Interested in Building Your Rental Portfolio?

Washington Capital Partners is excited to announce the addition of long-term financing products for your investment properties. Whether you bring one property or 10, we can provide financing as low as 6.5% under your name or LLC. If you already own rental properties or you have higher rates, we will be happy to refinance them and help you get more cash flow. We can also help you build your rental portfolio with our fix and rehab loans, and you can close the gap with our new long-term financing options. Best of all, we rely on your property cash flow and not your income to qualify. Call us today for more details: (703) 457-1995.

How to Find an Investment Property – Off-Market Deals

Finding a good deal for an investment property can be a challenge. In our last post, we talked about foreclosure properties, which are usually good deals, but also tend to be very competitive. In this post, you will learn more about off-market deals. These can be more difficult to find, but these sellers focus on the niche group of real estate investors, which can mean less competition and an easier acquisition. Pocket Listings In a pocket listing, a broker holds a signed listing agreement with the seller, but the property is not advertised or listed on the multiple listing service (MLS) which means your typical agent and home buyer don’t know the property is for sale. With these properties, the general public is unaware that the home is even for sale, meaning there is usually less competition for you as the buyer. Sellers may choose to list their home as a pocket listing because they generally provide the seller with more privacy than a traditional listing. These listings can also lead to a faster, smoother transaction overall. A good way to find these listings is to create connections with local real estate agents who will likely be aware of off-market listings like this. Wholesalers Perhaps the best way to find an off-market deal is to use a wholesaler. Wholesalers are frequently non-licensed real estate specialists who work closely with direct sellers or even other wholesalers to bring off market deals directly to real estate investors. They essentially act as the middlemen who put a property under contract then assign their right to that contract to an investor who then steps in to complete the rehab of the property. There is a large variety of different wholesale networks to get involved in. In the D.C. metro area, one place to keep an eye on for wholesale deals is Great DC Deals.com. This website provides up to date information on local real estate investment properties for sale in the metro area. When searching for wholesale deals, be sure to do your research and make sure the deal works for you. One thing to watch out for is a wholesaler that may be attempting to do a daisy chain. This is when a third party, not the actual wholesaler, holds the deed to the property. These particular deals tend to have difficulty closing once the project is complete, and sometimes they don’t even close at all, leaving you in debt without a property to sell. Real Estate Investment Events and Meetups There is a large community for real estate investors, especially in the D.C. metro area. Getting involved with REI events and meetups can be hugely beneficial to your business as a real estate investor. At these events, you will be able to network with other investors who can help you learn the ins and outs of the business. By establishing relationships with other investors, you also open yourself up for the opportunity to get a property from another investor. It is possible that an investor could purchase a property with the intent of completing a rehab project, but after the purchase they realize that they don’t have the time or resources needed to complete it at the time. In this case, the investor may approach other investors they know to unload the property before it becomes too much of a financial burden to them. Lenders Your lender is an excellent source for finding off-market deals, especially if that lender is local to the area you are trying to find a property in. At WCP, not only do we have extensive knowledge of the process and the local market, we also have connections in the area to builders, wholesalers and real estate agents that have a bank of properties they are trying to sell to investors. We regularly have 5-10 off-market properties each month that we are looking to place with investors. This is perfect for investors who don’t want to compete with hundreds or even thousands of other investors on market. Contact us today to learn more about how we can help with you find and acquire your investment property.

