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Terms You Should Know in the House Flipping Industry

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Real estate is a great industry to work in; it’s stable, and allows you to meet new people, take risks, and expand and grow to an almost endless degree. If you want to get started in this industry, you may want to learn some of the most common terms so you won’t get lost or confused doing your own research. 

House Flipping Terms

The house flipping industry has a lot of terms that are unique to the industry and are brought up a ton from experienced home flippers. Here as some of the most common that you’ll see and hear regularly:

  • Reno project – This one is pretty simple—this refers to a home that will need a renovation before it is sold on the market. 
  • Wholesaler – A wholesaler is a person who buys homes as-is and will sell them to another flipper. They don’t waste time renovating or selling a home to someone who will actually live in it. 
  • Bene – Bene is short for beneficiary, and that is typically a bank or lender that has ownership of a foreclosed property. 
  • Distressed property – A distressed property is one that is late on payments, and is in danger of foreclosure. 
  • NOD – NOD stands for notice of default, and is the point where a house is due to be foreclosed on. You can often get a list of these properties in advance, but it’ll cost you. 
  • Dollhouse and Haircut – Dollhouse and haircut just mean that homes are in pretty good shape, and need minimal renovation to be ready for the market.
  • LTV – LTV is just the Loan-to-Value ratio, meaning the difference in the loan and appraised value of the home. 
  • ARV – ARV stands for After Repair Value, and it’s just the value you of your home after renovations. This is where your profit comes in, so you need to have an idea of this number before you renovate.
  • Hard-money lender – Oh wait, that’s us! A hard-money lender is a private lender, meaning the money comes from private investors, and not from a bank. That means that you can get your money fast, and go on flipping or renovating your house much faster than a traditional lender. 

Contact Entrust Capital Funding, Today!

When you’re in need of a hard loan that can get you the house or renovation project with the lowest interest rates in town, call Entrust Capital. Let us finance your real estate dreams today!

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A Review of Hard Money: Why These Loans Can Help You Kickstart Your Wealth

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Every loan—whether from a friend or from a bank— is contingent upon a certain amount of trust. The trust is that you will pay it back. When it comes to a bank, of course, there is usually some collateral or high interest involved so that there is some guarantee that their efforts in lending the money to you will be worth it in the end. Hard money loans function a little differently, as they don’t exactly require proof that you will pay them.

Lenders are usually interested in your past credit and credit scores. This record is a kind of proof that can be used to indicate the likelihood of your ability to pay the loan back. Hard money loans are not exactly concerned with your credit score, as your past spending is not as relevant as the project at hand. The collateral—or in the case of real —estate investment, the home or property, is used as collateral to secure the loan. Your past credit card bills become irrelevant. So the value of the home you plan to purchase and flip is more important than the actual history of your spending.

Real estate can be a quick business. A property that goes on sale and is a lucrative opportunity for profit or a great buy, it will go quickly. Going through a traditional lender can be a time-consuming process. If you have some blotches in your credit history or some negative items, they will certainly play a role in slowing down a lender’s loan process. Because hard money loans are not concerned with your credit scores or financial history or standing, the process of obtaining a hard money loan is far more quick and efficient. It can often happen in just a few days and get you squared away with your new funds for your upcoming project.

Benefits of Hard Money Loans for Real Estate

Hard money loans can be a really great opportunity for people that are considering trying their hand at real estate investments or house flips. They are beneficial because

  • They are generally short term loans of about one to five years
  • They are fast
  • They are reliable
  • They are very flexible loans
  • They don’t look at your credit scores or credit history

So What Happens if You Can’t Repay the Loan?

Because of the way it is structured, if you are not able to pay your loan, then the owners of the loan will take the collateral and sell it to pay themselves back.

So When is Hard Money a Good Option?

Hard money loans can be a good option for people that might not qualify for a loan with a traditional lender. If you’ve had some bad credit history due to credit card issues, or etc. it will not really become a factor with hard money lenders. These types of loans can also be ideal for a house flip, where the purchaser has the home for just a short amount of time and then turns around and sells it for a profit. This way, the loan can be paid back quickly.

