Your Perfect Guide To Financing Property Development

If you happen to be a property investor, a developer, or a landlord, there’s an array of commercial land and development financing options to kick-start your project. However, for many commercial realty investors, the alternative investment market is pretty complex and large. So through this post, we’re attempting to simplify commercial property financing options for investors like you who’re looking forward to developing their own commercial properties.

Commercial mortgages

Commercial loans are used for purchasing commercial properties, such as offices, warehouses, and shops. Broadly defining, these mortgages will work like their private counterparts only. That is, a commercial mortgage will work to spread the cost of any large purchase over a specific period of time-generally, a fixed number of years.

The plainest commercial finance type will be leveraged by existing businesses that want to invest/buy in their own premises; a place where a business is currently operating. One typical example is of a dentist who’ll want to buy a specific piece of land within the clinic’s premises. However, if the dentists can’t pay for that specific piece of real estate straight away, then the dental expert can avail oneself of a number of commercial mortgage options-for example, commercial bridge financing.

If you don’t wish contributing cash yourself, then it’ll be, sometimes, possible to get close to 100 percent financing by putting in additional security. However, for getting full financing, you must have a powerful trading record and a solid history of operating within the premise (where you’re looking forward to investing). If you talk of the businesses, then it’s easy for an established business to get a commercial fund; however, for a start-up, getting commercial mortgages is difficult as the lenders have to face a lot of risks.

Buy-to-let mortgages V. commercial loans

Now, there’s one more situation where a commercial loan will be suitable; according to this situation, landlords-having large property portfolios-will make the most of business loans whenever they’ll want to buy a lot of properties. Having such a portfolio, you’ll combine a lot of properties within one single mortgage. By doing so, you’ll be able to cut arrangement fees and even leverage economies of scale.

Such a commercial mortgage is different from a buy-to-let mortgage in terms of scale only. So this setup can be leveraged by only those landlords that have multiple properties. This specific mortgage type is never meant for those individuals who’re looking to acquire their first ever rental property-for them, it’s the buy-to-let mortgage option.

So that’s it, readers. If you’re looking forward to getting a commercial mortgage loan for land and development finance, you’ll have to touch base with some of the finest alternative financing lenders in the market. That’s because they’ll be the ones to cater to your commercial property financing needs easily and, most importantly, quickly.

Cons and Pros of Private-Mortgage Loans

Private money loans are also known as hard money and it comes from private lending companies who offer loans to home buyers to buy a specific asset. Generally, home buyers often find these lenders by engaging a real estate investment club in their area. These loans are often secured by home investors. But unfortunately not every home-owner will be successful getting fund from a private lender. Here are the major pros and cons of private mortgage loans.

This loan could be a great option for home buyers who are not able to qualify for a traditional mortgage because of less than exact credit, debt or for self-employed people who can’t always offer proof of a stable income. A debtor should remember that a person with a poor credit record can get a hard money loan if the project shows the profit.

Personal loans are not paid back over 30 years like a traditional loan. A huge big number of private lenders expect the loan to be repaid within a very short time like as six to twelve months. Lenders are often looking for a very quick return for their money, and they generally are not set up to offer a loan for several years the way a typical mortgage company is. Homes that need extra renovations generally can’t get qualifies for conventional mortgages, no matter how better a borrower’s credit score is. In those cases, private money can play a very important role. A non-traditional lender can step in and offer to finance to get the house in sell-able condition, then flip the house.

One major drawback of personal mortgage loans is interest rates. The rates of interest are much higher with a private money lending than with a conventional loan. Even, sometimes mortgage rates are more than double, often 12 to 20 percent per year. Basically, mortgage rates are very high because private lenders don’t need exact credit. Fund from private lenders are generally secured by the property in question, so it is usually not very important to the lender if the debtor has good credit or not.

If you own a house that you believe is a candidate for a personal loan, the approval procedure often takes just a couple of weeks, as opposed, it takes 30 to 45 days for a conventional loan. For many borrowers, qualifying a loan than fast is a very good trade-off for higher interest rates. Generally, private money lenders don’t need a long drawn-out loan process like a conventional mortgage does.

If you have a house and you want to rehab it, as well as you feel that you could make it better enough to boost its worth in a short time that would allow you to pay off a personal loan and replace it with a conventional sale, then applying for a private loan is a viable option. As long as you understand the caveats and complete your research, there has a possibility to successfully secure a property without a conventional loan.

How Much Should I Pay for an Investment Property?

Many people wonder if there is some formula to be able to reach reliably, the amount of money one needs to spend in order to invest in a significant gain of Investment Property. It is worth mentioning that more and more people have already started to deal with such real estate investments and also with remarkable results. This is because the housing market to hire is highly effective and can bring substantial profit and fast payback of the initial investment in less time.

Although each housing market correlations may vary, there is some items worth to know and to take into account when going to buy one Investment Property. One significant size is the CAP rate. The capitalization rate is the relationship between the amounts of net income from the rental of this house, with its total market value. The net income can be calculated approach if from the annual rental fee we subtract approximately a rate of 10% for taxes, maintenance, etc. If we divide this net amount to the real value of the house, we find the CAP rate. A remarkable CAP rate for newly built residence that do not require special maintenance should be about 8%, while for most old houses or repair this figure should be at least twice.