How to Find an Investment Property – Foreclosures

If you’re new to real estate investing, or even a veteran investor, you may have a few questions about the process. One of the most common questions we get is, “How do I find a good investment property?” There are several ways you can find a good deal, you just have to know where to look. In this series, we will provide you with detailed descriptions of the best ways to find investment properties. Typically, the first properties that real estate investors look for are foreclosures. These properties almost always sell for well under market value, but they can also come with some major defects. While foreclosures make great investment properties, you also have to make sure you’re prepared for the less than perfect conditions. Foreclosure When a homeowner is unable to keep up with the mortgage payments of their home, the foreclosure process begins. As a real estate investor, these can make a very profitable investment property. The three stages of foreclosure are a short sale (considered to be pre-foreclosure), a public auction or an REO. Short Sale When a homeowner defaults on their mortgage payments, they can opt to put the home up as a short sale before the foreclosure process begins. The property is typically listed for a price that is lower than the amount the homeowner owes on the mortgage. Real estate investors can benefit from these sales by purchasing a property with a smaller price tag than it would have if it was listed as a typical sale. A real estate agent can help you find short sales, but there is usually stiff competition for these properties, so it may take offers on multiple properties before you win a deal. Public Auction Once foreclosure on a home begins, the property goes to a public auction. Most of the time, auctions take place at a public place located in the property’s county and not at the property itself. These properties can be a little risky because you usually don’t get a chance to see the property’s condition before the auction. The opening bid at these auctions is based on the amount that the original owner still owes on the property. If that amount is not reached, the home becomes an REO, or Real Estate Owned, property. And remember, if there are outstanding liens on the property, the bidder that wins the property may be responsible for covering them. REOs REO properties are owned by a lender; typically a bank. These properties usually come on the market after it failed to sell as a short sale or at a foreclosure auction, and the original owner was unable to keep up with their mortgage payments. Generally these properties are in need of major renovations in order to make the home appeal to the average buyer, which makes them perfect investment properties. Once a property reaches REO status, the lender is typically motivated to sell so they might be more open to price negotiations than the average seller. However, similar to short sales, the competition for these properties is high. While using a real estate agent to find these properties is a good idea, you can also try reaching out to banks to purchase bulk deals. The hard part about this approach is that it can be difficult to find the right person to speak with, and you may have to buy more properties than you can afford.

Purchase Your Investment Property Today

If you’ve been considering completing a real estate investment project, now is the time to purchase your property. The spring real estate market is right around the corner, and you have the opportunity to take advantage of the start of this year’s spring rush. Putting your property on the market at the very beginning of the selling season will increase your chances of getting a good offer before the market goes through its cycle again. Motivated Sellers Real estate is a human condition, and sometimes people just can’t avoid selling their home. Maybe they have to relocate for a new job or they just went through a divorce and they don’t have the time to wait for the “seller’s market” to come around. And when someone is forced to sell during the winter, investors can take advantage of these opportunities that every day traditional home buyers might not consider because they have the ability to wait until a more competitive market. It’s a known fact that supply is generally much lower in the winter, meaning many potential buyers aren’t even thinking about looking for their new home yet. Use this to your advantage to purchase your investment property, and turn it around in time for the buyers who are waiting for the spring market. Less Competition When You Sell Prime selling season is May to August. Listing your home in mid-March gives you a leg-up on the competition. Listing early virtually ensures you’ll have less competition than you would in May when the market is flooded with new listings. However, if the spring market is slower than average, you may also run the risk of being out on the market too early and risk your property staying on the market too long. The best way to judge this is to meet with a local real estate professional who knows the current market. Higher Listing Prices In the housing market, prices are highest during the prime season. By looking ahead and preparing your property for sale in the spring market, you are giving yourself the option to list at the highest price possible. In other markets, high inventory equals lower prices. But in the housing market, a well-priced home selling in the peak season usually garners multiple offers and can even sell for more than the asking price. Construction Purchasing your investment property in January gives you ample time to complete any renovations or rebuilds your property may need. Typically, it will take anywhere from 2 to 3 months to renovate an investment property. If there is a harsh winter, your construction time could extend longer than you had planned, and you still want to be able to deliver on time. Purchasing early helps you avoid extending your timeline past your comfort zone. One piece of advice is to consider purchasing your property after the Christmas and New Year holidays. The two week time-frame between Christmas and the New Year is almost always slower if not completely stalled. If you are working with a lender, remember that you will be paying interest on each of those days that your property is not being worked on and those are financing costs you could be saving.

Why Do Hard Money Loans Close Faster?

Real estate investors are drawn toward hard money loans for one main reason: a fast close. The faster you can close on your loan, the better your chances are of beating out your competition and getting the property you want. It’s pretty common knowledge that private lenders will close a loan faster, but do you know why that is? Read on to find out. Asset-Based Lending Your lender doesn’t care about your credit history or any bumps that may have damaged your credit score. We focus solely on the deal at hand. Because of this, we don’t have to take extra time to dig into your background and analyze every part of your financial history. Hard money lenders don’t care if you haven’t always been able to make every single credit card payment on time or if a mistake years ago damaged your financial health. We base loans off of the deal you place before us and your plan for the property, resulting in a faster closing process. Paperwork There is also less paperwork involved when applying for a hard money loan. Most hard money lenders don’t need to verify your income or credit history in order to approve a loan, which means you don’t have to complete nearly as much paperwork as you would with a traditional loan. This saves you weeks and lets you get started on rehabbing your property much faster. Approval Hard money lenders have an approval process that is significantly shorter than the process a bank must go through. At Washington Capital Partners, we do everything in-house, meaning nothing has to be passed along to other partners or companies. You will deal with one point person throughout the duration of your loan, and that person is almost always immediately available. Since nothing changes hands or has to go through multiple departments for approval, we have the ability to close a loans faster, sometimes in as little as 24 hours. Contact us if you would like more information on hard money, private lending, or Washington Capital Partners.

