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Real Estate Wholesaling Explained: What It Is and How It Works 

By | El Paso, Real Estate Wholesaling | No Comments

Smiling woman holding hundred dollar bills in front of a simple home designThere are many ways to invest in real estate in El Paso, including buying your own home or purchasing a share of a property. What many people do not know is that you can get invest in real estate or become involved in the business through the process of real estate wholesaling. 

Wholesale real estate is an especially good opportunity for investors who are starting out with investments. As long as you have the time, effort, and dedication, you could reap plenty in the end. Usually, wholesaling requires a real estate license in most states, but this is definitely a process to look into.

Interested? Well, you’ve come to just the right place.

As your El Paso real estate wholesaling team, we will explain more about how the process is done, step by step!

Call Entrust Capital Funding today —  (915) 320-6633

How El Paso Real Estate Wholesalers Make Money 

Before we dive into the process, it is important to know how exactly one can make money through wholesaling. The key is to find a distressed home that way you can make a contract for a small, earnest money deposit, done under 1% of the total purchase price. 

The wholesale fee (when a contract is assigned to another investor) depends on the wholesaler and the property but usually ranges between $5,000 and $10,000. There is a level of risk to wholesaling if you can’t find someone to close the contract, but there is also the possibility of making plenty of money. 

How to Real Estate Wholesale in 6 Simple Steps 

1) Find a Distressed Property and Find an Eager Seller 

As we mentioned already, the first step is to look for a distressed property in El Paso, which is one that is on the brink of foreclosure or may already be owned by the bank. Like this, you can purchase it at a low cost. Once you found a property, you have to confirm if the owner of the property is interested in selling. 

2) Determine the Best Potential Opportunities 

After finding a property and a seller, a wholesaler needs to confirm that the deal works out financially. There are two ways to identify the best potential opportunities, including ARV (after repair value) and MAO (maximum allowable offer). ARV is the fair market value of the home after all repairs have been done. MAO is the highest offer a wholesaler can make to a distressed seller, while still earning a profit. 

3) Negotiate on a Price, Start a Contract 

Because selling a home for less than what it’s actually worth can be hard, this is where wholesaling helps. You can put a property under contract at a price below market value by waiving as many purchase contract contingencies, focusing on the benefits, or offering to purchase the appliances and furniture as well. Once an agreement is made, you can assign a contract to another party. 

4) Find an Investor You Can Assign the Contract 

This is where you have to find another investor to assign the contract to, close escrow, and make repairs estimated by the wholesaler. A contract usually has no more than thirty days to assign to an investor. Wholesalers can reach out through networking events, listing the property on El Paso real estate websites, talking to real estate agents in El Paso to get in touch with interested clients, and more. 

5) Agree to Terms and Conditions 

Once you have been able to assign the contract to a buyer or an investor, you have to agree to terms and conditions. One of the best ways to negotiate an agreement is to split the difference or the wholesale could ask for a fixed wholesale fee of 10% of the ARV. An El Paso real estate wholesaler who does not exceed MAO usually has plenty of room to negotiate a win-win deal with the investor.

6) Close on the Property 

The last step works the same as traditional real estate closing does. Closing costs are paid by the buyer and seller as agreed in the contract and then the title is transferred to the buyer. Depending on the market, the closing could take place at the office of a real estate attorney, a title company, or through an escrow agent. 

Where to Find Real Estate for You to Wholesale 

Finding the best real estate to wholesale is usually done through networking with local real estate investors, connecting with investor-friendly real estate agents, or contracting attorneys or county clerks to check for estates that have homes or other kinds of properties. 

Learn More About How to Get Involved in El Paso Real Estate

It is evident that real estate wholesaling in El Paso is a great way to make healthy profits, especially for those who are willing to put the time and effort in when learning about the business. If you are ready to take the next step, we want to help. Contact Entrust Capital Funding today, to learn more. 