Another important factor that one must consider about the amount of money you spend on one Investment Property is how the local rental market is moving in this area. If, for example, invest in a house with low rental rate frequency, even if spend little money, this will harm us in the long term. Unlike the high rental rate can ensure us a risky investment. In this issue should be considered and the place of residence, as well as the direct benefits it offers, such as hospitals, banks, schools, etc.

Operating costs that this house will have should be the lowest possible. That money will be spent on maintenance repair and care of the house should be the less possible. This may help if several of these procedures you can take yourself. The less expenses the higher net profit and therefore easier to recoup the investment.

The amount of money you have to pay for one Investment Property depends on all these factors and therefore should be carefully choosing your moves. Investment as one understands with lower risk are those relating to new houses, modern, with several facilities, comfortable accommodation and easy maintenance. This means that the price of the rent of such housing will be high and our monthly income is quite important. Another good here is that if we want we can maintain the Investment Property for 10 years and then sell it at a very considerable value, something that will not be easily achieved by an old house.

Everything You Need to Know About the Home Loan Eligibility

A home loan might be a quick fix to all your home-related financial woes, but like any other loan, your lender will require you to prove your worth before awarding you with the funds.

So, how do you go about it?

It’s quite simple. All you have to do is produce all personal/professional details to your lender. Here’s a list of eligibility criteria you need to meet to successfully avail of a loan.

1. Examining your Eligibility

You’ll have to fulfil certain criteria to convince your lender(s) that you’re cut out for the loan. Here’s your home loan eligibility criteria checklist that might vary slightly depending on your lender, while maintaining the same essence:

  • Valid identification proof (passport/voter identification/ driver’s’ license) to prove that you’re an Indian resident
  • You must fall within the 25-70 years age group
  • If you are a self-employed individual, you’ll need to submit proof that your business is at least 5 years old
  • Your loan amount must fall between the minimum and maximum amount offered by your lender
  • Your latest credit report with a score of 750 or more and a brief history of on-time payments and credit utilisation

2. Documents Required for Home Loan Sanction

Once you’re eligible, the financial institution lending you funds will require documented proof of your existence and financial stability. Here are the papers you’ll have to put up:

  • Complete Home Loan application with all your credentials
  • Latest passport size photographs
  • Proof of identification (voter’s identification/passport/driver’s license)
  • Proof of residence (voter’s id/water or electricity bill)
  • Proof of business address (in case of self-employed candidates)
  • Bank account statement for the past six months
  • Signature identification
  • Personal assets and liabilities statements in a proper format as stipulated by your lender
  • Detailed information about loans you’re already paying including details of the lender and securities mortgaged

If you’re a salaried individual, you’ll have to provide the lender with additional documents. Here’s a list to help you organise your papers:

  • Original salary certificate for the previous month
  • Tax Deducted at Source certificate – Form 16 or a copy of the IT returns you’ve made in the past two years acknowledged by the Income Tax Department

For a self-employed individual running an enterprise, the additional documents to be submitted are as follows:

  • Income tax returns made in the past three years acknowledged by the Department of Income Tax
  • Receipt copies of advance income tax payments

3. Property Documents Required for a Home Loan Sanction

When you put up your property for a home loan, the financial institutions will demand legitimate paperwork to clear it of any illegalities before the loan amount is sanctioned. Here’s a list of documents you might have to produce if asked by your lender:

  • Agreement of sale
  • Paid building and land tax receipts
  • Certificate of possession
  • Location sketch of the property certified by revenue authorities
  • Letter of allotment issued by housing board or private builder
  • Receipts of advance payments made towards purchase of the flat
  • Non-encumbrance certificate
  • Original NOC under Urban Land Ceiling Act, 1976
  • Copy of relative order if the land has been utilised for agricultural purposes
  • Original NOC from Housing Society or private builder
  • Detailed estimation of the cost of construction

A stellar paper trail is undoubtedly the best method to get your loan application approved because those pieces of paper justify your ability to repay a loan. You’ll have to think of it as a job interview. Every detail mentioned in your documents has to be legitimate to get the final nod of sanction from your lender.

Smart Residential Property Investing and Rental Remodeling/Renovation Advice

The decisions people make with regard to residential rental property investments can be surprising. While the goal is always to make money, the approaches are varied and sometimes even counterproductive.

What makes rental property ventures successful long-term? What do smart investors do differently to make these enterprises consistently lucrative? In searching online, one is challenged to find a concise, comprehensive overview of answers to these questions.

With twelve years experience in residential property investing and management, it is clear to this writer that there are certain attributes and practices which characterize successful investors. After years of close observation, the following insights are offered for your consideration and reference.

7 Key Attributes of the Smart Residential Property Investor

• Sets clear and achievable short and long-term revenue goals, with realistic timeframes.
• Has a firm grasp on the financial requirements.
• Thoroughly researches property candidates.
• Buys rental property with prime location, sound structure, minimal repair requirements, at best price.
• Calculates property appeal for rent-rate ratio (i.e., poor appeal equates to lower rent rate, higher tenant turnover; high appeal equates to higher rent rate, lower tenant turnover).
• Understands curb appeal has a direct correlation to renting units faster.
• Knows that proper and timely repairs and maintenance help preserve equity.