Reasons to Use a Hard Money Loan

Real estate investors tend to have a few different options when it comes to financing a project, so why is a hard money loan the best option? Here is a snapshot of the benefits you’ll receive when you work with a hard money lender over a traditional bank loan. Fast closings Since hard money lenders give asset-based loans, we have the ability to close your loan within as little as 24 hours. Traditional banks will never be able to give you that kind of turnaround because they depend on your credit history, income, taxes and debt. Completing this paperwork can take weeks, if not months. In that amount of time, it’s very likely that someone else will snatch up the property you had your eye on. If you don’t want to risk missing out on a specific deal, working with a hard money lender is the best way to do that. Around the clock assistance WCP provides all of our clients with necessary and valuable information whenever you need it. If an emergency comes up with your property, you can be reassured that we have probably seen the same or a similar issue before, and we will give you the guidance and advice you need to solve it. We are a local company, so if you need information about your property’s neighborhood or the area in general, we can tell you everything you need to know. We can also connect you to local contractors and real estate agents if you are in need of those services. These are benefits that not every lender can provide. Potential for a substantial profit If you see an investment property but don’t have the financial strength to secure a bank loan, a private lender can help you. With our assistance, you have the potential to quickly generate a significant profit. You can have your entire project completed within a month if you want to, allowing you to profit from the deal in less time that it would have taken a traditional bank to decide whether or not they could approve your loan. Let us know if you have any questions or comments. We appreciate your feedback!

Know the Neighborhood Before You Invest

There are several factors to consider before deciding to invest in a property, but digging into the area’s demographic data is one of the most important. What does the neighborhood look like? What is the average size of a house? What are potential buyers in that area looking for? You don’t want to build a 3-bedroom, 2-bathroom house in a neighborhood of mainly 5-bedroom, 3.5-bathroom homes. If you do, your finished product will have much less value than it potentially could have had. Here are the top three things you should know about the neighborhood before you purchase an investment property. Who is your buyer? If you decide to invest in a property is located in a lower income neighborhood or in an area with a lower average price point, keep in mind that you will probably be selling to an FHA buyer. If this is the case, make sure you understand the time requirements involved with the FHA process. Usually, the approval process for an FHA loan takes anywhere from 30 to 45 days. If you’re working with a private lender to finance your property, take into the account the length of your loan and how waiting on an FHA loan will affect your timeline. You should also keep in mind that if your property will be listed at a lower price point, it is likely that you’ll have more offers on the finished property. This is a good thing, but it’s another factor that could affect your timeline. Ask local residents and realtors about the neighborhood to get the best idea of what kind of buyer you’re looking for. If you choose to work with a local lender, they can also help you decide on the best plan for your property. Those who live and work locally can tell you the neighborhood’s reputation, and they can also help you figure out what features of the home you should focus on and what features aren’t as important for that area. If your property is located in a rough neighborhood, consider purchasing equipment such as security cameras, motion detectors and locks to keep everything safe and secure. Create a contingency in your construction budget to allow for possible security issues that could arise. Location The location of your property is important to consider. If it is in proximity to Washington, D.C. or any other major city, you will usually have a stronger market the closer to the city you get. Another important factor is the kind of street the house is on. Is it on a busy state route or located on a small side street? This will affect the value of your property. For example, families tend to prefer to live on calmer streets where children can play in the yard without having to worry much about speeding traffic. When selecting a property in a neighborhood, always look for properties that you can create value in. Choose a property that you can add a certain amount of value to where the market will respond accordingly, allowing you to increase the price. So if the property is on a busy street, can you compensate for that drop in value by adding another bedroom or bathroom? You should also be sure to note whether the neighborhood is mainly made up of homeowners or renters. Most of the time, a home will get a little bump in value if it is surrounded by established families as opposed to transient neighbors that are renting for the time being. Consider looking in neighborhoods where there have been a lot of other home renovations. If other homes in the area have been renovated and sold, then you will have something to compare your property to in order to price it competitively. Job and population growth Job and population growth drives the housing market. The more growth there is, the more demand there is for homes. The Washington, D.C. market is generally stable. Because it is a government hub with a steady population increase, it was still rather stable during last downturn. So, if you choose to invest in properties in Washington, D.C. or its metro area, you will hopefully be more protected in doing renovations since the demand is almost always there. As always, if you have any questions about private lending or real estate investing, feel free to reach out to us.

