans backed by the U.S. Small Business Adminis - tration (SBA) and used to finance the purchase, construction, or renovation of commercial properties. These loans are available to small business owners who are unable to obtain traditional financing and may offer more favorable terms than other types of loans. Eligibility criteria for SBA real estate financing can vary depending on the lender and the specifics of the property being financed. In general, borrowers will need to have a strong credit score, a solid business plan, and a sufficient down payment to secure the loan. To be eligible for SBA financing, the property being financed must be primarily used for business purposes (e.g., office space, retail space, or warehouse space). Owner-occupied properties, such as businesses that operate out of a storefront or office building, may also be eligible for SBA financing. These programs may be a good option for small business owners who need to finance a commercial property but cannot obtain financing through other means. Commercial bridge loans. Com - mercial bridge loans in real estate refer to short-term financing options used to bridge the gap between the purchase of a new property and the sale of an existing property or other long-term financing options. These loans are typically used by investors or businesses who need quick
FAQ
Q: HOW DO I KNOW WHICH FINANCING OPTION IS BEST FOR MY REAL ESTATE INVESTMENT? A: It’s important to research and compare financing options based on your financial situation, the property type, and your investment goals. Consider factors such as interest rates, repayment terms, fees, and down payment requirements before choosing the best financing option for your real estate investment. Q: CAN I USE A HARD MONEY LOAN FOR A LONG-TERM INVESTMENT? A: Hard money loans are typically short-term loans, with repayment terms ranging from a few months to a few years. They are not suitable for long-term investments because they have high interest rates and fees. Q: ARE THERE ANY GOVERNMENT-BACKED LOANS AVAILABLE FOR COMMERCIAL PROPERTIES? A: Yes, the SBA offers government-backed loans for small businesses that need financing for their commercial properties. Q: WHAT IS THE TYPICAL INTEREST RATE FOR LAND LOANS? A: The interest rate for land loans varies depending on the lender and the borrower’s creditworthiness. However, land loans typically have higher interest rates than residential property loans. Q: CAN I GET A LOAN FOR A PROPERTY THAT NEEDS REPAIRS OR RENOVATIONS? A: Yes, some financing options, such as renovation loans and FHA 203k loans, allow borrowers to finance the cost of repairs or renovations into the loan amount. However, these loans typically have stricter requirements and higher interest rates than conventional loans.
financing to close a deal, renovate a property, or take advantage of a time-sensitive opportunity. Eligibility criteria for commercial bridge loans can vary depending on the lender and the specifics of the property being financed. Generally,
borrowers will need to have a solid credit score, a strong business plan, and a plan to repay the loan quickly. It’s important to note that commercial bridge loans typically come with higher interest rates and fees than other financing options.
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collateral to secure the financing. It’s important to note that seller financing may come with higher interest rates or other less favorable terms than traditional financing options. It’s vital for both the buyer and the seller to carefully consider the terms of any seller financing agreement before moving forward with a deal.
SUMMARY Financing options are essential to consider when
investing in real estate. Different financing options are available depending on the property type, including conventional loans, government-backed loans, private lenders, and hard money loans. Researching and comparing these options is crucial to finding the best financing option for your needs and budget. Note that the suitability of property type to loan type can vary depending on the specific lender, so it is essential to discuss your requirement in fine detail to ensure you get the best deal possible. Our team at REI News is expert in matching affordable, trusted lenders with investors based on the investment’s specific require - ments. Speak to our team today to find financing for your next real estate investment financing. •
However, they can be a good option for borrowers who need quick financing and have a clear plan to repay the loan in a short period. Mezzanine financing. Mezzanine financing in real estate is a type of hybrid financing that combines debt and equity financing. It provides a secondary layer of financing on top of a senior debt loan and is typically used to fill the gap between the borrower’s equity and the amount of financing they need to complete a project or acquisition. Private equity firms, hedge funds, or other institutional investors generally provide mezzanine financ - ing. A second lien on the property secures the loan and comes with a higher interest rate compared to senior debt loans. Eligibility criteria for mezzanine financing can vary depending on the lender and the project’s specifics. Generally, borrowers must have a strong credit score, a solid business plan, and a clear path to repaying the loan. Lenders will also typically require the borrower to have some equity in the project, because
mezzanine financing is considered a riskier investment. However, it can be a good option for borrowers who need additional funding to complete a project and have a clear plan for repaying the loan. Land loans. Land loans are used to finance the purchase of raw land. These loans have higher
interest rates and require a larger down payment than residential property loans.
