TR July-Aug 2024

TM INFORM. INSPIRE. EDUCATE. EMPOWER.

INVESTMENT STRATEGY

Disaster Investing

OPERATIONS

Understanding Construction Warranties

How Other Industries Shape the National Real Estate Market SAVVY RE PROFESSIONALS WILL UNDERSTAND THE IMPACT—AND THE RIPPLE EFFECTS. FEATURE

Avoiding Fraudulent Lenders FUNDING

JULY-AUG 2024 $ 5 .95 US :: $ 6 .95 CAN

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BRRRR LENDER No Seasoning Requirements + 1007 Appraisals Having a reliable capital partner that is well-versed in the BRRRR strategy can provide a seamless execution from beginning to end. Here’s how to supercharge your BRRRR with CV3:

BUY: Secure Your Property For a smooth acquisition, tap into CV3’s short-term bridge financing to help you move fast on a good deal. REHAB: Transform the Property With up to 100% Rehab Financing we can help you stay liquid through the renovation process. RENT: Find Qualified Tenants We understand you may not find tenants right away. That’s why we offer 1007 appraisals which will allow you to refinance on the property’s future rental income potential. REFINANCE: Recycle Your Cash Unlike most lenders, we have no seasoning requirements. As soon as the rehab is complete, you can take advantage of our cash out refinance and put your money back to work. REPEAT: Scale Your Portfolio Use your cash out funds to recycle your capital quickly and repeat the process over again!

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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Real Estate Success Starts

™

(844) 721-3733 | www.CV3financial.com/think-realty This is not a commitment to lend. Actual rates and terms depend on a variety of factors and restrictions may apply. CV3 Financial Services, LLC reserves the right to amend rates and guidelines without notice. NMLS ID #2478266. Loans made or arranged pursuant to California Finance Lenders Law License 60DBO-183355. AZ Mortgage Banker License #1047792, Idaho MBL-2082478266, FL Mortgage Banker License #MLD2457, MN License #MN-MO-2478266, OR Mortgage License #2478266, UT Mortgage Entity License #13576219.

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Real Estate Success Starts Here ™ (844) 721-3733 | www.CV3financial.com/think-realty

This is not a commitment to lend. Actual rates and terms depend on a variety of factors and restrictions may apply. CV3 Financial Services, LLC reserves the right to amend rates and guidelines without notice. NMLS ID #2478266. Loans made or arranged pursuant to California Finance Lenders Law License 60DBO-183355. AZ Mortgage Banker License #1047792, Idaho MBL-2082478266, FL Mortgage Banker License #MLD2457, MN License #MN-MO-2478266, OR Mortgage License #2478266, UT Mortgage Entity License #13576219.

PUBLISHER & CEO Eddie Wilson

MANAGING EDITOR Carmen Fields

FULFILLMENT COORDINATOR Blair Pierce

DESIGNER David Rodriguez

CONTRIBUTORS Luke Babich Tara Bogard CV3 David Jacobs Hannah Kesler Kiavi Bruce McNeilage Ryan Michaelis

HEY! LET’S BE FRIENDS! GET SOCIAL. STAY CONNECTED.

Taylor Miller Joel Moyes Real Property Management Damon Riehl Jeff Roth

Like, Follow & Share for the Latest Real Estate News, Trends and Insights from Think Realty

Santosh Salve John V. Santilli Jim Tannehill Michele Van Der Veen Skyler Wilson

Are you following Think Realty on social media? Things move pretty fast in real estate. Don’t miss out on the latest trends, tips, insights and news from your trusted resource for all things real estate investing! Follow. Like. Love. Share. Comment. You can do it all with Think Realty’s social media channels. Join the conversations in Think Realty social communities and connect with like-minded members who range from first-time to seasoned investors. Check out all of our social media channels and connect with us - and other investors - today!

SUBSCRIPTIONS :: The annual subscription for Think Realty Magazine is $39.99 in the U.S. Order online at www.ThinkRealty.com or call 816-398-4130. Provide your full name, address and telephone number. DISCLAIMER :: Think Realty Magazine , its owners, contractors, distributors and their respective representatives do not provide tax, accounting, investment or legal advice and make no guarantee as to the effectiveness or success of any investment or tax strategies discussed herein. Please consult your own independent adviser as to any questions you have or decision you are contemplating. ABOUT THIS MAGAZINE :: Think Realty Magazine is a publication of Affinity Real Estate Media LLC. Reproduction or use of any editorial or graphic, without permission, is prohibited. We are not responsible for the content of any paid advertisements. For reprint rights; to obtain a detailed statement of our privacy policy; and for all single-copy requests, address changes and other subscription inquiries:

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4 | think realty magazine :: july – august 2024

