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What You Need to Know About Rehab Loans and Your Options

By | El Paso, hard money loans, Home Buying, home renovation | No Comments

Flipping a home has several aspects to it. One is the financial side: getting the money, ensuring you have the funds ready to go for what you need. Another aspect is the hands-on aspect, which refers to the elbow grease needed to get a place up and running and turn-key condition. Here at Entrust Capital Funding, we help clients take care of the financial side so that they are at ease about having the financial backing they need to fulfill their vision. There are different ways to go about flipping homes, and one way to get there is through rehab loans. 

How Did The Concept of a Rehab Loan Originate 

Generally speaking, a rehab loan is a term used for a specific type of loan. It refers to when an investor seeks to buy real estate property in subpar conditions to renovate it and sell it for a profit. The idea is to renovate the property quickly and turn around and re-sell it for a better price in order to reap the rewards. A traditional mortgage loan would take too long and slow down the process needed to make flipping profitable and efficient. This is where a rehab loan can save the day. 

The term rehab loan is used in the United States and Canada. It was closely related to the hard money industry, which began in the 1950s. The term ‘hard money,’ however, originated as early as The Great Depression. When the crash hit, people became distrustful of banking institutions, and many people took their hard-earned money out of the banks, out of circulation, and put it in between their mattresses.

Without the money in circulation, lenders had to find other ways to get money to make loans. This led real estate to be used as collateral, and without much choice to get quick cash, many people took out loans against their homes. In the 1950s, changes were made to the credit industry that changed the way that people applied for these loans. The industry had its ebbs and flows, and since the 1990s, private lenders became a more popular choice for real estate financing. Investors realized that hard money loans offered benefits and perks that were not the same with traditional loans. 

What Are the Different Types of Rehab Loans? 

Rehab loans depend on where the funds are coming from. There are different types of rehab loans. The three main types include: 

  • Investment Property Line of Credit: This refers to tapping into your existing equity of a current home in order to finance the renovation work for a new property. This is similar to a home equity line of credit loan. 
  • FHA (Federal Housing Administration) 203 (k) loans: This loan is considered a rehab loan because it deals with a property that needs to be renovated, but it is for your personal use. It’s a way to purchase or refinance a home that is in need of major renovations and tag on the repair costs to your mortgage. The FHA 203 (k) loans offer a longer time to repay and lower interest rates. In order to get this loan, buyers must go through certain FHA – approved lenders. 
  • Hard Money Rehab Loan: These loans are great for real estate investors and buyers that have trouble finding financial assistance. Your income and credit scores are not a factor in qualifying for these loans. It’s all about the kind of collateral you can put on the table. For many real estate investors, the property in question is the very collateral they offer in exchange for the loan. 

A Closer Look at Hard Money Rehab Loans 

Hard money rehab loans are the go-to loan for many house flippers and those getting started in the real estate investment business. They are the get-in-get-out loan of choice. Flipping a property is meant to be a quick affair without the dragging processes of complex underwriting, credit investigations, and so forth. Many new investors do not have the capital at hand or the funds to see their first project through. This is part of the buyer’s initial risk, as they commit to the sale and the renovations. 

What Do Hard Money Lenders Look For? 

A hard money lender like Entrust Capital Funding will focus on the property in question. More specifically, we look at the real estate’s after repair value (ARP) when considering the final amount of your loan. Since the property is the main collateral, these assessments are made to cover the risk the investor is taking by lending the money. Depending on the property, a hard money lender can lend up to 75% of the total property value. 

Get Your House Flipping Started with Reliable Hard Money Rehab Loans 

Here at Entrust Capital Funding, there are no set specific requirements to qualify for a hard money rehab loan. We don’t look at your credit or evaluate debt history. Our investors are interested in investing in worthy real estate ventures. 

If you’re looking for fast money to make a real estate investment. Come talk to us. Call the professional team at Entrust Capital Funding and tell us more!

Real Estate Investing Forecast of 2021 and How To Move Forward 

By | El Paso, real estate investment loans | No Comments

Single family house on pile of money. Concept of real estate.The low mortgage interest rates of 2020 continue to be all the rage. The interest rates in the second half of the year went as low as 2.7% and this led many prospective buyers, to make the leap and start searching for their home. The economy also took many low blows, as small businesses across the country have had to close their doors. 