Young happy couple moving into their new home. They unpacking and cleaning new home

10 Important Questions to Ask Your Mortgage Lender 

By | El Paso, Home Buying | No Comments

If you are planning on buying a home, there is plenty to learn. As daunting as it might seem, you don’t need to worry. Odds are you’ll get the hang of it along the way. Should you have any questions—no matter how simple or complex they might sound to you—you should never hesitate to ask for help. 

Ultimately, the home buying process is a learning experience and you never know if you might find yourself in this scenario sometime in the future. We outline some questions you should ask your lender before closing off on a mortgage that way you are very familiar with the terms of your loan. 

My credit isn’t as good as it could be. Can I still get a loan?

The answer is yes! You can get a loan that is suited for those with low or poor credit. The FHA mortgage loan accepts buyers with low credit scores because the loan is backed by the federal government. This is something you should discuss with your lender right away. 

How much of a down payment do I need to put down if I am a first-time homebuyer?

The standard of a down payment calls for 20% of the mortgage. However, applicants who qualify for a VA or FHA loan can possibly pay as little as 3.5% of their total mortgage for a down payment. However, if you can afford the 20%, you should do so. 

What will closing costs look like?

Closing costs typically include fees such as: 

  • Title search fees
  • Title insurance
  • Recording and transfer costs
  • Loan preparation fees 
  • Discount points to get a lower interest rate 

You can always ask your lender to provide a comprehensive rundown of what will be charged in closing costs. 

Does your interest rate include loan discount points?

Mortgage discount points are typically available to future homeowners who want to pay an upfront fee in order to gain a lower interest rate. Discount points are not mandatory, so this is something to prepare for if your lender doesn’t offer that. 

Do you charge any application fees, credit report fees, or any other upfront fees?

Some lenders will charge application fees. These fees are intended to cover the costs of processing your application for a new loan. These costs typically include credit checks and administrative expenses. Application fees vary depending on the work it takes to process your loan application. 

How long will it take to get my loan with the application to closing?

Oftentimes, a lender will quote a rate that is good for 30 days, but it can take a total of 45 days for your loan to close. If this timeline doesn’t work for you, you should ask your lender about how this can affect your plans. This applies to purchase as well as refinanced loans. 

Are there any prepayment penalties?

This fee is charged when you pay all or part of your mortgage loan off early. It may also come up if you ever decide to refinance for a lower rate. Lenders cannot charge early payoff penalties on FHA, VA, or USDA loans, other loan types may charge penalty fees. You should ask if this applies to your loan. 

Do you provide any down payment assistance programs?

Oftentimes, lenders offer down payment assistance programs and they are usually offered to veterans and first-time homebuyers. VA loans do not require down payments and offer lower interest rates. If you have limited savings, you should ask your lender what programs you might qualify for. 

When can I lock in the interest rate?

Interest rates are known to fluctuate. Locking in a rate can be helpful. You should inquire with your lender about when you can lock in a particular rate and for how long you will be able to keep it locked in. 

Can you estimate when the closing will be?

Many of the factors that determine the close date are out of your control as an applicant. Delays can happen and the best way to avoid them is to simply be in touch with your lender as much as possible. Asking your lender can help you get a rough idea of the timeline you’ll be working with. 

Get a Loan that Works for You with Entrust Capital Funding 

Entrust Capital Funding offers unique services you will not be able to find anywhere else. Our hard money loans can help you increase the value of your home, being able to price it for more, should you ever consider selling. Want to know more about our services? Give us a call today to learn more. 

Flipping houses concept, flat tiny person vector illustration

Get After Your Flipping Dreams — 4 Tips for Successful House Flippers & Real Estate Investors

By | El Paso, home renovation | No Comments

Flipping homes for money does not happen overnight. People make good money flipping homes every day in this country, but every one of those people had to do their research, take some risks, and understand the different lending options available before they jumped into it. The footwork put in before the deal is made will serve you well as you navigate the uncertain waters of real estate investing. 