LETTER FROM THE EDITOR

Industry Influence D uring an election year, many factors can influence real estate markets, ranging from political uncertainty, potential policy change, and the perception of markets. During this election year, a few notable factors to keep in mind that can influence real estate and real estate investors include: 1. POLITICAL UNCERTAINTY. Elections often bring uncertainty about future policies, which can lead to volatility in the real estate market. This can cause delays in making purchasing decisions until after the election. 2. POTENTIAL POLICY CHANGES. One area that is always important to pay attention to during an election year is possible changes in property taxes, capital gains taxes, and mortgage interest deductions. Another important topic is housing reform, including affordable housing. 3. INTEREST RATES AND MONETARY POLICY. If you are involved in real estate, there’s no doubt you are paying attention to the Federal Reserve and interest rates. Changes in these rates affect home affordability and investment decisions and are expected to be a focus in the upcoming election. 4. ECONOMIC POLICIES AND OUTLOOK. Stances on economic growth and market stability are key areas to pay attention to. A positive outlook can boost real estate markets, while concerns can cause reservations in spending and slow down market activity. Real estate market trends are closely tied to employment rates. Policies that impact job creation can influence both the residential and the commercial sectors of real estate. 5. HISTORICAL TRENDS. It is important to pay attention to historical data regarding how the real estate market has performed during an election year, but remember that there is money to be made in each cycle of real estate investing. Historical data can help produce a blueprint of what to expect and how to adjust. Election years introduce a range of uncertainties and potential changes that can significantly impact real estate markets. Because of an election year’s impact and influence on the real estate market and real estate investing, Think Realty is excited to announce its upcoming Virtual REI Summit July 31-Aug. 1. At this virtual summit, Think Realty and a host of experts will address the common variables every investor needs to keep top of mind. Participants will gain insight into everything needed to navigate their election-year investment strategy. •

CARMEN FIELDS MANAGING EDITOR

thinkrealty.com | 5

OPERATIONS: VALUE INSIDE THIS ISSUE

How Other Industries Shape the National Real Estate Market KEY INDUSTRIES SHAPE THE NATIONWIDE REAL ESTATE MARKET, AND SAVVY REAL ESTATE PROFESSIONALS WILL MAKE A POINT TO UNDERSTAND THE RIPPLE EFFECTS. FEATURE PAGE 54

JOEL MOYES

6 | think realty magazine :: july – august 2024

C O N T E N T S

FUNDING Best Loan Options for Investment Property An article series on navigating the private lending world Damon Riehl PAGE 8

MARKET & TRENDS

Developing a Rehab Budget for a Residential Property Follow these steps to create an accurate line-item budget. John V. Santilli PAGE 58 How to Protect Your Investment Property and Maximize Your Return If you’ve leaped into single-family rental property ownership, chances are you have one main goal: to make a profit. Real Property Management PAGE 62 Bare Minimum Marketing Essentials These essential steps ensure your message is clear, compelling, and well- crafted—and reaches its audience. Skyler Wilson PAGE 64 Identifying the Perfect Investment Property Navigating the real estate market requires a blend of analysis and strategy that considers economic indicators, property valuation methods, and property types. Kiavi PAGE 66 An Agent’s Survival Guide to 2024’s Market Shake-Up You can master 2024’s market following these three essential agent tips. Ryan Michaelis PAGE 68

Don’t Let Them Lie to You: Real Estate Investing Is Crucial to Housing Market Health It’s time to stop villainizing investors, no matter the scale. Bruce McNeilage PAGE 34 2024 Trends: Real Estate Investing with an IRA Several trends could signal a unique opportunity for investments made within Self-Directed IRAs. Tara Bogard PAGE 36 DESIGN Metal Matters Metal finishes impact the overall design of any home—and ultimately bring the design together. Michele Van Der Veen PAGE 38 OPERATIONS Understanding Construction Warranties Understanding the complexities of construction warranties strengthens your position as a developer or owner and helps ensure your project is finished to quality standards. David Jacobs PAGE 44 7 Steps to Adding Value to Your Network Being generous with your network increases your influence and opportunities. Jeff Roth PAGE 48

Financing Built For Real Estate Investors™ Non-owner, no income, no problem! CV3 PAGE 12 A Different Way to Manage Your Finances The Infinite Banking Concept allows you to fully control your finances and ensure your money serves you. Hannah Kesler PAGE 14

Avoiding Fraudulent Hard Money Lenders

Learning the red flags of fraudulent hard money lending will help you safeguard against them. Santosh Salve PAGE 18

INVESTMENT STRATEGY Tiny Homes, Big Returns Here’s what you need to know about investing in the micro-living trend. Luke Babich PAGE 28

Tailor Your Portfolio with a Land Investment

Land investment requires careful research, due diligence, and long-term vision, but the potential rewards make it worth considering. Taylor Miller PAGE 30 Disaster Investing Investing in real estate recently impacted by natural disasters is a complex and nuanced endeavor that requires careful consideration of both moral and financial factors. Taylor Miller PAGE 32

8 Ways to Build Your Industry Influence

You can build a robust presence in the real estate investment space, attract a loyal following, and become a respected industry influencer. Jim Tannehill PAGE 52

thinkrealty.com | 7

FUNDING: INVESTMENT PROPERTY LOANS

Best Loan Options for Investment Property AN ARTICLE SERIES ON NAVIGATING THE PRIVATE LENDING WORLD

DAMON RIEHL

I nvesting in real estate can be a rewarding venture. However, the success of your investment often hinges on securing the best loan for your unique needs. In this article, we will navigate the intricacies of finding the best investment property loans, shedding light on key considerations and strategies to maximize your investment potential.