For small business owners and entrepreneurs, it’s been a difficult year to navigate, but it’s not all lost. Here at Entrust Capital Funding, we write a lot about the entrepreneurial spirit and how it relates to real estate investors. So while there are many uncertainties and unknowns, the year 2020 taught us that that is always the case. 

What We Learned from 2020’s Pandemic

The pandemic changed the business landscape, but just as some businesses flourished, others had to adapt, reassess, and maybe even start over. For people looking to find lucrative opportunities, this presented a ripe time for launching a new venture. 

Forbes magazine points out that while the pandemic put a lot of businesses in jeopardy, it is nothing new to see new types of businesses or a resurgence of old models when there’s a sea change. The argument points to several major enterprises that began during difficult economic times. 

During the recession of 1957-1958, the first Hyatt Hotel opened and rose to great successes. Microsoft was founded during the oil embargo of 73-75. The years following the 2008 housing bubble saw the emergence of popular startups like Uber and Airbnb. Perhaps these society-altering events force people to realign their thinking and change consumer needs and demands. As we slowly see our society return to ‘normal,’ there are likely to be permanent changes. 

The Real Estate Market for 2021 

As anyone in real estate will confirm, the housing market has been smoking this year. In the El Paso area, reports of hungry homebuyers running out of houses to buy made the rounds in the real estate community. A KFOX report as late as Sept of 2020—when El Paso was considered a hot spot for the pandemic—people continued to buy homes. The data pointed to more than 30 homes sold per day during August in El Paso county. The Fall made for the biggest home growth that many in the business have seen for many years. 

The main reason is low mortgage rates but also people who found themselves stuck at home or paying exorbitant rents, deciding that investing toward their own place was probably the way to go. Young Millennial buyers seemed to suddenly jump onto the market, as many found themselves to be in an economic position to do so. 

According to another report, Millennial and Gen-Z buyers are expected to play a growing role in home purchases and single-family housing starts are expected to grow another 9 percent in 2021. As the younger generation settles down and gets high-paying jobs, they become a good home-buying prospect. 

What Does This Mean for Real Estate Investment?

As far as real estate investment goes, it continues to show promise for the upcoming year. This is not only because the real estate market has shown to continue strong even through the harsher pandemic numbers, but because new home construction has slowed and this means that many older homes on the market that need remodeling are being scooped up as investment opportunities. Residential construction continues to face limiting factors. These include higher material costs (such as lumber) and longer delivery times for materials, skill shortages, and more. 

If you’re a real estate investor that is looking to flip homes and sell them in the greater El Paso area, this may be your time to jump on the opportunity. With many new home constructions lagging, people that are putting their homes on the market are being incentivized by the rising home prices. Many homes, however, will require major and minor renovations that can make quite the difference on a final sale price. 

There are other real estate investing options as well. According to U.S News, the most popular places to invest as the year of 2021 kicks off are:

  • Residential properties: The new work-from-home-model is changing the way people live and operate at home. They may find themselves looking for new spaces that accommodate the modern ‘online’ lifestyle. 
  • Industrial properties: Places usually used for storage and warehousing might have a high potential for many eCommerce businesses sprouting up. 
  • Commercial/retail properties: As many retail stores move online, their spaces will soon become available and can be converted or renovated for new purposes. 
  • Vacant land: Investing in vacant land is a little different but can be a great way to go into an investment for someone that understands zoning laws, construction, and more. 

As the pandemic forces many businesses to close their doors, many commercial spaces that can be transformed will be made available. As changing cultural trends continue thanks to the changing job landscape, the possibilities to turn real estate into a new and lucrative investment continue to remain positive. 

Looking To Dive Into Real Estate Investing in 2021! We Got the Right Solution. 

Before you can invest in real estate, you need to have a plan and some idea of how to obtain the funds necessary. Sometimes it can be harder than it sounds, but with Entrust Capital Funding, we can provide you with quick answers about your qualification to obtain a loan from us. We operate in El Paso and are helping many entrepreneurs start their enterprises with real estate and housing investment. Call us today and find out more. 