Seller financing. Seller financing, also known as owner financing, is a type of financing where the seller of a property acts as the lender and provides financing to the buyer. The seller receives payments from the buyer over time rather than receiving a lump sum payment at the time of the sale. Eligibility criteria for seller financing can vary depending on the seller’s preferences and the specifics of the deal being negotiated. In general, the seller will want to ensure the buyer has a good credit history and the ability to make regular payments. The seller may also require a down payment or
Damon Riehl is the founder and CEO of Investment Property Loan Exchange. He has more than 35 years of lending experience in a broad array of asset
classes, including commercial and residential mort- gage, small business, and construction lending. Riehl held top leadership positions as head of commercial lending for Ocwen Mortgage, head of unsecured lending for Citibank, global mortgage leader for GE Capital, and head of construction products at Fannie Mae. He is a member of the Harvard Joint Centers for Housing Studies. Riehl has built six de novo lending platforms and used that knowledge to build and grow Investment Property Loan Exchange and the fintech platform LoanBidz.com.
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Navigating a Changing Market with BRRRR Here’s how to use the BRRRR strategy to lead to profitable investments.
by Mitchell Zagrodnik
B y textbook definition, the United States entered a recession in 2022 when the economy shrank for two consecutive quarters; howev - er, there are several other factors considered when deeming a period of time as a recession. Even with the two negative quarters, the labor market and consumer spending are still strong. Because of that, it’s hard to compare the current period with other recessionary periods. Still, many experts believe a reces - sion is unavoidable. When it is going to happen is a matter of opinion. Since mid-2022 when the Federal Reserve began issuing substantial rate increases, the market has slowed considerably. Yes, these increases are meant to combat inflation, but their impact on the real estate market has been sub - stantial. Typically, in a recessionary period, the market shifts from a seller’s market to a buyer’s market due to slowing demand and drop - ping home values created by the rising rates. Usually in a recession, the Fed would lower rates to incentivize spending to help get the economy going. In the current sit - uation, since the goal is to combat inflation, rates continue to rise. Because of our current economic uncertainty, investors should do their research to stay ahead of the
game, looking for ways to reces - sion-proof their investment strategy and create long-term profits. WHAT IS THE BRRRR STRATEGY? Investors have heavily used the BRRRR investment strategy during the past decade. The acronym stands for Buy, Renovate, Rent, Refinance, Repeat. Investors looking for a property to buy often search for one that is considered distressed and needs a good amount of rehab to make rent-ready. The rehab often consists of improvements meant to increase the overall value of the property. Remodeling a bathroom or building a brand-new kitchen are just a couple examples of how investors can add significant value to their properties. Once the rehab is complete, the property is ready to rent. For the strategy to be a successful investment, you have to ensure it cash flows. You can achieve this by making sure the tenant’s rental payment is more than your monthly interest payment. Keep in mind as well that you are more likely to get favorable funding terms from your lender when the property is rented, so search for quality tenants for these properties. That
vetting process can even begin during the rehab stage. Then, when the property is cash flowing consistently, you can do a cash-out refinance and go on to fund your next investment. That cash-out refinance is based on the new ren - ovated value, allowing an investor to take advantage of the instant equity they just built by refinancing. The BRRRR method has become an industry staple for investors because it allows them to consistently grow their portfolios and continuously add to their passive income. The ultimate goal for each property is to refinance so you can roll over the equity from the property and get your next venture up and running. Maintain contact with your private lender about these projects as well. Depending on previous experience, they will often require a down payment in the 15%-25% range as well as funding the entire renovation. Then you can do the refinance portion after the rehab is complete—all under one roof, with minimal documents required and quicker closing times. STILL A RELEVANT STRATEGY? Compared to today, interest rates were significantly lower for the first seven to eight years BRRRR was
