Author: Lending Agent
Individual Retirement Accounts (IRAs) are commonly known as long-term savings tools, but real estate investors can leverage them in ways that go beyond traditional stock and bond investments. By strategically utilizing IRAs—especially Roth IRAs—you can grow your real estate portfolio and engage in lending activities while minimizing tax burdens.IRA Basics: How They Work and Who Is EligibleRoth IRAs function similarly to 401(k) accounts but with notable differences. In a 401(k), contributions reduce your taxable income now through tax deductions. However, you pay taxes on gains during retirement withdrawals. Roth IRAs operate differently by taxing contributions upfront instead of later. Growth…
Factors Affecting DSCR EligibilityIf you’re interested in a DSCR loan, the following factors will impact your eligibility. You can take steps to optimize each of these to increase your chances of obtaining a DSCR loan with favorable terms.Rental Income and Cash FlowFirst, you want to maximize the income that your property generates. That means setting competitive rental rates and minimizing vacancies through effective marketing and tenant management. You’ll need a consistent cash flow to support a healthy DSCR.Operating ExpensesThe other half of the DSCR equation is operating expenses. These eat into your net profits and reduce the maximum loan amount…
The real estate investment landscape is evolving quickly, prompting investors to monitor legislative changes closely. Trump’s possible return to office heightens this focus. The impending expiration of the Bonus Depreciation law concerns many investors. This law has made real estate highly appealing for those with active income.Understanding the significance of this change and its impact on real estate investors is essential. Here’s why:The Power of DepreciationTaxes can significantly impact investment returns, and many investors already know that real estate offers unique tax advantages. Unlike W-2 income, where taxes are withheld automatically, real estate investments allow for strategic deductions and tax…
Craig Fuhr, Senior Loan Officer at Dominion Financial and co-host of Real Investor Radio, sat down with Brad Chandler, co-founder of Express Homebuyers. As one of the Northeast’s most active investors, Brad has flipped over 4,500 homes and built one of the nation’s leading home-buying companies, showcasing the story behind Express Homebuyers success. The conversation explores his early days, the company’s rapid growth, and the key lessons he’s learned along the way. A key takeaway? Success in real estate happens over time and requires developing the right partnerships and strategies. Let’s dive in:Q: How did you decide to start Express Homebuyers,…
In the wake of Donald Trump’s reelection, financial markets are experiencing notable Post-Election Market Shifts. The stock market has climbed, reflecting investor optimism. Potential tax cuts, infrastructure spending, and business-friendly policies are driving this sentiment. These factors have raised expectations for corporate profits. As a result, equities have seen a strong rally. At the same time, the Federal Reserve has been reducing short-term interest rates, aiming to support economic growth and maintain low borrowing costs. This move aligns with efforts to keep the economy resilient, encouraging borrowing and investment through accessible credit. However, the bond market is reacting differently. Yields on intermediate-term…
A sharp drop in mortgage rates brought homebuyers off the fence in October after a slow summer.Sales of previously owned homes last month rose 3.4% from September to a seasonally adjusted, annualized rate of 3.96 million units, according to the National Association of Realtors. Sales were 2.9% higher than October of last year, marking the first annual increase in more than three years.This count is based on signed contracts, meaning most of the deals were made in August and September. During that time, the average rate on the popular 30-year fixed mortgage was falling. It started August around 6.6% and…
After flatlining the week before, mortgage demand rose last week, despite mortgage rates increasing for the fourth straight week. Total application volume climbed 1.7% compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased to 6.90% from 6.86%, with points rising to 0.70 from 0.60 (including the origination fee) for loans with a 20% down payment. That was the highest level since July.Applications for a mortgage to purchase a home rose 2% for the week but were 1% lower than…
An often-overlooked factor in real estate investing is a property’s risk of natural disasters. Hurricanes, floods, and wildfires can wreak havoc in certain areas, but understanding the connection between natural disasters and real estate investing can help savvy investors turn challenges into unique opportunities.In 2023 alone, the United States experienced 28 natural disasters causing over $1 billion in property damage, including the extensive destruction from Hurricane Helene in the Southeast and widespread flooding from Hurricane Milton in Florida. While natural disasters are unpredictable, certain regions are consistently higher-risk than others. By understanding how these events impact the housing market, investors can…
You want in on the real estate game, but you’re not sure which strategy is the right fit — active vs. passive investing. It’s a personal decision that requires careful consideration of your financial objectives, market knowledge, and risk tolerance. There’s also a time factor to think about. After all, there are only so many hours in each day.Defining Active InvestingActive real estate investing is hands-on. You make all the decisions — which properties to buy, where to look for them, and how to finance them. You decide on your strategy, whether you want to use the property as a…
What Is a DSCR Loan?Traditional banks rely on a borrower’s assets, income, and credit history to make a lending decision. That isn’t the case with a DSCR loan. Lenders that offer DSCR loans examine a property’s cash flow potential during the qualification process. There’s less concern about the borrower’s ability to repay, and more about whether the rental income will cover the mortgage debt. A DSCR lender uses a single basic metric to qualify borrowers: cash flow divided by monthly debt payments. If the ratio exceeds 1, the borrower may be eligible for the loan.To see how this works, assume…