Real Estate Lending: Finding Funding – Joint Venture Agreements (JVA)

Real Estate Lending: Finding Funding – Joint Venture Agreements (JVA)

We’re on the back-end of our “Finding Funding” series and today, I’m going to discuss my personal favorite avenue of funding – the Joint Venture Agreement, referred to in this article as a “JVA.”   I use JVA agreements on the majority of my flips. It’s my favorite avenue of funding for my “buy, fix, sell” properties because it means that there’s literally ZERO monies coming out of MY pocket. You might be wondering how that’s possible? I structure my JVA’s so that the lender pays 100% of out-of-pocket costs. He pays the earnest money, the purchase, the closing costs, insurance, utilities, all construction rehab costs…everything!   I prefer doing JVA’s as it provides me the ability to do multiple concurrent deals at the same time without a lot of outgoing funds. For instance, I can do five JVA’s at the same time and not have it affect my pocketbook. There is literally zero out of pocket expenses. But if I were to do five HML (hard-money lender) deals at the same time, I would require a huge amount of upfront capital! I’d have to put up 20% for each house as a down payment on the loan. In addition, I’d have to pay all earnest monies, closing costs, insurance, utilities, the monthly payment, and don’t forget that I’d have to also front all of the construction funds! This would equate to hundreds of thousands of dollars, if not more. Obviously, with JVA’s, one can grow at a rapid pace without incurring all of the risk. It’s win-win!   How does one structure a JVA? Well, there’s two ways to do this but In both scenarios, there is a JVA agreement in place:   The JVA lender holds the title to the property – and I’m ok with this as long as we have a JVA in place. The JVA contract is between the lender and me and dictates that upon sale, all previous expenses are reimbursed and the remaining profits are divided per a previously agreed-upon split. The most common split is 50/50, but I have worked with JVA lenders who give me a 70/30 split! But I’ve never agreed to pay more than 50% of the profit to the lender. I (the investor) hold the title and the JVA lender takes first lien with the mortgage and note. At closing, an attorney or title company will record a mortgage and note for the property so that when the property is sold and before any monies are taken out, the mortgage gets paid off first.   JVA lenders prefer experience so you should gain some before you attempt a JVA. It’s not likely for someone to loan you money without a proven and successful track record. The JVA lender absorbs the majority of the risk during a JVA flip. It’s a high risk yet high reward situation so...

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Tips For Flipping Houses

Tips For Flipping Houses

You want some tips for flipping houses, eh? How often have you heard the controlled media talking heads tell you that the real estate market is dead, the bubble has burst, or the recession lingers in real estate? I’ve heard it countless times just in the last year or so. Well, I’m here to tell you, flipping is here to stay! It never left. Flipped/rehabbed homes accounted for 4.6% of all U.S. single-family home sales in 2013, which is up from 4.2 percent in 2012 and 2.6 percent in 2011, according to data from RealtyTrac. Foreclosures have likely driven that trend. But increasingly, non-distressed properties are also overdue for house flipping. With that in mind, I’ll share with you some of my tips for flipping houses!   Tips for flipping houses: Tip #1 – Not all markets are the same…or even similar sometimes. What works in Seattle, Washington will not work in Toledo, Ohio. Obviously, one can flip pretty much anywhere, but it’s crazy to think that the same thing will work in another market elsewhere. Know your market and watch it patiently for the right deal.   Tips for flipping houses: Tip #2 – Don’t be scared to make a full price offer in certain situations. Use the inspection period as a chance to inspect the property for potential problems that could lead to a significant reduction in price. Essentially, you’re making an offer right out of the gate and then negotiating second. Of course, there’s a chance that you may not get the seller to reduce the price but if the numbers of your offer are strong, most sellers are hesitant to walk away from a solid offer.   Tips for flipping houses: Tip #3 – Network! Networking is the lifeblood of business. As they say, “it’s all about who you know!” If you don’t work your contacts and search out hidden opportunities, you won’t be a successful flipper in a competitive market.   Tips for flipping houses: Tip #4 – Make money when you buy a flip. It used to be easy to make money when you purchased a home because prices were rising so quickly. But these days, it can be challenging. A market with more realistic prices means that flippers need to look harder for the right houses and be disciplined not to overpay.   Tips for flipping houses: Tip #5 – Watch the market data – both local and nationwide. National employment numbers, consumer moods, and GDP provide some sense of direction. But real estate is also local, so track inventory levels, pricing trends, and local unemployment.   For more information and free real estate investing education, visit http://andrewcordle.com          ...