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Keep in mind that most long-term loans have a standard of a five-year prepayment penalty on them. But if rates drop enough, it may even make sense to deal with that penalty to get a much lower rate and much stronger cash flow. DOES BRRRR FIT YOUR GOALS? Even in a down market, BRRRR is a proven strategy for long-term pas - sive income and portfolio growth. Whether you are new to the investor space or you’ve been in the game a long time, it’s important to gauge different investment strategies and find which one best fits your goals. If you want bigger returns in short periods of time, the BRRRR method may not be the best fit for you. But if you are thinking in terms of long-term profits, this strategy could be in keeping with your goals. The real estate market is very fluid. An impending recession is a perfectly understandable reason to be more conservative with your investments. Being more selective with your properties, finding and vetting good tenants, and allowing yourself some cushion with your rents to allow for reasonable cash flow even during tough times are essential habits to build when looking to recession-proof your investment portfolio. • Mitchell Zagrodnik, partnerships coordinator, joined RCN Capital in spring 2022. Zagrodnik brings a strong work ethic, communication skills, teamwork, and ambition to RCN’s business development team. Zagrodnik’s goals are to build new customer relationships as well as maintain existing ones, and to educate potential clients on RCN’s products. Zagrodnik’s previous work in sales and customer service will contribute to RCN’s longstanding commitment to customer relations. Zagrodnik graduated from the University of Connecticut in 2018 with a degree in political science.
homebuyer demand has gone down. You may be able to find a property at a discount; when the market inevitably becomes more favorable, the property you purchased at the lower price will appreciate. There’s no question that it’s not as easy to get these deals done today, but there are still opportunities for great cash-flowing BRRRR invest - ments. It just takes more discipline and patience to find the perfect property. When rates were lower, it was easier to rely on home values appreciating. Now with higher rates, the emphasis has to be on finding a stable cash-flowing property. It’s tough to forecast, but expectations are that interest rates will drop during the next two to three years. By then it may make sense to refinance, and as rates go down, house appreciation will rise again. When that happens, your property that was cash-flowing well in an inflationary market will cash-flow even stronger.
popular. Considering that, wouldn’t the current higher rates make the strategy less attractive for investors to use for refinancing their prop - erties, given that higher interest rates often mean lower cash flow? Interest rates have doubled since 2022, but investors can still produce cash-flowing properties and more than cover their monthly payments with consistent rental income. Understandably, those who are new to real estate investing may be hesitant to try this strategy. Experienced investors, however, can still find ways to use the BRRRR method so that it’s profitable for their properties. It is important to note that not every property is suitable for the BRRRR method. The key to success - fully using BRRRR is keeping costs low so you can make the highest return on investment. One thing buy - ers can take advantage of in a mar - ket like this is that with higher rates, property values have gone down and
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©RCN Capital, LLC. 2023 All Rights Reserved. NMLS #1045656. RCN Capital, LLC is licensed in AZ (License #: 0932325), CA (Loans made or arranged by RCN Capital, LLC pursuant to a California Finance Lenders Law license # 60DBO-46258), MN (MN-MO-1045656), and OR (ML-5571).
This is not an offer to lend. All offers of credit are subject to due diligence, underwriting and approval. Not all borrowers will qualify and not all borrowers that qualify will receive the lowest rate or best terms. Actual rates and terms depend on a variety of factors and are subject to change without notice.
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©RCN Capital, LLC. 2023 All Rights Reserved. NMLS #1045656. RCN Capital, LLC is licensed in AZ (License #: 0932325), CA (Loans made or arranged by RCN Capital, LLC pursuant to a California Finance Lenders Law license # 60DBO-46258), MN (MN-MO-1045656), and OR (ML-5571). This is not an offer to lend. All offers of credit are subject to due diligence, underwriting and approval. Not all borrowers will qualify and not all borrowers that qualify will receive the lowest rate or best terms. Actual rates and terms depend on a variety of factors and are subject to change without notice.