Reach Your Wealth Potential With Hard Money Loans

Here at Entrust Capital Funding, we are excited to help people launch their wealth-gaining endeavors. We understand it’s hard work to flip homes or invest in real estate and our hard money loans with low interest rates can help make that happen quickly, effectively, and with a trusted and reputable lender that is owned and operated locally.

How To Maximize Your Profits as a House Flipper

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Thinking about flipping homes? Rehabbing a home can be an extremely lucrative pursuit if it is approached with caution, understanding, and a little bit of insight knowledge into the inner workings of the industry. Your first flip might seem like an insurmountable task but arming yourself with a few key tips will really make a difference to the outcome. It can certainly help you produce the kind of profit you’re looking for. Let’s look at a few wise words to consider.

Think Carefully About Remodeling Choices

The fix and flip is often seen on television as a great massive overhaul of the home’s interior and exterior designs, bathrooms, kitchen, etc. This makes for great entertainment, as the full transformation of a home is something to witness. However, when dealing with a flip in real life, it is important to note that over remodeling it might not necessarily bring more profits to you as the flipper. As Forbes magazine points out, remodeling takes a lot more time, money, and resources. Embarking on complex remodels will often open the doors for more issues to arise.

  • Tearing into walls can lead to more problems. When digging too deep you might run into a problem you didn’t bargain for. Also, a mistake by the contractor can extend the timeline.
  • More time more money. Another reason why spending an extended amount of time on flips is not advisable is because the more time you spend on it the more money you will be spending and possibly losing.
  • The changing market can make a difference. If you hold on to a house for too long, the market may change and alter your original calculations, pricing, etc.
  • Keep it simple. Experienced house flippers have said that keeping the repairs and remodels simple is the best way to go. Completely changing the bathroom or kitchen will not necessarily pay off at the end. Keeping the changes to what is necessary is a wiser investment choice in a lot of cases.

Some possible risks

There is no shortage of date or factors you can consider when flipping a home. This doesn’t mean you have to fully learn the industry but only be aware of certain things that can impact the way you approach your flip, how much your renovate, how much you spend on repairs, and how quickly you get it back into the market.

Consider market trends. You don’t have to be a real estate expert to look for some big patterns on market trends. You can check in with a multitude of sources —like realtor.com, Joint Center for Housing Studies of Harvard University, neighborhood price ranges, local MLS statistics, census.gov, even social media— for updates on the market. This will give you some insight into demographic shifts that can impact the price of the property you are looking to buy.

Look at changing interest rates. The interest rates on home loans are always important to consider. The interest rates might tell you something about the prospective buyers for your planned property.

Valuation. This is a critical part of the flipping process. Carefully considering and estimating the price of the finished product.  What is the After Repair Value (ARV)? Get a good idea of what the selling price will be before you make an offer to purchase the property.

Choose contractors wisely. In a previous post, we talked about the importance of choosing the right contractors. Doing some research, weighing your options, and calling around, will go a long way when it comes to choosing a reputable and trustworthy contractor.

Ready, Set, Flip!

ATTOM, the real estate data company, reported the average profit on house flips can be up to $65,520 in the second quarter of 2018. Of course the number varies on whether you are doing a lower price range flip or a high-end flip.  If you’re ready to embark on the flipping journey, a hard money loan might be the solution for you to get started fast. We don’t do credit checks and you can hit the ground running asap. Give Entrust Capital Funding a call today.

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An Inside Peek into 2019 and the State of the House Flip

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It was just over a year ago that WalletHub released its top list of cities deemed the best places for house flipping in the U.S. The top of that list surprised many—as it is not an often cited housing market and comes from one of Texas smallest cities— but it didn’t surprise us. The border town of El Paso was named the best city for house flipping in Texas. This means it beats out other hot markets like San Antonio and Dallas.

The rankings were based on a few criteria and measured from 22 key indicators including market potential, remodeling costs, and quality of life. El Paso scored 95, 9, and 48 in the above.

The El Paso Housing Market Today

The median home value in El Paso is $126,700. This is significantly lower from other cities in Texas. The median home value in a San Antonio zip code, for example, is listed at $278,300. This is a significant difference and makes house flipping in El Paso a much more accessible endeavor. The values of El Paso homes have gone up approximately 4.5% over the past year and seem to be rising. The median price of homes in El Paso is about 1$68,250 compared to San Antonio is $285,350.