Are Hard Money Loans Bad?

Hard money loans are a great tool for real estate investors, but the truth about this business is often misconstrued. There are a lot of people out there who hear the terms “hard money loan” or “private lending” and immediately give it a negative connotation. The way they see it, you’re spending a lot of money for a loan that is high risk and provides little reward once it is complete. But this couldn’t be further from the truth. Just like most other things in life, it is important to learn all the facts before you come to any conclusions. Working with a private lender can help you increase your net worth exponentially. It is a myth that hard money loans are used only as a last resort. For experienced investors who know the process, we are the first call they make. Today we are going to debunk some of the most common myths about hard money loans. Read on to see if everything you know to be true about private lending is fact and not fiction. Myth 1: Private Lending is Predatory Lending Many people hear the term “hard money lending” and immediately think of it as predatory lending, otherwise known as loan sharks. In reality, most hard money lenders do not operate under this loan to own strategy which is so often what is depicted in Hollywood. Predatory lenders are those who know the borrower does not have the funds or the experience to successfully complete the deal, but they agree to fund them anyway. Then, with the poor advice from the lender, the borrower is forced to foreclose, leaving him empty-handed and the lender with a property that they pay pennies on the dollar for. The truth is, foreclosure is a very long and tedious process, and no lender really wants to deal with it. Good lenders will only accept loans that will perform well. At WCP, we want our borrowers to be successful every time they work with us. We take the time to provide you with all the knowledge, resources, and funds you need to successfully complete your deal time and time again. Myth 2: Interest Rates are Exorbitantly High While interest rates are usually higher on private loans than they are on commercial loans, they are not as high as many people think. The increased rate compensates for the higher risk that the lender is taking on by funding your project. But when you factor in the value of quick turnarounds for underwriting and construction draws, you will find that the higher interest rates are worth it every time. Commercial lenders, and sometimes even larger local lenders, cannot close as fast, which could end up costing you the entire deal. Myth 3: Using a Hard Money Lender is a Last Resort Many people believe that using a hard money lender is something you do only if you are desperate to get a loan after other institutions have turned you down. This could not be farther from the truth. You will find that experienced real estate investors go to private lenders first. Private lenders can offer you a turnaround time of a matter of hours instead of a matter of weeks. You have less obstacles in your way because you don’t have the same underwriting standards that you do with traditional loans. We are asset-based, meaning we are not underwriting the borrower as an individual but rather the deal itself. Myth 4: Hard Money Loans are Difficult to Get When you work with a private lender like WCP, you will find that our capital structure removes the barriers that can stop you from obtaining a loan quickly. We use on-call capital which streamlines the process of obtaining a loan because we are the only party that has to underwrite and approve the loan. Some other lenders may have lending lines of credit with local institutional banks, meaning there are then two parties that must underwrite the deal and approve. So while the myth may be true for other lenders, it’s not true for WCP.