INVESTOR REVIEW :: 13
Broker Power: A Key to Investors’ Success Working with a mortgage broker for your real estate funding needs offers a number of advantages.
by Ben Fertig
A s a residential real estate investor, you face a myriad of decisions that shape the trajectory of your projects. From selecting the ideal location to determining the in - vestment time horizon and securing reliable contractors, every choice has far-reaching implications. One crucial decision is the financing of your projects. The
Capital, a leading capital provider in the residential investor loan market, offers a diverse array of lending options through its broker partners. Although our product offerings are competitive and relevant, we acknowledge that no single provider or lender can cater to the needs of every investor comprehensively. Striving to excel in
source of your project capital and the process of obtaining it can significantly impact the success of your investments. This raises the fundamental question: Should you work directly with a lender or enlist the expertise of a mortgage broker? Recognizing the importance of having access to a wide range of lending products, Constructive
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every aspect would be a formidable challenge, and most entities likely would be unable to maintain a cost structure that doesn’t impact their pricing and terms. To address this inherent inefficiency, mortgage brokers emerge as the ultimate solution. These professionals bring several key advantages to the table, benefiting both experienced and inexperienced investors. Let’s explore several of these advantages, shedding light on the benefits, process, and results of working with a broker for your real estate funding needs. UNBIASED FUNDING SOLUTIONS One of the primary roles of mortgage brokers is to secure the best deal for their clients. They operate independently and possess access to multiple capital providers. This impartiality allows them to offer unbiased advice and access to a diverse range of loan products. Seasoned brokers have the expertise to effectively navigate the lending landscape, allowing them to access most, if not all, relevant loan products and understand their nuanced features. With their finger on the pulse of the market, brokers can identify the right product and terms that align precisely with your investment objectives, akin to a skilled surgeon selecting the appropriate instrument for a delicate procedure. STREAMLINES THE FINANCING PROCESS Obtaining the right financing for your project can be a daunting and time-consuming task. Rather than enduring the stressful process of approaching multiple lenders, you can turn to a mortgage
broker to serve as your dedicated advocate. They work on your behalf, leveraging their market knowledge and established relationships with capital providers to identify the most suitable lending solution for your specific needs. In fact, mortgage brokers often excel at securing funding for more challenging transactions that traditional banks and other lenders might not be interested in, saving you valuable time and effort that you can focus on other crucial aspects of your investments.
the process, infusing it with a personal touch. They provide the necessary understanding,
education, and guidance throughout the transaction, ensuring all parties involved are on the same page. When a broker brings a loan application to Constructive Capital, they take charge of the communication with the investor, ensuring the loan file is properly prepared and delivered for funding. Each participant leverages their strengths throughout the process, resulting in the lowest overall cost to originate your loan. FOCUSED ON YOUR INVESTMENT GOALS A mortgage broker works closely with you to understand your business and your goals for each project. They act as your trusted partner, maintaining objectivity throughout the process. From identifying the right capital solution to guiding you through the application and funding processes,
RELATIONSHIP-ORIENTED In the realm of real estate
investing, as in any other business, relationships play a pivotal role in achieving success. The connections a mortgage broker has established with their lending network, combined with the relationship they build with you as their client, are central to their effectiveness. Although technology and financials are essential, brokers humanize