El Paso’s Growth

El Paso is a city with a growing population and in a September 2018 report, was said to be enjoying a healthy buyer’s market. This means there is a lot of opportunity for people to snatch up valuable properties in areas being remodeled or rebuilt and take advantage of the growing market. In 2015, El Paso’s population was 676,391 in 2018 the latest census data showed it was closer to 683, 577 in 2017. This shows a considerable increase in the past couple of years and means that many more people moving here are in the market to purchase a new home.

Tips Before Jumping In

So if you’ve been thinking about house flipping for some time, there are probably hundreds of questions, doubts, and trepidations that cross your mind. Below are some initial things to keep in mind before you jump in:

  • Understand risk vs. reward.
  • Research the neighborhood the house is on, the side of town, schools, etc.
  • Take notice of the renovations that might be needed and do a little preliminary research on the cost of those particular renovations, contractors in the area, etc.
  • Avoid homes that require expansive repairs like mold, asbestos, foundation problems, etc.
  • Learn the basics of the market. You don’t have to become a real estate analyst, but looking at a few trends, some patterns, or some information on your particular market can inform you of some important aspects.

And Go With the Right Lender

Entrust Capital Funding has the lowest interest rate in the city. As a part of a cohort of real estate companies, we know the market well and know that the market is hot for buyers. A hard money lender doesn’t check your credit or take weeks on end to happen. We can get you the loan asap, so you can move on the property you want and start the profit clock.

Tips for Hiring the Best Contractor for Your Flip Remodel

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House flipping has become a lucrative business in the past couple of years, as television shows and success stories have hit the mainstream. There is a lot of profit potential to be had in the art of flipping houses, but arming yourself with knowledge and advice can go a long way in a business that has little room for error. When you purchase a home with the intent of reselling it, chances are there will be some remodeling and repairs involved before you can put the house back on the market for a profit. For this month’s post, we thought we’d take a look at a crucially important aspect of house flipping.

If you ask any house flipper what one of the most difficult parts of the job is, they will tell you that a big part is being able to hire the right contractors. It is inevitable that a house flip will require some renovations or repairs, some more complex than others, but quality work is essential for a successful flip. Some people take a more ‘hands-off’ approach to a flip and some like to be managing all the subcontractors involved. Weigh your options as to what you want and prefer to do. Hiring a general contractor means that any subcontracting goes through the main company and this is important to note.

Below are some things to consider when hiring a contractor to perform your repairs.

Start with a plan.

There are many ways to spruce up a house for a flip. Some repairs are absolutely necessary, like fixing broken pipes or replacing roof shingles. Others are more aesthetic, like putting in a new vanity in the bathroom or redoing the kitchen cabinets. Before you begin getting any estimates or calling around, have a detailed and prioritized plan about what needs to be done.

Choose the right company for the right job.

Make sure that the contractors you are hiring are specialized and/or experienced in the particular work you are needing. Just because a company is great in redoing kitchens, doesn’t mean they can put in an addition to the home or fix the bathroom with the same rate of quality.

Don’t go with the first one.  

You don’t always have to go with the first contractor you call. Interview at least three different contractors, look at their past work, get a sense for their work ethic, their reputation, and their pricing.

Budget for surprises.

It is almost expected that once work begins on a house, surprises are inevitable. You are likely to find a roof leak here and there or rotten flooring underneath a carpet, etc.

Sign a clear and detailed contract.

Make sure that all the work that is being done is in writing and clearly detailed in a contract. This includes deadlines, prices, and a detailed description of the main job being performed.

Check reviews.

While online reviews will not tell you everything and you don’t want to rely on it as your main source of information, it can be an important way to get a sense for their work. Review sites like Angie’s List and Yelp might offer a way to get some reliable reviews.

If house flipping or selling rehab homes is something you are interested in doing for a longer period of time,  then you can compound your knowledge as you go. After the first or second home, for example, you’ll know the materials, parts, and repairs that you are more likely to do and will have worked with some good contractors that you can reuse.

Get Started With House Flipping Today

The first step to working in the business of buying, repairing, and selling houses is starting with the capital to do it. Entrust Capital Funding will provide real estate investors with reliable loans to get the job done. Our process is fast and easy. We also offer the lowest interest rates in the area. In addition, we have trusted partners we have worked with in the past that can provide reliable contracting and labor. Call us today and get started!!