Buying a home and flipping it, is not for the faint of heart. So if you’re thinking about testing the waters of home flipping, read our introductory guide on how to get started. 

Is Real Estate Investing for Me?

Let’s put it this way, real estate investing is not the type of thing people stumble into without any interest in it. Most successful house flippers possess a couple of natural attributes that serve them well in the home selling business. Some might describe it as follows:

  • A natural hustle: If you’re one of those people that doesn’t have to be told what needs to be done and you just go out there and get after it, this might be for you. Selling homes is a hustle and you need the inner spark to get it done. 
  • An eye for a good deal: Some people are good at identifying a potential deal. Whether that’s getting a household item or the best deal on a car. 
  • A mind that’s comfortable with numbers. Real estate investing will have some surprises and some unexpected costs, but a successful investor knows how to crunch the numbers and get accurate and precise estimates on costs.
  • A cursory understanding of the market. While you don’t have to be a real estate expert, knowing the market that you’ll be working in will make it easier for you to spot a good deal or a bad one. Having an eye for potential good investments serves a house flipper well. This includes knowing neighborhoods, upcoming city renovations, developments, etc. 
  • Have a solid and fundamental understanding of home repairs or know someone that does. Being able to spot a good contractor can be a lifesaver. You don’t have to be the world’s greatest handyman, but having some understanding of home repairs or some experience hiring trusted contractors puts you in a better place. It also makes it easier for you to spot needed repairs on a possible flip. 

4 Tips Every House Flipper Should Know 

There is no golden book or Holy Bible of house flipping, but there is a lot of tried and true advice out there from people that have learned things the hard way. We have written a lot about finding the right flip and breaking through the real estate business, but there are several other key points to consider. 

Here’s some sound advice to keep you on the right track. 

#1 Arm yourself with knowledge—consider a real estate license

While there is no set requirement to become a house flipper, getting a real estate license is a good place to start. Going through the process teaches you to break through the real estate lingo, learn important terms, regulations, forms, HOAs, etc. You make connections in the community. You also get access to the MLS to better gauge prices. Also, going through the classes and instruction will solidify your commitment to the endeavor.

If you want to jump in right away, contact a person you trust and know is a solid real estate agent. Perhaps you have good connections already. Use them.  

#2 Establish good connections with reliable contractors

You don’t want to wait until you have signed on a house to start looking for your contractors. If you know the market, do your research on well-vetted contractors and workers. Even if you plan on doing a lot of the work yourself, you’ll likely need to hire a licensed contractor for a job or two. Establish connections with them before so that you have a go-to and know who you can trust. 

#3 Work the math— flipping homes is a numbers game

Before jumping on a deal, make sure that you know how to work some numbers and accurately estimate the cost of certain repairs. For example, putting in new floors. Make sure to factor in the cost of all materials and labor. Don’t forget to factor in taxes, insurance, mortgage payments, real estate commissions, and other marketing costs. 

#4 Don’t over-improve the home — this is not your dream home

One common mistake some beginning flippers do is they try to do too much to a house. The fact is that even in a seller’s market, you’re not going to get a home for more than the market is willing to pay. This has a lot to do with the neighborhood and the home itself. Remember that you’re not working on your dream home. You’re just working to get the home sold without overspending on repairs. For people with vision, it’s almost a creative experience imagining what a house can become. They easily get carried away, especially at first. Be frugal, be cautious with what you spend on repairs. 

Get the Right Loan Fast and Kickstart Your Flipping Dreams!

We didn’t even get to the money part. The kind of loans that you get are a central part of the house flipping business. Here at Entrust Capital Funding, we offer reliable hard money loans so that people don’t have to waste time going through banks. 

Ready to get your hands on some real estate investment loans and opportunities. We want to hear from you. Call Entrust Capital today

House before and after repair vector illustration. Flat design.