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diverse range of options, the best terms, and top-notch service throughout your investment journey. At Constructive Capital, we believe in a better way to invest in real estate—a more valuable and less intrusive approach that offers an effortless process, competitive pric - ing, and comprehensive programs. We come to work every day driven by our desire to build strong, long-lasting relationships with our clients and help them achieve their financial goals. We maintain our focus on fix-and-flip and rental capital solutions because we genu - inely care about the success of our clients and their individual deals, setting us apart from the rest. Our unwavering commitment to speed, flexibility, price, and reliability ensures that your investors can move at a faster and more consis - tent pace than their competition. The name Constructive Capital stems from the Latin word con - structus, meaning “put together the parts in their proper place and order.” This encapsulates our approach to helping you thrive—by organizing all the elements that make up a successful funding deal in the most efficient manner. •
brokers ensure your project is financed effectively. Moreover, a reputable broker continues to support you beyond the initial funding, ensuring your current borrowing needs are met and you have ongoing access to the financ - ing necessary for your investments. In the realm of lending, costs are eventually passed on to the borrower or customer. After years of evaluating both borrower-direct and broker-driven models, it has become evident that the latter yields the most favorable results for all parties involved: the investor, the lender, and the sales channel. This approach maximizes the likelihood of achieving each
party’s goals while enhancing loan performance and project success. When you find a mortgage broker you trust, you open the door to a wide range of options, favorable terms, and exceptional service for your residential investment financing needs. If you’re searching for a broker in your area or one with specific expertise, visit constructiveloans.com and let Constructive Capital connect you with one of our reputable partners. Constructive Capital recognizes the crucial role mortgage brokers play in the success of real estate investors and is dedicated to providing a seamless experience, ensuring you have access to a
Ben Fertig is the founder and president of Constructive Capital, the leading national capital provider for DSCR Rental Loans and Residential Transitional Loans (RTL
or fix-and-flip loans). Before launching Constructive, Fertig led credit and asset management at Finance of America Commercial and served as chief operator officer of Jordan Capital Finance, where he managed originations, credit policy, and capital markets. Fertig was instrumental in the sale of the Jordan Capital Finance platform to Blackstone and Finance of America in 2017. He began his mortgage banking career more than 25 years ago and has served in a senior leadership role in the residential investor loan market since 2012.
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85% of our 1Q fundings closed within 20 days of application
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INVESTOR REVIEW :: 17
Can Real Estate Marketing Be Effective and Affordable?
Here’s how digital tactics help you use your budget wisely and reach your audience.
by Jenifer Calandra
T he exclusive new luxury com - munity you’ve been working on is finally pre-leasing, and it’s time to find residents to fill available units. You hope that people have driven by and seen the impressive construction for the last few months and that news has spread through word-of-mouth. But it’s 2023, and word-of-mouth isn’t what it used to be. Instead, you need a real estate marketing plan that will produce signed leases—without overspend - ing before your property can turn
a profit. Yes, this kind of market - ing campaign exists, and it gets your apartment homes, condos, or other investment property in front of the right potential resi - dents at the right time, without putting your finances in the red. It’s time to go digital with your marketing tactics. Here’s how. HYPER-TARGET YOUR DEMOGRAPHIC. Consider how traditional media works. You advertise your properties
or investment opportunities in a print publication or on network TV. Both types of outlets can vaguely describe who consumes their media based on household demographics, Nielsen studies, and other methods. But you can’t further drill down to audience segments by personal interests, income, location, employment, and more. In fact, there’s little guaran - tee that your ad will be served to your audience. Digital marketing, however, allows you to put your ads in front of your target audience with greater precision than ever before. You can drill down by ZIP code, household size, income, and other factors to home in on exactly who you want to see your ads. REACH OUT TO YOUR AUDIENCE ON THEIR PREFERRED DEVICES According to the Pew Research Center, just 23% of Americans report reading a print newspaper. Similarly, surveys show that the percentage of Americans who watch cable or satellite TV has dropped to about 56%, meaning your audience is less likely to even see a traditional ad. So where do people consume their media? Online, of course! And they’re
