You found the deal to move forward with, next step is to seek out a loan to help you finance your new project. The excitement of a new project sets in and you can’t wait to get to the final product, but how do you reassure yourself that you are receiving the appropriate funding to get there? A crucial part of being an investor is educating yourself on what to look out for and what to expect. This doesn’t mean you need to know everything there is to know about real estate investing. It simply means you should know the questions to ask your lender so they can help educate you on the proper loan you should seek to finance your investment. Ultimately, helping you, avoid any surprise fees that can easily get over looked.
Learn about the market and the area you are interested investing in. Pick up on what most homes have in the community, and what you can do to shine a spotlight on your property. If every house on the block has a deck, you will want to install a deck or refurbish an existing one to make your property competitive. Once you come up with the necessities to keep up with the neighborhood, brainstorm what could set you apart. A finished basement, an extra bedroom, or a fireplace can bring extra appeal to your property because it is not available in the majority of its surroundings. These are great topics to consult with your lender on. Odds are they have been through similar situations to be able to make suggestions while figure out what makes most sense for your budget.
Put yourself in the shoes of the buyer, what is in your line of sight from the house? Do you look out the windows and see a beautiful park or a major highway? What attractions are in close radius of the property? You have to mix the numbers with the art, meaning that your property value is greatly affected by the “appearance” of its surroundings. Take all of this into consideration when contemplating investing in a property. You don’t have to do it all alone, your lender can be a valuable resource to assist you in analyzing all of these details to find you a good deal to invest in.
The cheapest way is not always the best path to pursue. Get a quote from 2-3 different contractors to give you full understanding of what they are going to do for you. Don’t zone in on the numbers, they are important to consider, but not the only thing to consider. Take time to review what you are getting in that quote. Are they installing cheap and low quality equipment that the home buyer is going to have to replace within their first year, or is it going to be a property that you would want to purchase? For example, it is not uncommon for contractors to quote you out for hollow doors instead of full wooden doors. This may not seem like a big deal, but the difference can be incredible to the home buyer. Most hollow doors are light and flimsy, provide minimal protection from outside temperatures, and need replaced within a year or two. You do not need to feel the need to splurge on everything, but value the price differences and ask yourself if you were living in the home what would you hope was installed during the renovations.
When seeking funding for your investment pay attention to all of your soft cost, cost that are not considered direct construction cost, these can include legal fees, draw fees, inspection fees, commitment fees, etc. Washington Capital Partners does not charge commitment fees, draw fees, or wire fees. With that said, not every lending company has the same policy. Keep that in mind when talking to potential lenders, find out what your soft cost are going to be so you are not hit with any surprises throughout your investment. Your lender should be more than just a source of money; they should be your “business partner” to assist you throughout your investment which is why you should educate yourself about them before making any decisions.
There are several details that go into analyzing your deal, investing, and seeking financing from a lender. We mentioned a few in this blog, but if you are interested in learning more please contact us! Our passion is real estate investing, and our team wants to help you and your investment succeed.