Selecting the right loan is paramount to your investment journey’s success. The nuances of the real estate market demand a tailored financial approach, making it crucial to explore the options available and identify the ones that align seamlessly with your investment goals. Before delving into the specifics, it’s essential to understand the landscape of investment property loans. How do

they differ from traditional mortgages? What role do local market factors play in shaping loan options? Answering these questions will provide you with a solid foundation for making informed decisions. BASICS OF INVESTMENT PROPERTY LOANS Investment property loans are the financial backbone for real estate

8 | think realty magazine :: july - august 2024

investments. Unlike traditional home mortgages, these loans are tailored for properties purchased with the intent to generate rental income or appreciate. Key features include: HIGHER INTEREST RATES. Investment property loans often come with slightly higher interest rates compared to primary residence loans. LARGER DOWN PAYMENTS. Lenders typically require a more substantial down payment for investment properties, usually ranging from 15% to 25% of the property’s purchase price. RENTAL INCOME CONSIDERATION. Lenders may factor in potential rental income when evaluating your eligibility and loan terms. Understanding these fundamental aspects sets the stage for navigating the complexities of investment property financing. KEY DIFFERENCES FROM TRADITIONAL MORTGAGES Distinguishing investment property financing from traditional mortgages is crucial for making strategic decisions. Key differences include: INTENDED USE. Traditional mortgages are designed for owner-occupied residences, while investment property loans are geared toward properties used for investment purposes. RISK ASSESSMENT. Lenders assess the risk differently for investment properties, considering factors such as potential rental income, property management, and market conditions. LOAN TERMS. Investment property loans often have shorter loan terms and may come with higher monthly payments. By grasping these distinctions, you can align your financial strategy with the unique requirements of investment property financing.

FREQUENTLY ASKED QUESTIONS

WHAT ARE THE KEY FACTORS TO CONSIDER WHEN CHOOSING A LOAN FOR AN INVESTMENT PROPERTY? When selecting a loan for your investment property, consider factors such as interest rates, loan terms, down payment requirements eligibility criteria. It’s essential to align the loan options with your financial goals and investment strategy. HOW DOES THE INTEREST RATE IMPACT THE OVERALL COST OF THE LOAN FOR AN INVESTMENT PROPERTY? The interest rate significantly influences the total cost of the loan. A lower interest rate can result in lower monthly payments and reduced overall expenses over the life of the loan. It’s crucial to compare interest rates from different lenders to find the most favorable terms.

HOW DOES THE LOAN TERM AFFECT MY INVESTMENT PROPERTY FINANCING?

Loan terms, such as the duration of the loan, impact your monthly payment and overall interest cost. Shorter loan terms generally have higher monthly payments, but you pay lower total interest. Longer terms may have lower monthly payments but result in higher overall interest expenses. Consider your financial goals and investment strategy when choosing the loan term.

IMPORTANCE OF LOCAL MARKET FACTORS

By conducting thorough research into your local market, you position yourself to select financing that aligns with the specific conditions of your investment property.

The local real estate market plays a pivotal role in shaping your financing options. Consider the following factors: MARKET TRENDS. Understanding current and future market trends helps you anticipate property appreciation or potential rental income.

CRITERIA FOR SELECTING THE BEST LOAN

When it comes to selecting the best loan for your investment property, several critical criteria can significantly impact the success and profitability of your venture. Understanding these factors will empower you to make informed decisions that align with your financial goals and risk tolerance. INTEREST RATES. Your loan’s interest rate is a pivotal factor. Consider the

ECONOMIC FACTORS. Economic stability and growth in the local

area can influence property values and rental demand. REGULATORY ENVIRONMENT. Local regulations may impact your financing options, making it essential to be well-versed about legal issues.

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FUNDING: INVESTMENT PROPERTY LOANS

LOAN TERM OPTIONS. Evaluate the available loan term options. Shorter terms may have higher monthly payments but can save on overall interest costs. Longer terms may provide more flexibility in your monthly budget but result in higher total interest payments. LOAN-TO-VALUE (LTV) RATIO. The LTV ratio compares the loan amount to the property’s appraised value. A lower LTV ratio can result in better loan terms and increased lender confidence in your investment.

type of interest rate (fixed or adjustable) and compare rates among lenders. A lower interest rate can save you money over the life of the loan.Down payment requirements. Examine the down payment requirements set by various lenders. A higher down payment may reduce your monthly payments but can impact your initial investment capital. Evaluate lenders that offer reasonable down payment terms for investment properties. CREDIT SCORE CONSIDERATIONS. Your credit score plays a significant role in loan approval and the interest rate you receive. Understand the credit score requirements of potential lenders and take steps to improve your score before applying for a loan.