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using a multitude of devices to do it: smartphones, smart TVs, tablets, and computers. Your ads can appear on these devices in a variety of ways, including: • As display ads (sometimes called “banner ads”), alongside content on the websites your audience visits. • In search engine results at the top of the results page or ranked on the first page of search results due to search engine optimization. • As over-the-top (OTT) video ads on streaming services, like YouTube TV, Hulu, etc. • In smartphone apps. • In retargeted ads, after a potential customer has already visited your site or shown an interest in similar properties. • On social media platforms such as Facebook and Instagram, even if users don’t follow your page or like your business profile. • In podcasts and other audio programming (e.g., Spotify or Pandora). SHOW WHERE YOUR LEADS COME FROM Before the rise of digital marketing, businesses had to ask
prospects directly how they heard about them. It was the only surefire way of finding out which types of marketing were most effective, but it is an ineffective way of tracking leads. With digital advertising, however, you gain an impressive amount of data to analyze, not only the number of times your ad was displayed but also whether anyone clicked on your ad or took an action because of it. You can even determine which ads garnered your leads. This information allows marketers to use only the channels most effective for connecting with your target audience, so no money is wasted on ineffective tactics. With all available data in hand, you can compare the total money you spent to your return on investment. SAVE BIG WITH PAY-PER-CLICK (PPC) One of the unique features of digital marketing is that, depending on the tactic you choose, you will only pay an agreed-upon fee each time your ad is shown to someone (called an “impression”) or when a user clicks on it (called “pay-per-click”). These ads cost little to produce, because you don’t need to pay for filming budgets or for printing press charges. In fact, setting up paid media campaigns includes determining how much
you’re willing to pay over the course of your entire campaign, choosing keywords or phrases that offer the most possible impressions for the lowest cost. This helps you manage your budget and track where every cent goes. And with the average cost per lead for the real estate industry sitting at about $45, your profit margin grows when you incorporate PPC ads into your marketing strategy. EMPLOY A HUMAN TOUCH Although machine learning and artificial intelligence can help you master your digital marketing strategy, computers can’t do everything for you. In fact, it takes a human touch to understand the nuances of your business goals so your digital campaigns deliver the best possible results. It’s important to partner with a digital marketing agency to ensure your campaigns are as cost-effective and functional as possible. You’ll want to work with one with experience in the real estate or property management industries for the best results. •
Jenifer Calandra’s decade of marketing experience in a range of industries gives her a unique perspective on strategy. A professional writer by trade, Calandra
crafts the story of your brand to engage with your target audience in her role at iFocus Marketing. Learn more at ifocusmarketing.com.
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To find private money you can trust, start here. Our members are the most-trusted private lenders in the business. They’ve pledged to follow the industry’s only Code of Ethics , enforced by the oldest and largest association for private lenders. Find your next financial partner today at aaplonline.com/directory.
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Filmed on location, Titan Talk is a one-on-one interview between you and Eddie Wilson, CEO of Think Realty and the American Association of Private Lenders. This personal endorsement carries extensive publicity, marketing opportunities, and bragging rights, naming you as the exclusive Titan of your real estate sector for a year.
What’s Included
CONTACT SALES@THINKREALTY.COM FOR MORE INFO!
• One-on-one, 20-minute video interview by Eddie Wilson filmed on location. • Video interview posted on Eddie Wilson’s website and social media pages, and the Think Realty Podcast page. • Profile article in Think Realty and Private Lender magazines with coverline status. • Profile article posted on thinkrealty.com, aaplonline.com, and officialew.com, naming you the exclusive Titan of your sector for 12 months. • Video and article circulated to over 24,000 industry professionals via the Think Realty and AAPL e-newsletters. • Six social media posts on Think Realty and AAPL’s Facebook and LinkedIn pages.
Brought to you by:
INVESTOR REVIEW :: 21
5 Tips for Deciding Which Investment Loan Is the Best Fit The right type of investment loan for you depends on the property you want to buy as well as your personal goals and financial standing.