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Property Investments

Property Investments

Property investments are part of most millionaires portfolio. As I’ve mentioned previously, I made my first million by the age of 25 by investing in real estate and flipping properties.   There are many advantages of property investments. They can provide investors with an opportunity to rent, income and cash flow, and can provide potential tax benefits in the right situation. If you currently own investment property, you can also use that equity as a useful resource for buying additional properties. But remember, when using your home/property as equity for another purchased property, that home becomes the security for the new loan.   Whenever you’re investing in properties, how much you repay is determined by the loan interest, points, origination charge, and the term of the loan. Your reasons for buying property investments are varied but, ultimately, the goal is to make lots of money, right?! To increase the chances for a successful start, you should gain control of your finances, know your buying power, have an overall investment strategy, and have knowledge of the area where the property is located.   When you’re planning for property investments, one must always remember these three recommendations: Create a solid financial plan by understanding your credit needs and your borrowing ability Estimate how much you can spend by calculating your down payment, your monthly payment, your closing costs, and your pre-paid expenses Set a timeframe – Take into consideration your credit, cash flow, and savings and determine when you can buy your home If I can be successful in property investments, then so can you. It just takes hard work, dedication, and maybe a little dose of luck from time to time. You can make money flipping houses by learning from one of the best in the business. I have countless strategies, tips, and techniques that helped me reach my goals. Many of those proven strategies, tips, and techniques are available for free on my website, http://andrewcordle.com. On my website, one can learn to make money investing in real estate properties. My team and I have spent countless hours putting together one of the most comprehensive educational libraries available on the internet. And our extensive educational library is available to you right now, for free!   For more free information to help you develop your property investments plan, visit http://andrewcordle.com          ...

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Fixer Upper House

Fixer Upper House

How many times have you driven past a fixer upper house and wanted to take it from being an eyesore to a beautiful flip? It’s happened to me countless times. At least once or twice a day, I drive by them and have the same thoughts. A fixer upper house with obvious issues can be a great opportunity as long as you understand and accept what you’re getting yourself into!   And to be honest, it’s one of the most satisfying processes in the real estate investing industry. The feeling of accomplishment and satisfaction is like no other. To take a fixer-upper house in it’s initial condition and rehab it into an aesthetically pleasing beauty is one of my favorite things in the world to do. I love the feeling of accomplishment when you complete and sell a flip that you’ve taken from being a dud to a diamond!   One can purchase a fixer upper house in a great area for below market price, invest time and capital rehabbing it, and end-up with a home that is like brand-new that’s worth 2-3 times what you paid for it. Sounds like a no-brainer, right? Most of the time, it is. But purchasing one of these homes can weigh you down with all kinds of problems. So before you dive-into that task, ensure that you have a realistic idea of what you’re getting yourself into!   If I can be successful in property investments, then so can you. It just takes hard work, dedication, and maybe a little dose of luck from time to time. You can make money flipping a fixer upper house by learning from one of the best in the business. I have countless strategies, tips, and techniques that helped me reach my goals. Many of those proven strategies, tips, and techniques are available for free on my website, http://andrewcordle.com. On my website, you can learn to make money investing in real estate properties. My team and I have spent countless hours putting together one of the most comprehensive educational libraries available on the internet. And our extensive educational library is available to you right now, for free!   For more information and free education to help you rehab your next fixer upper house, visit http://blog.andrewcordle.com          ...

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