Real estate agent signing new home owners

How to Break Through In Real Estate Investing

By | El Paso, real estate investment loans | No Comments

There is no shortage of advertisements, reality television shows, and YouTube stars that go around talking about the fortune awaiting your next real estate flip. They make it sound easy and straightforward. It can be! Flipping homes has become a popular venture and one that people of all walks of life have taken a stab at. The initial hurdle for average investors seems to be getting over that stage fright or ‘beginner nerves.’ It’s natural to be nervous about jumping into a new financial adventure. But you don’t have to do it alone! There are plenty of resources and advice out there that can help you proceed with caution and an arsenal of knowledge. So let’s take a look at some good ways to break into the real estate business. 

Here’s How to Become a Solopreneur 

Previously, we wrote about the spirit of entrepreneurship in America and how it drove innovation and economic expansion. Today, there is a new hot button word that takes from this incredible spirit of adventure and transfers it to the work that you can do as an individual. Hence, the solopreneur. While many do house flips as a tag team activity, it is also something that you can do on your own. In many ways, define your own schedule, rules, and goals. It’s why sometimes house flips are known to be one of the favorite activities of solopreneurs. 

House flipping can be for everyone: from homemakers, young professionals, and even movie stars and celebrities. Several notable names have made quite the fortune with real estate investing. Some of these people include Arnold Schwarzenegger and Vanilla Ice. As if Mr. Schwarzenegger hadn’t done enough in his life, as a world-famous body-builder, iconic actor, and governor, many people will be surprised to know that young Schwarzenegger got his start in real estate investing. His early investments and the revenue he acquired from them allowed him to pursue his billion other interests. He would scrape together winnings of body-building contests and other gigs to purchase multi-family real estate. He would then, in turn, convert into revenue streams. 

Using Fear as a Powerful Motivator 

As humans, fear is a defense mechanism to protect us from harm and dangerous situations. Biologically speaking, this can be a very useful tool. However, we all know that fear can also hinder our ability to take just enough risk to do extraordinary things. Just ask anybody who has ever done anything worthwhile, and they will tell you that they suffered from nerves and quite possibly some serious doubt at some point in the process. It’s ok. Television makes house flipping seem very easy, but when was the last time something was as easy as seen on tv? Real estate investing is there for the taking, but it does require some due diligence and smart decision-making. Here’s how to get started. 

Tip #1: Learn what you can and continue learning. 

Like any other industry, the real estate market and the industry are always changing. It is very closely connected with the market and the state of the economy, so looking out for signs and having some cursory understanding of the many factors that affect investing will only serve you well. Don’t act blindly. Sit down and organize your thoughts and figure out where you might lack knowledge. 

Tip #2 Build a Network of Support

Many people try to break through into real estate, and many of those people remain eager to share their knowledge and experiences. There are people out there that dedicate their whole life to real estate and studying the markets. Many communities have open financial advising meetings or support groups for those trying to get into real estate. Get ideas. Learn. And find a network of people that are there to help you with a wise word when you need it. 

Tip #3 Partner Up With A Suitable Real Estate Agent & Contractors 

Flipping a home is one thing, but you are going to sell the property at some point. Part of building a professional network is looking around for trustworthy real estate agents that specialize in flips and know the market. Real estate agents are on the front lines, and they are filled with useful tips and advice. Working with someone you trust and that you don’t have to micromanage when it comes time to sell is one way to ensure a successful and quick sale of your property. Knowing and trusting contractors or companies that will be part of your ‘repair team’ is also huge. Working with people you can trust to do the job right will save you the tendency to need to micromanage every single repair. 

Tip #4 Gain Knowledge of Interior Design and Home Repair 

One mistake that people make when flipping homes comes in the form of the repairs themselves. If you’re buying a flip property, it is understood that you will be making repairs on the home yourself. You’ll likely want to oversee some of these repairs, and some you will trust contractors in your area. So, just because you are remodeling and making repairs to the home doesn’t mean you are doing it the right way. More specifically, it doesn’t mean that you are pouring the most resources into the most important kinds and types of repairs. 

You also want to think about having a safety net. Don’t go all in the first time and play it smart. Keep your eyes open, and you’ll be just fine. 

One of the best things you can do is go with trusted capital. Here at Entrust Capital Funding, we support the entrepreneurial (and solopreneur) spirit. It’s why we provide easy access to loans and help people make a splash in an industry that is open to anyone willing to work for it! 