TRADITIONAL MORTGAGE LOANS. Traditional mortgage loans are a tried-and-true option for financing investment properties. These loans typically come with fixed interest rates, providing stability over the long term. Investors can benefit from predictable monthly payments, making budgeting and financial planning more straightforward. Understanding the nuances of traditional mortgages is crucial for those seeking a conventional and secure financing route for property investments. FHA LOANS FOR INVESTMENT PROPERTIES. Federal Housing Administration (FHA) loans are designed to make homeownership

TYPES OF INVESTMENT LOANS

There are five main types of investment loans. Understanding their nuances will help you choose the best one for you.

10 | think realty magazine :: july - august 2024

FINANCING FOR PROPERTY FLIPPING Property flipping, the art of buying distressed properties, renovating them, and selling the properties for a profit, requires a specific approach to financing. This section explores various financing options tailored for property flipping, emphasizing short-term solutions and strategies to maximize returns. SHORT-TERM LOAN OPTIONS. Property flipping often involves a quick turn- around, making short-term loans an ideal financing solution. These loans, such as hard money loans or bridge loans, offer rapid access to funds with shorter repay- ment periods. Explore the advantages and considerations of these loans, under- standing their role in facilitating swift property acquisitions and renovations. RENOVATION FINANCING. Renovating a property is a crucial step in the flipping process. Delve into financing options specifically designed for renovations, including home improvement loans or 203(k) loans. Understand how these loans provide the necessary capital to undertake renovations and enhance the property’s market value, ultimately contributing to a profitable sale. FLIPPING STRATEGIES FOR MAXIMUM RETURNS. Successful property flipping requires more than just financing. It involves strategic planning. Explore effective flipping strategies, including identifying the right properties, minimizing renovation costs without compromising quality, and optimizing the timing of the sale so you can achieve maximum return on your investment.

more accessible, and they also can be used for investment properties. Exploring FHA loans opens up possibilities for investors, especially those who may not meet the stringent requirements of traditional loans. VA LOANS FOR INVESTMENT PROPERTIES. Veterans have a unique financing option through VA loans. Understanding the benefits and requirements specific to VA loans is crucial for veterans looking to capitalize on their eligibility and embark on successful real estate investments. PRIVATE LENDER OPTIONS. For investors seeking flexibility and alternatives to traditional financing, private lenders offer a compelling solution. Private lender options can provide tailored financing solutions for their property investments. If you choose this route, be sure you understand the terms, advantages, and potential pitfalls associated with borrowing from private sources. COMMERCIAL LOANS FOR INVESTMENT PROPERTIES. Investing in large-scale projects requires specialized financing, and commercial loans are designed to meet these unique needs. Again, make sure you understand the intricacies of commercial loans for investment properties, including a comprehensive understanding of the terms, conditions, and considerations associated with this type of financing. Commercial loans can unlock opportunities in the dynamic real estate market.

Keep in mind that the concept of the “best loan” is inherently subjective. The ideal loan aligns seamlessly with individual investment goals, risk tolerance, and the dynamic landscape of the real estate market. By understanding the intricacies of each financing option, investors can make informed choices, unlocking the potential for financial success in the vibrant and promising real estate market. •

DAMON RIEHL

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 mortgage, small business 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. Now that you understand the benefits and considerations you need to take when investing in real estate, you may want to start investing in your first property. One of the first steps is to work out a budget and your financing options. Our team at LoanBidz.com can help you figure out affordable options from the most reliable lenders for your exact needs.

thinkrealty.com | 11

OPERATIONS: FINANCING

SPONSORED CONTENT Financing Built for Real Estate Investors ™ Non-owner, no income, no problem! Financing Built For Real Estate Investors ™ NON-OWNER, NO INCOME, NO PROBLEM!

Financing Built for Real Estate Investors ™ Non-owner, no income, no problem!

CV3 The world of real estate investing is brimming with opportunities, but traditional lenders can often act as gatekeepers, demanding pristine T he world of real estate investing is brimming with opportunities, but traditional lenders can often act as gatekeepers, demanding pristine credit scores and W-2s. But what if you, the savvy investor, don’t fit the mold? This is often the problem for most real estate investors, which is where private money lenders offer the solution with a non‑owner‑occupied, no-income documented loan! Let’s take a look at situations where this type of loan makes sense for real estate investors: credit scores and W-2s. But what if you, the savvy investor, don’t fit the mold? This is often the problem for most real estate investors which is where private money lenders offer the solution with a non-owner occupied, no income documented loan! The world of real estate investing is brimming with opportunities, but traditional lenders can often act as gatekeepers, demanding pristine credit scores and W-2s. But what if you, the savvy investor, don’t fit the mold? This is often the problem for most real estate investors which is where private money lenders offer the solution with a non-owner occupied, no income documented loan! Let’s take a look at situations where this type of loan makes sense for real estate investors:

Let’s take a look at situations where this type of loan makes sense for real estate investors: PROPERTY TYPE Private money lenders specialize in PROPERTY TYPE Private money lenders specialize in financing non-owner-occupied residential properties - typically including single-family, townhouses, condos, and multifamily. So, if the property you’re eying doesn’t conform to the bank’s lending criteria, the non-owner, no income loan may be the way to go. NO DOCUMENTED INCOME Real estate investors often generate income through rentals, flips, or businesses. Since these are business purpose loans, lenders will look beyond W-2s and consider alternative income streams as long as the property itself demonstrates strong earning potential. CREDIT SCORES Real estate investors often generate income through rentals, flips, or businesses. Since these are business purpose loans, lenders will look beyond W-2s and consider alternative income streams as long as the property itself demonstrates strong earning potential. CREDIT SCORES financing non‑owner‑occupied residential properties, typically including single-family, townhouses, condos, and multifamily. So, if the property you’re eyeing doesn’t conform to the bank’s lending criteria, the non-owner, no-income loan may be the way to go. NO DOCUMENTED INCOME Real estate investors often generate income through rentals, flips, or businesses. Since these are business-purpose loans, lenders will look beyond W-2s and consider alternative income streams as long as the property itself demonstrates strong earning potential. CREDIT SCORES FICO scores are not deal breakers. Better scores may lead to more favorable terms for interest rates and points, but if you believe your current credit situation is holding you back from investing in real estate, this type of loan can help. LOAN LIMITS FICO scores are not deal breakers. Better scores may lead to more favorable terms like interest rates and points, but if you believe your current credit situation is holding you back from investing in real estate, this type of loan can help. LOAN LIMITS Since these loans aren’t considering debt-to-income ratios, there is no limitation on how many properties you can get a loan on. Added bonus: with a cross-collateralization you can finance multiple properties (typically up to 10) under ONE loan, saving you time and additional costs. CV3 Financial: Your Bridge to Investment Freedom Since these loans aren’t considering debt-to-income ratios, there is no limitation on how many properties you can get a loan on. Added bonus: with a cross-collateralization you can finance multiple properties (typically up to 10) under ONE loan, saving you time and additional costs. CV3 Financial: Your Bridge to Investment Freedom Since these loans aren’t considering debt-to-income ratios, there is no limitation on how many properties you can get a loan on. Added bonus: With a cross-collateralization, you can finance multiple properties (typically up to 10) under ONE loan, saving you time and additional costs. CV3 Financial: Your Bridge to Investment Freedom Depending on your investing strategy, CV3 offers non-owner, no income loans tailored to your needs. From fix-and-flip and rental to cash‑out refinances, we’ve got your short and long-term financing covered. Built for real estate investors, our financing opens doors to a wider range of investment opportunities, allowing you to diversify and scale your portfolio for maximum success. • This is not a commitment to lend. Actual rates and terms depend on a variety of factors and restrictions may apply. CV3 Financial Services, LLC reserves the right to amend rates and guidelines without notice. NMLS ID #2478266. Loans made or arranged pursuant to California Finance Lenders Law License 60DBO-183355. AZ Mortgage Banker License #1047792, Idaho MBL-2082478266, FL Mortgage Banker License #MLD2457, MN License #MN-MO-2478266, OR Mortgage License #2478266, UT Mortgage Entity License #13576219. (844) 721-3733 | www.CV3financial.com/think-realty Real Estate Success Starts ™ Here This is not a commitment to lend. Actual rates and terms depend on a variety of factors and restrictions may apply. CV3 Financial Services, LLC reserves the right to amend rates and guidelines without notice. NMLS ID #2478266. Loans made or arranged pursuant to California Finance Lenders Law License 60DBO-183355. AZ Mortgage Banker License #1047792, Idaho MBL-2082478266, FL Mortgage Banker License #MLD2457, MN License #MN-MO-2478266, OR Mortgage License #2478266, UT Mortgage Entity License #13576219. (844) 721-3733 | www.CV3financial.com/think-realty Real Estate Success Starts ™ Here Depending on your investing strategy, CV3 offers non-owner, no income loans tailored to your needs. From fix and flip and rental to cash out refinances - we’ve got your short and long-term financing covered. Built for real estate investors, our financing opens doors to a wider range of investment opportunities, allowing you to diversify and scale your portfolio for maximum success. Depending on your investing strategy, CV3 offers non-owner, no income loans tailored to your needs. From fix and flip and rental to cash out refinances - we’ve got your short and long-term financing covered. Built for real estate investors, our financing opens doors to a wider range of investment opportunities, allowing you to diversify and scale your portfolio for maximum success. PROPERTY TYPE Private money lenders specialize in financing non-owner-occupied residential properties - typically including single-family, townhouses, condos, and multifamily. So, if the property you’re eying doesn’t conform to the bank’s lending criteria, the non-owner, no income loan may be the way to go. NO DOCUMENTED INCOME FICO scores are not deal breakers. Better scores may lead to more favorable terms like interest rates and points, but if you believe your current credit situation is holding you back from investing in real estate, this type of loan can help. LOAN LIMITS

12 | think realty magazine :: july - august 2024

ORLANDO REI SUMMIT SEPTEMBER 12&13

Everything you need to profit from real estate in today’s market and economy Curated subject matter experts bring you timely market insights to navigate election year disruptions and get you ready to take the next step forward in your real estate investment business.