The wise investor also appreciates how scaled renovating/remodeling can increase equity and maintain a top-quality tenant base. For those with a plan to sell the property within a predetermined timeframe, such improvements prepare the property for that eventuality while reducing impact to cash flow and minimizing cost spikes. They also know that potential buyers will be evaluating not only the innate property value, but also the renter history (i.e., rent and turnover rates, repair/maintenance records).

4 Key Reasons to Update/Remodel Rental Units

• Maintain, better yet increase equity.
• Attract better-qualified tenants; garner higher rent rates.
• Amortize costs in preparation to sell.
• Earn tax advantages.

3 Key Renovating/Remodeling Considerations

• Do not under or over remodel/renovate.
• Remodel costs will generally need to be depreciated rather than deducted.
• Time improvements for when unit is vacant and ideally off-season.

6 Highest ROI/Most Cost Effective Property Improvements

• Thorough cleaning
• Paint, exterior and interior
• Carpeting, flooring
• Kitchen and bathroom: Resurfacing versus replacing
• New windows and/or doors
• Curb appeal

The savviest of investors are those who take the time to conduct careful research, analyze and regularly review financial data, make calculated property purchases, maintain and periodically upgrade property for optimal equity, and properly manage renter relations.

Tips on Investment Properties for Beginners

When you have extra cash and want to invest it the best option is real estate because they have high returns. Although property prices in the short term may go up and down, they appreciate substantially in the long run. Investment properties are something that you can bank on as it will acquire value with the development of the areas in the vicinity of the property. There are risks that cannot be completely eliminated but if you do a thorough research and planning you can lessen the risks. If you are a beginner investor, investing in real estate can seem daunting at first. Here are some tips to help you make the right investment choice.

• Know the range of options for real estate investment-you can invest in buying commercial properties, residential houses, apartments, condos, or land so you need to study which would be a better investment for you. There are many options so you will need to do your research to see which one will align with your future plans and stay within your budget.

• Why investing-are you investing to buy to sell again for a profit or do you want to rent the investment property? If your investment properties are residential you can create a regular income by invent in rental properties. You can also be a “house flipper,” which is where you buy an older home, renovate them, and sell them for a profit. If you decide to invest in commercial property you can hold it until the prices go up and then sell it to make a good profit.

• Location-when buying an investment property remember it is all about the location. The price of the property is largely a function of where it is located. Where the property is helps to decide the price range. Make sure that you research the price trends according to different locations before you buy investment properties.

• Network with a real estate agent-they can make your job a lot easier finding the type of property you want to buy. When you network with real estate agents they can help point you toward investment properties that fit your plans. A real estate broker will handle the legal work that is involved with the sale and purchase of the property for you. They can also make an offer and negotiate for you.

• Make financial arrangements-once you chosen the investment property you will need to arrange a mortgage to pay what your savings do not cover.

The most important thing to remember when buying investment properties is to do your research.

Five Ways A Real Estate Agent Can Help You Find Your Dream Home

Having a real estate agent can help take the mystery out of shopping for your new residence. Many folks think that it is easier to shop for themselves. However, having an agent provides a significant advantage over trying to search on your own.

Realtors Have In-Depth Knowledge

Firstly, a realtor will have in-depth knowledge that goes beyond how much square footage is in a house or how many rooms it has. This can include an understanding about the type of piping that is used in the bathrooms and what types of schools are in the area. Your realtor can also tell you about the community, which can be especially helpful if you’re moving from out of state.

Realtors Have Ethics to Stand By

Another reason to feel confident about using a real estate agent is that all realtors must conform to the Realtors Code of Ethics. This requires all individuals working with a realtor to be treated equally, professionally, and fairly, no matter what their background. You can go into a realtor’s office knowing you are entitled to a professional experience.

Realtors Protect Their Clients

Realtors also have a fiduciary responsibility in helping you. Realtors protect buyers when doing transactions on their behalf, guiding you away from someone who might try to take advantage. Your realtor can offer you their opinions and guidance on whether a house is a good buy or not.

Your Realtor Knows the Current Laws

Realtors make it their job to keep up with the latest rules and regulations surrounding house buying. Since they are required by law to stay abreast of any changes, your real estate agent can advise you on current laws about buying, from helping you with contracts to understanding different types of riders. Because laws vary by state, if you are relocating from a different area, having an agent can be a major asset.

A Realtor Will Help You Get the Right Price

Finally, your realtor will be able to assist you in coming up with a price that is right for you. Your real estate agent can negotiate a price on your behalf. Since your agent will have experience in doing this, it will come more naturally to them. If you are shy when it comes to bartering, you can rest easy and let them act on your behalf. They will work to get you the lowest price possible and make sure that your buying experience is as pleasant and enjoyable as it can be.

Once you start working with an experienced real estate agent, you will be amazed at how easy it is to find the home of your dreams.