A History of the Flip: House Flipping and Real Estate Investment 

By | Uncategorized | No Comments

Workers are installing plasterboard (drywall) for gypsum walls in apartment is under construction, remodeling, renovation, extension, restoration and reconstructionThe term house flipping has become popularized thanks to television shows like Flip This House, Flip Las Vegas, Zombie House Flipping, and countless others. Nobody would have thought that a show about fixing houses would go so mainstream and grow its own bit of cult following. You can even buy merch and sport the very clever “Do you even flip bro?” Who wouldn’t want that?!  The very idea of seeing something (an old house) for what it could be is so quintessentially American in nature. That is, our culture has always encouraged reinvention and innovation and the real estate business is no different. It’s why hundreds of people across the country—from stay-at-home moms to real estate agents to handymen— set out every year to buy and flip properties. Many people see it as much more than just lucrative business; it’s an opportunity to take something that’s falling apart and make it beautiful again. There is great satisfaction in that. Here at Entrust Capital Funding, we facilitate this process for people as they embark on the exciting journey of real estate investment. Sometimes the hardest part is getting started, so we help secure the funds and you take it from there. 

Where did the idea of  ‘the flip’ get started?

Let us take this all the way back. We mean waaaay back.  It’s no secret that Americans hold property in very high regard. Property rights are well enshrined in our laws and thinking.  The founding fathers drew from the philosophy of John Locke, Enlightenment thinker and philosopher, who wrote famously about the role of government and the way a free society might function. The core principle of ‘life, liberty, and the pursuit of happiness’ was a reference to Locke’s very revolutionary idea (at the time) of natural rights that included life, liberty, and property. It was changed to ‘happiness’ by Mr. Thomas Jefferson himself who deemed it a much more appealing and inspiring phrase given the document in which he was writing it. After all, the document needed to rally support behind the revolutionary cause. 

That, of course, serves as the basis for much of our society. The American Dream is very much tied to owning one’s own property and having the picture perfect home with the white picket fence. Today, many versions of this ‘perfect home’ exist, and those that understand the value of real estate investing know that it is an instinct ingrained in Americans to want to own their home, their property, where their family can grow and thrive. A home, after all, is the place where you feel safe and protected and free. 

If there is one thing that television shows like those mentioned above have done, it makes the concept of a house flipper mainstream. Most people thirty years ago might have known what you were talking about when you said the term. Today, it’s a pretty well-known tactic to get into a lucrative business. House flipping as we know it in these mainstream shows really began around the 1980s. The early 80s had an economic recession hit and people with reliable incomes and savings were able to buy the foreclosed homes, fix them, and sell them for a profit. Savvy people understood that markets are always fluctuating and that when a recession happens, there is likely to be an improvement. 

The Outward Expansion and Mass Production of Homes 

Suburbia, which began in the 50s and 60s as millions of American servicemen returned to build families and made use of the GI Bill, meant that rows and rows of houses in the outskirts of cities began the outward expansion that we know today. The surge of home-building continued onto the 70s, 80s, and 90s as suburbs extended outward and larger metropolitan areas grew in population, density, and infrastructure. This pushed the outward expansion that led to the building of entire neighborhoods and communities outside America’s major cities.

Blast from the Past – The Appeal of Retro Homes and Renovations

Whether it’s fashion or films, the idea of returning to the past has always appealed to people. The same applies to homes. Renovating and sprucing up an old classic home from the early 20th century is part of what kickstarted the movement of flipping houses. Retro home features like classic chimneys, wallpapers, clawfoot tubs, and more are always coming back and have homeowners seeking blasts from the past. With homeowners eager and happy to purchase older homes that have been renovated, house flippers discovered that turning old abandoned homes into modernized havens with stylish additions and improvements was very much a burgeoning market. 

And so the trend of the house flipper continues because it is a never-ending market. As new generations of Americans come up, new-somewhat-modified versions of the American Dream continue and people search for that perfect home. For the real estate investor, this means that the work they put into the house will be worth it. Many real estate investors, of course, fall in love with the process of turning something that is dilapidated, forgotten, perhaps a little abandoned, into a breath-taking home that inspires hopes and dreams. For many, this is what it’s all about. 

If you have a passion for giving people what they are looking for, the world of real estate investment might be for you. Here at Entrust Capital Funding, we help people find those opportunities and turn them into profits. Give us a call and learn about how you can dive into the world of house flipping.