Investment Strategy

Roundtables

REI Vendors

Replay

Don’t miss a beat: Access a selection of recorded sessions after each event.

Connect with vendors specializing in REI tools, products, and services.

Participate in guided, small- group discussion on focused investment topics.

Attend live sessions with opportunities to Q/A the best minds in the business.

thinkrealty.com | 13

FUNDING: INFINITE BANKING CONCEPT

SPONSORED CONTENT

A Different Way to Manage Your Finances THE INFINITE BANKING CONCEPT ALLOWS YOU TO FULLY CONTROL YOUR FINANCES AND ENSURE YOUR MONEY SERVES YOU.

HANNAH KESLER

I n the quest for financial independence, many of us yearn for effective ways to manage our finances and cash flow that surpass traditional banking limitations. One way to master financial autonomy

HOW IT WORKS The Infinite Banking Concept is founded on the principle of becoming your own banker. This doesn’t involve opening a bank in the conventional

is through the Infinite Banking Concept (IBC). This strategy isn’t merely about saving—it’s about fully controlling your financial life and ensuring your money serves you—not the other way around.

14 | think realty magazine :: july - august 2024

sense. It means employing a whole life insurance policy structured to maximize high immediate cash value and your financial control. Such a policy allows you to bypass commercial banks and government interference so you can manage your funds independently. The beauty of this concept lies in how your money is handled. By channeling your funds through a whole-life policy with a mutually owned insurance company, your money earns uninterrupted, guaranteed compounding interest. Even more appealing is the liquidity this arrangement offers. You can access your money at any time for whatever you want: deploying it for investments, purchases, services you are buying, or any financial needs without penalty. Control and freedom. This approach also shields your assets. In most states, the cash value in your policy is safeguarded against judgments, liens, and lawsuits. Furthermore, the growth within the policy is tax-free, you are not restricted by governmental regulations, and there’s no cap on what you can use the money for. The plan also includes a death benefit, ensuring that when the inevitable happens (your graduation date), your financial legacy is secure.

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(paying cash), a concept known as opportunity cost. Although many recognize this principle in theory, few apply it to their financial practices. Infinite Banking challenges this oversight, offering a method where your money remains continually productive, and under your control. Adopting the Infinite Banking Concept requires more than just understanding its mechanics. It demands a cultural shift toward personal financial

Personally, as a private lender, I am now able to “double dip” on my money, always earning interest inside my policy and interest earned from my borrower when the money is being deployed out. The Infinite Banking Concept hinges on a critical financial principle articulated by Nelson Nash: You finance everything you buy. You either pay interest to someone else (bank finance) or forfeit the interest you could have earned otherwise

Consider a scenario in which you use the cash value to invest in a rental property. Not only does your money continue to accrue interest within the policy, but it also works for you in your real estate investment. This dual advantage—your money earning interest in both the policy and the investment—exemplifies

how you can effectively have your money work in two places at once.

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FUNDING: INFINITE BANKING CONCEPT

HANNAH KESLER

empowerment. It’s about altering your financial mindset to fully use tools that foster independence. Understanding and applying Infinite Banking Concept principles not only secures your financial future but also builds a robust foundation for future generations. IBC isn’t just about choosing a financial strategy; it’s about initiating a movement toward self-reliance and proactive financial management. It empowers you to reclaim control over your financial affairs, ensuring your money effectively fulfills your personal and family goals.

For those interested in delving deeper into how to implement these strategies in your life, I encourage you to visit our website (themoneymultiplier.com/presentation) to watch our presentation on how, what, and why we practice this concept. Click “Watch Brent Now.” You’ll find a wealth of video resources, our podcast show, and information about our upcoming live events designed to educate and empower individuals like you on the journey to financial liberation. The Money Multiplier Method—A Grassroots Method of Avoiding Fractional Reserve Banking… Think About It! •

Hannah Kesler is a second-generation Infinite Banking Concept practitioner. She and her father have traveled around the U.S. to teach this method for how to recycle, recapture, and keep total control of your hard-earned dollars. She has been implementing the Infinite Banking Concept since she was 18 years old and has been involved in real estate investing since the age of 20.

Hannah Kesler | 913-908-3511 | hannah@themoneymultiplier.com www.themoneymultiplier.com The Money Multiplier Podcast - streams everywhere

16 | think realty magazine :: july - august 2024

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FUNDING: AVOIDING FRAUD

Avoiding Fraudulent Hard Money Lenders LEARNING THE RED FLAGS OF FRAUDULENT HARD MONEY LENDING WILL HELP YOU SAFEGUARD AGAINST THEM.

SANTOSH SALVE

H ard money loans have become popular for many investors because of their quick approval process and flexible terms. Given the demand for these loans, there has also been an increase in fraudulent hard money lenders who prey on unsuspecting borrowers.

protecting your investments and ensuring a smooth transaction. Falling victim to a scam can result in significant financial losses, damage to your credit, and a prolonged legal battle. Let’s explore the importance of recognizing fraudulent hard money lenders, the common tactics they

yourself with knowledge, you can confidently navigate the hard money lending landscape and focus on growing your real estate portfolio.