by Luke Babich
I nvesting in real estate is an ex - pensive undertaking. Even experi - enced investors take out loans when purchasing an investment property. An investment loan is any loan borrowed to cover the costs of an investment property. Although the right investment loan for you may be a traditional 15- to 30-year mortgage, it could also be different from the mortgage you used to invest in your first home. For exam - ple, investment loans also include short-term mortgages for investors who want to buy and flip property. Investment property loans may
because some real estate investors take on additional lines of credit to give themselves increased financial freedom. Using rotating lines of credit, however, could end up costing more in interest than long-term home loans. Financing your investment correctly will determine your return. Start by understanding what you need from an investment loan and compare that to your current financial standing. Once you have an idea of the type of loan you’ll need, look for lenders who specialize in that area of real estate investment. Research third-party lender reviews and
consult with a trusted adviser, such as your real estate agent. Here are five tips to find the right loan for your investment property. 1. UNDERSTAND YOUR INVESTMENT LOAN OPTIONS Borrowers should understand their options as they begin to consider prop - erties and investment loans. The type of loan investors qualify for will impact their ability to turn a profit from a real estate investment. Take inventory of your desired loan terms, paying special attention to the following:
• Loan coverage area. Does the loan cover the region
need to be more flexible than a traditional home mortgage
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where an investor wants to purchase a property?
these local programs to see if you qualify for assistance that will ease the cash burden of financing your investment property.
estimates from potential lenders. Thinking about your financial goals holistically will help you avoid wading through estimates for loans that may not suit your needs. An experienced real estate agent can also weigh in on the loan process. Your agent may not be a financial expert, but he or she may be able to recommend a lender or offer guidance on what type of loan could suit your needs. 5. COMPARE LOAN ESTIMATES The final step in the loan evaluation process is to compare estimates you’ve received online or from lending agents. These estimates aren’t final offers, but they are tools you can use to evaluate loan terms side by side before making a decision. Read reviews of lending institutions as you decide on a type of loan and lender. Third-party reviews can help you judge the lender’s customer service approach and alert you of any operational red flags. Finally, consider your desired working relationship with your lender. If you want a more traditional borrowing experience that takes more time to close, a conventional lender may be your best option. If you want a faster flow of cash, private lenders may be a better fit. •
• Loan amount . How much will an investor be able to borrow? • Loan type. Most real estate investors use conventional loans, but some consider Federal Housing Administration (FHA) loans because of their low down-payment options. • Loan term. How long will an investor have to pay back the loan? • Interest rate. Is the rate fixed or variable? Experienced real estate investors should also consider the specific costs they need the loan to cover. For example, a real estate investor who wants to buy an apartment building may be able to take out a different type of loan for a larger amount. 2. DETERMINE WHETHER YOU QUALIFY FOR SPECIAL PROGRAMS Special loan programs can help you save on upfront costs for your investment property and make it more lucrative in the long run. These loan programs
3. EXAMINE YOUR PERSONAL FINANCES
Your personal finances will deter - mine your loan eligibility and what kind of investment property you can afford. Consider the following factors before applying for a loan to expand your real estate investment portfolio: • Your household income • Your debt-to-income ratio • Your on-hand cash for a down payment, closing costs, and other expenses • Your credit score What other expenses are you expecting for this investment? Will you need mortgage insurance? Will you pay full commission to your real estate agent? Evaluating your personal finances will make it easier to narrow down your search for a loan provider once you’ve chosen a property to invest in. 4. NARROW YOUR LIST OF POTENTIAL LOAN VENDORS When you’re ready to start evaluating lenders, consider how your personal finances measure up to the types of loans and interest rates offered. Some lenders will only offer specific loans, and others won’t accept borrowers without a certain amount of cash or a certain credit score. If you have cash on hand but a low credit score, start by looking at FHA loan providers who lend to borrowers building credit. Consider your short- and long- term financial plans before gathering
can take the form of credits or reduced interest rates.
The federal government offers special loan programs through the office of Veterans Affairs for U.S. military veterans, active duty service members, and surviving spouses. The U.S. Department of Agriculture also offers special programs for low- to middle-income borrowers located in rural areas. Many states also offer loan assistance programs for first-time homebuyers and other incentives to encourage investment. Research
Luke Babich is the co-founder of Clever Real Estate, a real estate education platform committed to helping home- buyers, sellers, and investors make
smarter financial decisions. Babich is a licensed real estate agent in the state of Missouri. His research and insights have been featured on Big- gerPockets, Inman, the Los Angeles Times, and other online and media outlets. Babich earned a bachelor’s degree in political science, with honors, from Stanford University.