Top 5 Qualities to Look for in a Private Lender

When you’re trying to find a private lender, it’s important to know exactly what qualities you should look for. Here, we have broken down the top five qualities your private lender should possess in order to ensure that your transaction moves quickly and efficiently. Attentiveness It is very important that your lender is responsive and attentive to your needs. Your lender should be a second set of eyes on everything – from documents, to the property itself and agreements with contractors – before, during and after your deal. Your lender is one of your resources. They shouldn’t hamper you from completing your deals in a timely manner. The reason you approach a private lender in the first place is because traditional lenders just can’t close those deals fast enough. One of the largest complaints we have heard from investors is that they could never get in contact with their lender in a timely manner. At WCP, we guarantee we will respond to any emails, calls or texts within a matter of hours, if not immediately. We understand how precious your time is and how important it is that you get what you need as soon as possible. It can be scary when the person dealing with your finances is not available for you to speak with when any questions or issues arise. There are some lenders out there that will simply lend you the money you need without offering any additional advice or value to your specific transaction. At WCP, we help you as much or as little as you want, every step of the way. Size The size of your lender can really make or break your deal. If you choose a lender that is too small, they may not have all the manpower needed to complete your deal. On the contrary, if the lender you choose is too big, you risk your deal getting lost in the shuffle. At WCP, we consider ourselves a larger lender with a small lender feel. You will meet one-on-one with a specific point person who will be by your side throughout the entire process. While we have many of the benefits of being a larger lender, such as a large amount of available funds and extensive industry experience, you will get the personalized attention that you will usually only find with a smaller lender. Experience Your lender should be well-seasoned not only in the art of hard money lending, but also highly educated in your local marketplace. If you choose a lender that is either new to the business or the area, you may be risking your entire deal. Perhaps the lender hasn’t underwritten many deals, or they are not familiar with the local neighborhoods. Most of the time, investors will encounter one or two unexpected obstacles during the process. With an experienced lender, there is a good chance that they have solved similar issues with prior deals, and you will benefit from that knowledge. If your lender is inexperienced, they may not know exactly how to handle these issues, which could put your entire transaction at risk. We have underwritten thousands of deals in the DC metro area, and we understand the unique marketplace in each neighborhood. We know what sells where, so we will be able to provide you with as much advice as you need when it comes to creating the concept for your new property. Capital Do your research and make sure your lender is well capitalized. Some smaller lenders may not have the backup reserves to take on multiple clients at a time. They may have to wait for deals to close completely before pushing money back out again to fund other loans. This could delay your own transaction, and might even make you miss out on that great new property. Organization Your lender’s organization is very important to your transaction. In private lending, you don’t have all of the regulatory impositions that traditional institutions do. There are some lenders that are not very organized and actually don’t know all that much about hard money lending. There is an intricate, step by step process involved with every transaction. At WCP, we have incredibly advanced systems in place that have helped us improve our efficiency and speed for each deal. Our systems automate the process, from approving a loan to getting draws funded and ensure that everything is completed quickly and efficiently. Let us know if you have any questions, or want to learn more about what we can do for you!

How to Wholesale a Property

Wholesaling real estate is a great way for new investors to build capital and accumulate down payment money for future rehab projects. Some investors learn the very basics of wholesaling and try to jump right in, but that can be risky if you don’t understand the process completely. There a few vital steps to follow in order to ensure that the deal works in your favor. In order to complete a successful deal, you must first take the time to learn how the process works and how to avoid common wholesaling mistakes. What are the basics? A wholesaler is someone who puts a property under contract, and once the contract is ratified, assigns it to another investor for a higher price, also known as an assignee. The assignee legally steps into the shoes of the assignor (original buyer) and takes on all the rights and responsibilities of the underlying purchase agreement. To accomplish this, both the assignor and assignee must enter into an Assignment Agreement. In this way the assignor makes a profit, with relatively low risk involved. By wholesaling a property, you can build capital without having to put in all the time and money that a complete rehab requires. As a wholesaler, you never actually take ownership of the property. Keep in mind that you will need to put a deposit down when you ratify the purchase agreement. However, if done correctly, you will be collecting a deposit from the Assignee to back up the funds you have in escrow. While completing a rehab may be more lucrative than wholesaling, it’s a good option if you are just starting out in the investor space. How do I begin? While the process might seem simple, there are several key aspects to the deal: 1) you must have the ability to find off-market deals, and 2) you absolutely must have a network of trusted buyers before you purchase the property. Many times, a new investor will get a little too eager and put a property under contract before they have a credible buyer lined up. You risk losing your deposit if you can’t ultimately find a buyer (assignee) for the property. You risk agreeing to purchase a property you may not be able to afford. Reduce your risk by negotiating the low deposit amount and always have a liquidated damages clause that protects you from further liability. How can WCP help me wholesale? One important aspect of wholesaling is making sure you have language in your purchase contract and assignment agreement that will protect you. For example, you must always have an assignability clause included in the purchase contract. We have helped numerous investors complete wholesale deals. We have a network of completely vetted and trusted buyers that we can connect you with. This allows you to immediately get started without having to build a contract list from scratch. The majority of off-market deals require a quick turnaround – don’t get caught trying to find your buyers after you’ve already put your deposit down. Great DC Deals is another source you can use to help sell your wholesale property. Reach out to us today if you have any questions or would like to learn more about wholesaling a property.