WHAT IS HARD MONEY LENDING?

Hard money lending is a way to borrow money using real estate as collateral. Instead of getting a loan from a bank, you

Identifying and avoiding these fraudulent lenders is crucial for

use, and how you can safeguard against these threats. By arming

18 | think realty magazine :: july - august 2024

get it from a private investor or company. These loans are usually for short periods and have higher interest rates. Imagine you find an old house you want to buy, fix up, and sell for a profit. You need $100,000 to buy it, but the bank can’t give you a loan quickly enough. You go to a hard money lender who agrees to lend you the money based on the value of the house, not your credit score. You

get the money fast, buy the house, fix it up, and then sell it. You pay back the loan with interest from the sale profits. WHY REAL ESTATE INVESTORS USE HARD MONEY LOANS

else does. Hard money lenders can provide funds more quickly than traditional banks, allowing investors to seize opportunities. FLEXIBILITY. Traditional banks often have strict rules about who they lend to and what properties they’ll finance. Hard money lenders are more flexible and may be willing to lend to investors with less-than-perfect credit or for properties that banks won’t touch.

Real estate investors use hard money loans for a few reasons:

QUICK FUNDING. Sometimes, investors need money fast to buy a property before someone

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FUNDING: AVOIDING FRAUD

NO NEED FOR PERFECT CREDIT. With hard money loans, the property itself acts as collateral, so lenders are less concerned about the borrower’s credit history. This benefits investors who might not have excellent credit but still want to invest in real estate. PROPERTY FLIPPING. Many investors use hard money loans for “fix-and-flip” projects: They buy a property, renovate it, and sell it quickly for a profit. Hard money loans provide the necessary funds for purchasing and renovating the property, allowing investors to turn a profit in a short amount of time. BRIDGE FINANCING. Sometimes, investors need temporary financing to bridge the gap between buying a property and securing long-term financing. Hard money loans like bridge loans can fill this gap, allowing investors to acquire properties while they arrange for more permanent financing. Overall, real estate investors use hard money loans because they offer speed, flexibility, and accessibility.

RISKS ASSOCIATED WITH HARD MONEY LOANS

Hard money loans do come with risks: HIGH INTEREST RATES. Hard money loans usually have higher interest rates, meaning investors pay more in interest over the life of the loan, cutting into potential profits. SHORT LOAN TERMS. Hard money loans usually have shorter terms, often ranging from six months to a few years. Investors must be confident they can repay the loan within this timeframe; otherwise, they risk facing steep penalties or foreclosure. ASSET-BASED LENDING. Hard money lenders base their decisions primarily on the value of the property being used as collateral rather than on the borrower’s

20 | think realty magazine :: july - august 2024

creditworthiness. If the property’s value decreases or the market declines, investors may owe more than the property is worth. HIDDEN FEES. Some hard money lenders may charge hidden fees or impose strict terms that catch investors off guard. It’s crucial for investors to carefully review the terms of the loan agreement to avoid unexpected costs. LIMITED REGULATION. Compared to traditional banks, hard money lenders are subject to less regulation. This lack of oversight can make it easier for unscrupulous lenders to engage in predatory practices, leaving investors vulnerable. Overall, while hard money loans offer quick access to financing, investors must carefully weigh the risks and benefits before pursuing this type of funding for their real estate ventures.

RECOGNIZING GENERAL RED FLAGS

Real estate investors must watch for red flags that indicate potential risks or fraudulent activities. By recognizing these warning signs, investors can protect themselves from unscrupulous lenders and scams. Here are some key red flags to watch out for: EARLY SIGNS OF A FRAUDULENT LENDER. Beware of lenders who contact you out of the blue, especially through unsolicited emails, phone calls, or social media messages. Legitimate lenders typically don’t approach potential borrowers in this manner. UNUSUALLY HIGH INTEREST RATES AND FEES. Be wary of lenders offering loans with excessively high interest rates, hidden fees, or unfavorable repayment terms. Although hard money loans often come with higher rates and shorter

terms compared to traditional loans, the terms should still be reasonable and within industry standards. LACK OF TRANSPARENT LOAN TERMS. Be cautious if a lender hesitates to provide clear details about loan terms, fees, and repayment conditions. Transparent communication is crucial in lending relationships, and evasive or vague responses could signal fraudulent intentions. PRESSURE TO ACT QUICKLY. Watch out for lenders who use high-pressure sales tactics to rush you into accepting their loan offer. Tactics like insisting on immediate decisions or creating a sense of urgency may indicate the lender is more interested in closing the deal quickly than looking out for your best interests.