The Art of the Flip: Use Hard Money Loans To Flip Houses

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You’ve heard the term. You’ve seen ads on YouTube and television about it. Maybe you’ve even seen the show Flip this House on A&E or Flip or Flop on HGTV. You’ve heard people talk about getting rich, but what is the big deal with hard money loans anyway? Thousands of real estate investors across the country are discovering the real meaning of making money by buying and flipping homes. Flipping is a term that refers to buying a property with the intent of quickly remodeling and/or reselling for a profit. It’s a tricky business, but when partnered with the right lenders and handled correctly, it can create lucrative opportunities for money making. Use hard money and learn the art of the flip.

So where do I begin? That is the question. Hard money loans don’t require a credit check and are therefore much faster to get. This is because the money is coming from private investors ready to see it go to good use and see a return on it. So once you’ve got a loan to work with, you want to get started. Below are some tips to get started on the art of the flip.

#1 Learn. Get to know the market. Read a few books or attend a few courses. Getting a sense for some basic market trends, jargon, and concepts will serve you well in the long run and give you a foundation through which to build the instincts to make good decisions.

#2  Take it easy. Don’t dive into anything and start small. If you’re new to the business, don’t go for the most expensive luxury home. Try a small single family home or a low-cost property without too many complex repairs. This will whet your appetite and help you experience the process without tremendous risk.

# 3 Trust your construction crew. You will be making repairs and renovations to the property you plan to flip so you need to have people that you trust. Once the clock is ticking is not the time to experiment with contractors and new people. Go with someone you are familiar with and can trust to get the job done.

#4 Don’t over improve. Yes, this is a common mistake. Many first time flippers will spend way too much money on repairs that may not have been needing in the first place. Be cautious about what you improve or fix and get a good sense for what will actually make a difference when it comes time to sell.  Some repairs will have to be made based on the inspection and appraisal, but others might be up to you and there are strategic ways to approach this.

Television shows like Flip This House have seen a tremendous amount of success— despite the stars’ often questionable character— because people see the potential and opportunity for themselves. In reality, there is plenty of opportunity out there for people that are interested in making money and learning a new art. Flipping is one thing, but without the right lender and the help of trusted real estate agents and real estate experts, you might find yourself disoriented and having lost your investment. When it comes to hard money loans in El Paso, there are very few trusted options. Entrust Capital Funding started in the business as a way to help people improve their wealth and further train real estate investors and agents.

 

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Minimize your risks

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Want faster closings? Can’t use credit to get a loan? El Paso Texas’ Hard money lending is your best choice. But there a few things we want you to know to reduce risks with Hard money loans. There are usually risks involved with money loans but if you keep this goal in mind when getting a loan. Pay the loan off as soon as possible. This reduces higher interest rates. The longer you take, the more interest you will be paying rather than the actual loan amount.

Always have an assessment of your purchase done. The worst thing you want to happen is not getting your money’s worth and the property sells for way less than what you anticipated. Have it appraised before you do anything, this insures you are risking less.

Make sure you are honest and up front with your lender. Make them aware of your plans and ideas with the property. The best way to determine what the best solution for your loan is to be transparent and able to communicate well with the lender. Another thing that’s important is spending less. If you are remodeling or flipping its always smart to choose how you will spend your money wisely. Spend it where it is needed the most and not carelessly on things you can’t get your money’s worth!

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Are You Choosing The Right Lender

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El Paso, Texas Hard Money Lenders are everywhere. There’s so many to choose from and it’s tough to know whether or not they are reputable and honest. These things are important. There are so many options it may be a bit difficult to make a decision. Its best to be in search for one that can actually get you profit and up your business or home. Look for the differences in annual rates and per month interest rates. Are there any penalties? Sometimes it’s not easy to finish a project in time so it’s always good to know about penalties just in case. Speaking about time is your lender punctual? There’s no need to be working with a lender who takes weeks maybe even months to finalize a loan. The quicker they work the better it is to work with them and get started on your projects. Not every offer is a winner unfortunately but at least doing your research will save you time and money.