Finding the Right Flip: What To Look for In an Investment Property 

By | El Paso, Home Buying | No Comments

So, getting a real estate investment loan in El Paso is easier than you thought. What now? So you look for the next opportunity that calls your name. And right now the El Paso real estate market is pretty active. So, what do you look for when searching for the next best home to flip? 

There is no single correct answer. After all, being a real estate investor is all about vision, creativity, and what we like to call that ‘inner hustle.’ It’s not a slow man’s game. When it comes to real estate flips, you have to move quickly but strategically, take risks but weigh your options, know the ground game, understand the market, have the right team of contractors, and move swiftly towards the end goal. Many of the United States’ home sales were a result of house flips. According to Investopedia in 2019, about 6.2% of all home sales in the United States were house flips

The Ultimate Checklist for the Best Flip — Keep These 5 Tips in Mind 

Just because a home looks a little run down and is calling your name doesn’t mean it’s the right one for you. Television makes house flipping look like a walk in the park. There are plenty of homes out there that could use some renovations, but your best flip will meet one or some of these criteria:

  1. Make sure the neighborhood has potential. When someone buys a home, they are likely buying more than just the lot and structure. They are committing to the neighborhood and locality in which it sits. A lot of time a neighborhood’s popularity is related to local schools, nearby amenities, or surrounding parks. Finding one of the smaller homes in the big neighborhoods can prove a big investment. That’s because the high value of the neighboring properties makes the smaller home more accessible to a larger buyer pool. 
  2. See beyond the lack of curb appeal. You are a house flipper. Think like one. That means seeing what something could be and not what it is. It’s all about finding the quickest road (no shortcuts) to the destination— i.e. looking at how to get to a desirable home from the conditions of the home you see. Is it going to take landscaping? A new driveway? A new front door and a couple of trees? Etc etc. A renovation doesn’t mean you have to install a whole new floor or do a full kitchen remodel. It might mean being strategic with these renovation options and using what you have and working with it.  
  3. Don’t forget to take a quick look at the neighbors. Find a great house in a good neighborhood, but have a crazy cat lady as a neighbor? This might be a problem. Eccentric is not always a great quality in the real estate market, so if you find a home that appears to have neighbors that are on the fringe and are keeping bees, or have ten chickens, goats, and a mini pig, take that into consideration. 
  4. Stay away from busy streets or heavily trafficked streets. A lot of really nice older homes will often be located in unfortunate subdivisions that were somehow chewed up by modern development. A home that sits right next to a busy street that sees a lot of traffic and noise, will always sit on the market for a long time. Consider staying away from these properties unless there are other characteristics that outweigh this downfall. 

Three Quick Warnings: Stay Away from These Common Mistakes 

Just like there is some general advice to follow, there are also a few mistakes that can be avoided with just a little background information. The 70% rule known to a lot of real estate investors states that an investor should pay no more than 70% of the after repair value (ARV) of a property minus the repairs needed. 

Mistake #1: Belly flop into the first deal without doing your homework. Research financing options and make sure you know which one is right for you and your circumstances. Remember to factor in the costs of repairs, as it is the only way to make sure you’ll make a profit. 

Mistake #2: Assuming that it is a part-time endeavor. It can be for experienced real estate investors. If you are just starting out, it might not be the best approach to do this as your side-gig. At least, not for your first property. Finding the right property, researching value and market, plus the acquisition, take time. That is not counting the time it will take supervising contractors. 

Mistake #3: Losing patience and jumping the gun. This piece of advice can apply to many endeavors. Real estate takes patience and some prowling. Get familiar with the kind of property you want to flip and jump on it when the time is right. 

Found the Right Property? Now Get a Quick Real Estate Investment Loan and Get to Flipping 

Getting a hard money loan will be faster, easier, and will not present obstacles to the acquisition of your right property. Call Entrust Capital and get the money you need to flip today. 

Want to find out more about hard money loans for real estate investment? Call Entrust Capital in El Paso and learn more.