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Take It Outside! With so many potential buyers looking for outdoor amenities on the properties they are considering, think about how you can “take it outside” with your next renovation.
by Michele Van Der Veen
W ith the popularity of out - door living spaces on the rise, it’s no wonder more buy - ers are looking for homes that provide outdoor amenities. Patios that extend the indoor living spaces to the outside, outdoor cooking and food preparation areas, spaces designated just for dining, lounging and seating areas for socializing, entertainment areas, and even secluded areas to get away to read a book outdoors are all popular with buyers these days. As such, you should consider them when designing your next renovation. As with any living space, remember that
lighting, heating, and cooling are all things to think about as you design your outdoor living areas.
be perfect for entertaining and cooking outside. If your renovation is on the larger side and allows for an outdoor kitchen, keep in mind you’ll need some sort of roof or covering to protect appliances. OUTDOOR DINING If your outdoor space is adjacent to your indoor kitchen, you may want to turn the space into an outdoor dining area so you can enjoy dining any time without needing to carry tableware and food too far. An outdoor spot for dining
OUTDOOR COOKING Most outdoor kitchen spaces feature spacious grills, sinks, cabinets, small refrigerators, and stovetops. Some even include dishwashers. Everyone loves the idea of having a place to prepare food outside—it gives the sense of having two kitchens! Outdoor kitchens aren’t just for mansions either. Simply staging a home with small square footage with a barbecue grill conveys to the buyers that the home would
will show potential buyers the home’s ability to seat larger parties. Although most homes
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Staging lounging areas outside allows potential buyers to experience it, creating a lasting impression of the home. Showing an outdoor lounge area in your renovation project is just another great way to show how a home can be used to its full potential. OUTDOOR ENTERTAINMENT Creating a home with an outdoor entertainment area may seem over- the-top for an average flip. But why not? For next to nothing, you can add an outdoor entertainment area. Adding an extra GFI plug to connect a television to an average outdoor covered patio area could create a real Wow! factor for your next reno - vation. Potential buyers will imagine themselves watching the big game outside with friends or picture themselves having a relaxing movie night alone outside. Televisions and sound systems are the perfect focal point for an outdoor space under a patio cover and can help to create more living space, especially for homes with less square footage.
away from streets, and near less high-traffic areas of the home. Adding French doors to the primary suite, leading to a secluded outdoor spot is always a great idea. It not only gives a smaller primary room a much larger feel, but also shows how the room can be used as a place to get away from the world to read a book or enjoy a cup of tea. Given the fast pace of life, having a quiet spot to go to at the end of a hard day seems to be high on every buyer’s list. As with any living area, even outdoor living areas will need sufficient lighting for night use. String lighting is always a great idea for outdoor lighting. String lights can make a small area seem larger than it really is. It also has a way of making areas feel “dressed up,” adding an almost party feel. String lighting can be applied in crisscross or in straight rows for a more formal feel. They can be a plug-in style, or you can purchase a solar style for use in areas where no electrical plug can be found. Also, with the availability of solar on just about every outdoor light you can buy today, good old landscape lights with small solar panels on them are a great way to illuminate
offer a dining room to seat party guests, an outside dining area shows that even a smaller home can seat large parties adequately by offering two places to dine. Staging the outdoor dining area is one of the easiest ways to get the point across to a potential buyer that the home could be great for entertaining. Staging an outdoor table that holds an umbrella is always a good choice. Showing the outdoor dining to buyers with the patio umbrella open conveys to buyers they will be cool and comfortable while dining outside. OUTDOOR LOUNGING If you create an outdoor space complete with comfy couches, chairs, recliners, and side tables, you can create a wonderful place to lounge. This outdoor extension of your living room creates a great area for large groups of people to hang out as the party gets started. And it makes for a wonderful place for guests to lounge after dinner.
OUTDOOR QUIET SPOTS Locate your quiet outdoor spots away from the front of the house,
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