LACK OF DUE DILIGENCE. Legitimate lenders conduct thorough due diligence before extending a loan, including assessing the property’s value and the borrower’s ability to repay. If a lender skips these steps or shows little interest in evaluating the risk, it’s a major red flag. NEGATIVE REVIEWS OR COMPLAINTS. Research the lender’s reputation online and check for any negative reviews or complaints from past borrowers. A few negative reviews may not be cause for alarm, but a pattern of complaints or consistent negative feedback should raise red flags. NO PHYSICAL ADDRESS OR LICENSING. Verify the legitimacy of lenders by confirming their physical address and licensing status. Legitimate

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FUNDING: AVOIDING FRAUD

RED FLAGS DURING THE APPLICATION PROCESS If you’ve made it to the application process with a hard money lender, watch out for these additional red flags: REQUESTS FOR UPFRONT FEES. Beware of lenders who require excessive upfront fees before processing your loan application. Some fees are standard in the lending process, but excessively high fees or fees demanded before any work is done could indicate a scam. INCONSISTENT OR CONFUSING COMMUNICATION. If a lender is evasive or unwilling to provide clear information about loan terms, fees, or lending practices, proceed with

lenders should have a physical office address and be licensed to operate in their jurisdiction. If a lender refuses to provide this information or operates without proper licensing, proceed with caution. QUESTIONABLE BACKGROUND CHECK RESULTS. Check whether the lender or any affiliated individuals have faced disciplinary actions, lawsuits, or sanctions in the past. This information may be available through regulatory agencies or court records. Verify the lender’s credentials and credentials of key personnel (e.g., loan officers or brokers). Look for relevant experience, qualifications, and membership in professional associations.

caution. Transparent communication is essential in any lending relationship, and a lack of transparency could indicate fraudulent intentions. Also pay attention to inconsistencies or discrepancies in the lender’s communication. For example, if the lender provides conflicting information about loan terms or seems unsure about key details, it could be a sign of trouble. UNPROFESSIONAL OR INCOMPLETE DOCUMENTATION. A legitimate lender will require documentation to assess the property’s value and your ability to repay the loan. If a lender is willing

to offer a loan without requesting any documentation or conducting due diligence, it’s a major red flag.

IF YOU HAVE

ONE OF THESE AND

THEN YOU HAVE

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money remains safe and secure.” “

SPOTTING FAKE PROMISES AND TOO-GOOD-TO-BE-TRUE DEALS. Be wary of lenders who make unrealistic promises or guarantees (e.g., guaranteed approval regardless of credit history or guaranteed low interest rates). Legitimate lenders understand the inherent risks involved in lending and are unlikely to make such assurances. GUARANTEED APPROVALS WITHOUT CREDIT CHECKS. Guaranteed approvals without credit checks is a major red flag. Legitimate lenders understand the importance of assessing a borrower’s creditworthiness and risk before extending a loan. A lender claiming to offer guaranteed approvals without conducting credit checks is likely engaging in deceptive practices and may be attempting to exploit borrowers who may not qualify for traditional financing. Be cautious of such claims and thoroughly vet any lender who makes them. PROMISES OF EXTREMELY FAST LOAN PROCESSING. Although hard money loans are known for quicker turnaround times than traditional bank loans, excessively rapid processing claims may signal a lack of thorough due diligence. Legitimate lenders prioritize accuracy and proper evaluation of loan applications, so be cautious of promises prioritizing speed. Rushed processing could lead to hidden fees, unfavorable terms, or inadequate evaluation of the property’s value, ultimately putting borrowers at risk. UNREALISTICALLY LOW OR HIGH INTEREST RATES. Be cautious of lenders offering loans with unusually low or high interest rates, balloon payments, or other unfavorable terms. Hard money loans typically come with higher rates and shorter terms than traditional loans, but the terms should still be reasonable and within industry standards.

By implementing best practices for fraud protection, borrowers can fortify their defenses and ensure their hard‑earned

BEST PRACTICES In the world of financial transactions, the age-old saying “prevention is better than cure” is relevant. By implementing best practices for fraud protection, borrowers can fortify their defenses and ensure their hard-earned money remains safe and secure. WORK WITH REPUTABLE AND ESTABLISHED LENDERS. When seeking hard money loans, prioritize working with reputable and established lenders that have a track record of reliability and transparency. Doing so reduces the risk of encountering fraudulent schemes. Research lenders’ backgrounds, check their credentials and look for reviews or testimonials from past borrowers to ensure you’re partnering with a trustworthy institution. CONSULT WITH A REAL ESTATE ATTORNEY. Before entering into any loan agreement, consider consulting with a real estate attorney. An attorney can review the loan terms, identify potential red flags and hidden clauses, and provide legal advice to protect your interests.

USE ESCROW SERVICES FOR TRANSACTIONS. Using escrow services for transactions adds an extra layer of security and transparency. Escrow services hold funds in a neutral account until all the transaction conditions are met, ensuring that both parties fulfill their obligations before the funds are released. This reduces the risk of fraudulent activity or disputes occurring during the transaction process. STEPS TO TAKE IF YOU SUSPECT FRAUD If you suspect fraud or deceptive practices during the loan process, take immediate action to protect yourself. Document any suspicious behavior or communication, gather evidence, and cease further interaction with the potentially fraudulent lender. Notify relevant authorities and seek legal assistance to address the situation promptly and effectively. GATHER EVIDENCE AND DOCUMENTATION. In cases of suspected fraud, gather as much evidence and documentation as possible to

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