This week, Sales Executives Kevin and Gunnar are here to talk about one of the many questions they get from realtors: Why should I pursue investor clients?
Reason #1: You’ll do more transactions with an investor. A traditional home buyer might buy a house every couple of years, unlike an investor who is going to be purchasing and selling multiple houses in a single year.
Reason #2: The DC market is flush right now with investors who are looking for professional real estate agents to assist them with acquisitions.
Reason #3: When you work with investors there is less hand-holding, they know the process, and there is less emotional attachment to the deals.
Thank you for watching and we’ll see you next week!
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In this special edition of Minute Monday, sales associate Joska give us a tour of his condo flip and shares some tips and strategies to keep in mind when flipping an investment property.
Tip #1 – Find a good contractor. Contractors can make or break the success of your flip, so it’s important to use referrals and reviews to select a good crew. Once you find a crew, be sure to treat them well as they will be more likely to go the extra mile for your project.
Tip #2 – Price your flip to sell. Use your comps to determine a realistic sales price for your flip. If you get too aggressive on price, your flip could sit on the market with little to no interest from serious buyers.
Tip #3 – Always stage your flip! Make sure to use a staging company that understands the style of your target market. Professional staging and photography could be the difference between 10 days on market and 10 weeks on market.
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Welcome back for Minute Monday #7. Jared Fausnaught, Director of Sales, is back again to discuss one of the biggest myths surrounding hard money lending.
Myth: Hard Money Lending IS Predatory Lending.
This myth suggests that a hard money lender like WCP will lend to a borrower while knowing that the borrower doesn’t have the ability to successfully complete the project. The objective of predatory lenders is essentially to set a borrower up for failure so that they can take ownership of the property when the borrower runs out of construction money. This is where the term “loan to own” comes from. This couldn’t be further from the truth when it comes to hard money.
At WCP:
This week Kevin breaks down an example deal and explains some of the hard money loan metrics he uses to analyze them.
Example:
There’s a property for sale for $250,000 and it needs $50,000 in repair. The estimated ARV as presented by the investor is $400,000. Here we’re going to analyze the deal making sure the ARV (After-Repair-Value) is supported by comps. If everything checks out we take a look at our 2 lending metrics: LTV (Loan-to-Value) and LTC (Loan-to-Cost).
This week’s Minute Monday, Josh, our Director of Technologies will give you a behind the scenes look into WCP’s systems.
Here’s a quick rundown on how our technologies continue to assist us every step of the way:
On the website you submit your loan application or quick estimate, that data comes into our CRM system. Behind the scenes our loan officers are immediately notified and to give them more information our system pulls the public record information. Once you begin your project and begin to request construction draws, we will send our in-house inspector out and he’ll be able to take pictures of your property. Those pictures are then uploaded right back into our CRM system and our loan officers will be able view them and in turn, help you get the construction draw approved faster.
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Investing in today’s market has been easier in some ways, particularly in the D.C. Metro area because of healthy appreciation in real estate. But as we saw in D.C.’s Petworth in late summer of 2014, a market saturated with investors can be devastating. Inventory builds (properties that sit on the market), and ill-prepared investors are forced to cut sales prices drastically. In Petworth’s case, sales prices were cut as much as six figures—wiping out profits and equity.
The Power of Data
So how can you avoid a situation in which the market is appreciating at a high rate and yet unwise investors are losing money in the wrong, saturated areas? If repair value, repair cost, and profit margin are the only numbers you’re crunching, be prepared for a tough awakening followed by a loss. Understanding the metrics of the market will help you identify the best opportunities, while saving you time and money. Below are some important guidelines to follow to step up your game and add to your due diligence.
Know the Investor Ratio
Tracking the number of as-is/cash buy transactions is a great tool for evaluating an investment opportunity and understanding your competition, in effect knowing your investor ratio. To calculate your investor ratio, look back at the last 6 months of transactions in the target neighborhood. If the number of investor transactions averages 30 each month, for example, then jumps to 60. At that point, you know you will be dealing with double the competition when selling your property. If the market can’t support double the amount of sales, you are going to see sellers slashing prices left and right until a new balance is found.
Know When to Come to Market
Understanding how active a market is will allow you to know how bold to be with pricing. Keep a close eye on price increases when you notice them. Days on market (DOM) is the best gauge of market temperature. If you notice that DOM are decreasing, you know that it is a hot market. If DOM are on the rise, the wise thing to do is to be aggressively conservative. Price the property more prudently than your competition before your competition adjusts the price, creating a new lower, more attractive edge before you do.
Utilize Expert Advice
Few things excite investors more than getting more money as a result of the market stars aligning in your favor. We know it is not your job to forecast the market, as it is, you already have enough on your plate. Here at Washington Capital Partners, helping customers in our area allows us to understand where people invest and at what prices. Run your deal by us, we are happy to help you be more successful and share our insights with you!
Say hello to Joska, Sales Associate here at WCP. In this episode, he will be share information on our Refinancing loan program.
Refinancing is a great tool we offer to investors who currently own an investment asset like a flip, that they have listed for sale and are ready to get started on their next project
Our refinancing program allows you to leverage your current asset to secure finding for your next one. This helps investors maintain a continuous stream of projects and keep invested money working for you rather than just sitting on the market for 1-3 months. Typically we can lend on leverage properties at 50-60% of the (loan-to-value) LTV. As long as the property you are leveraging is vacant and a true investment, meaning that it’s not your personal dwelling refinancing through WCP is an excellent way to keep your portfolio growing without any lulls.
Thank your for watching, see you next week!
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We’re back again with Minute Monday #3. This week’s episode, “Using Hard Money for a Fix & Flip Loan” is presented by our Sales Executive, Gunnar.
Our Construction / Repair loan program is for investors who not only need funding for the acquisition but the construction costs as well. Also known as a “fix and flip” loan this is for investors who are ready to take on their next rehab for a serious return on their investment. The process is pretty simple, we provide funding for acquisition and then we will release the construction money through scheduled draws. We have an in-house inspector who will be tracking the progress of the project and we will be releasing the funds accordingly.
For more information on how you can qualify for a Construction / Repair loan, contact us today!
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Welcome back to our second week of Minute Monday! In this episode our Director of Sales, Jared, is back to give you a briefing on our loan program, Transactional Funding.
Our transactional funding program is best for wholesalers who have found deal usually on-market that has an assignability clause that doesn’t allow them to assign the contract.
To get around banks not wanting wholesalers to receive that profit margin we have created this loan program to help you “double close.” Unfortunately title companies do not allow simultaneous closings, but we can get you the deal by providing 100% of the funding for transaction #1 for buyer #1 and then come in for the transaction #2 and provide acquisition and construction funding for buyer #2. This allows buyer #1 to successfully receive their assignment fee.
If you would like more detailed information about Transactional Funding contact us today. Thank you for tuning in and we’ll see you next week!
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