Understand the Difference Between Home Equity Loans and Home Equity Line of Credit

Homeowners often wonder how they can use their home’s equity to access low-interest financing. A home equity loan or line of credit are two options available to you. To find out which one best suits your needs, check out some of the differences below.

Home Equity Loan (HEL)

A loan that takes advantage of the equity in your home is a good way to borrow money. This option allows you to obtain a fixed amount and receive it in a single payment. The amount you receive is based on your home’s value, payment terms, verifiable income, and credit history. You can get it with a fixed rate, a fixed term, and even a fixed monthly fee. Plus, interest payments are 100 percent tax deductible.

Home Equity Line of Credit (HELOC)

With a home equity line of credit, you don’t get all your money at once. Instead, you open revolving credit, which allows you to receive money when you need it. Your house is used as collateral to open the credit account. Companies approve this type of account based on the appraised value of the property and subtracting the current balance of the existing mortgage. Some consider income, debt ratio, and credit history.

Unlike a HEL, in a HELOC you withdraw funds as needed over a period of time, usually five to ten years. Plans vary and you may have special checks or a card to use to access your funds. Depending on your account, you may need to borrow no less than a certain amount each time you access it. You may also need to maintain a minimum outstanding balance. Some plans also require a specific initial withdrawal.

After the “withdrawal period” ends, some HELOC providers will allow you to renew your account terms. Not all lenders allow you to renew the plan. Also, after the “withdrawal period” is over, enter the “repayment period”. Your lender may ask you to pay the full amount back at this time. Others allow you to make quotas.

What is the difference between them?

While both HEL and HELOC allow you to leverage the value of your property to gain access to financing, there are two important differences. Those are the interest rates and the repayment terms.

With a HEL, you get a fixed interest rate. This means that you know what your interest rate is from month to month. This also makes your payments fixed, making it easy to budget each month.

However, a home equity line of credit generally has an adjustable rate. This means that the monthly interest payment can vary depending on the index. Lenders traditionally add a margin of a few percentage points to the prime rate. You should ask the lender what index is used, what is the margin charged, how often the rate is adjusted, and what is the rate cap and floor.

Since the interest is adjustable, the monthly payments fluctuate. Also, during the withdrawal period, you may be responsible for repaying the monthly interest only, and not paying the principle until after the repayment period begins.

3 of the top 9 reasons the housing bubble is bursting

If you own a real estate property or are thinking about buying a property, you better pay attention, because this could be the most important message you will receive this year regarding real estate and your financial future.

The last five years have seen explosive growth in the real estate market, and as a result, many people believe that real estate is the safest investment you can make. Well, that is no longer true. Rapidly rising house prices have caused the real estate market to be at price levels never before seen in history when adjusting for inflation. The growing number of people concerned about the housing bubble means that there are fewer real estate buyers available. Fewer buyers means that prices are going down.

On May 4, 2006, Federal Reserve Board Governor Susan Blies declared that “housing has really peaked.” This follows in the footsteps of new Fed Chairman Ben Bernanke, who said he was concerned that the “weakening” of the housing market could hurt the economy. And former Fed Chairman Alan Greenspan previously described the housing market as sparkling. All of these top financial experts agree that there is already a viable recession in the market, so it is clear that you need to know the reasons behind this change.

3 of the top 9 reasons the housing bubble will burst include:

1. Interest rates are going up – foreclosures are up 72%!

2. First-time home buyers are priced out of the market – the housing market is a pyramid and the bottom line is crumbling

3. The psychology of the market has changed and now people are afraid that the bubble will burst: the mania for real estate is over!

The first reason the housing bubble bursts is the rise in interest rates. Under Alan Greenspan, interest rates were at record lows from June 2003 to June 2004. These low interest rates allowed people to buy houses that were more expensive than they could normally afford but at the same monthly cost, essentially creating “free money”. However, the era of low interest rates is over as interest rates have been rising and will continue to rise further. Interest rates must rise to fight inflation, in part because of high gas and food costs. Higher interest rates make owning a home more expensive, reducing the value of existing homes.

Higher interest rates are also affecting people who bought adjustable mortgages (ARMs). Adjustable mortgages have very low interest rates and low monthly payments for the first two to three years, but then the low interest rate disappears and the monthly mortgage payment increases dramatically. As a result of the adjustable mortgage rate readjustments, foreclosures for the first quarter of 2006 increased 72% from the first quarter of 2005.

The foreclosure situation will only get worse as interest rates continue to rise and more adjustable mortgage payments adjust to a higher interest rate and a higher mortgage payment. Moody’s stated that 25% of all outstanding mortgages will be reset at interest rates during 2006 and 2007. That’s $ 2 trillion of US mortgage debt! When the payments go up, it will be a big hit with the pocketbook. A study by one of the nation’s largest title insurers found that 1.4 million households will face a payment increase of 50% or more once the initial payment period ends.

The second reason the housing bubble bursts is that new home buyers are no longer able to buy homes due to high prices and higher interest rates. The real estate market is basically a pyramid scheme and as long as the number of buyers is growing everything is fine. As first-time home buyers purchase homes at the bottom of the pyramid, the new money for that $ 100,000.00 home moves up the pyramid to the seller and buyer of a $ 1,000,000.00 home as people sell. a house and buy one more. expensive house. This double-edged sword of high home prices and higher interest rates has driven many new buyers off the market, and we are now beginning to feel the effects on the broader property market. Sales are slowing and inventories of available-for-sale homes are increasing rapidly. The latest report on the housing market showed that new home sales fell 10.5% in February 2006. This is the biggest drop in a month in nine years.

The third reason the housing bubble bursts is that the psychology of the housing market has changed. Over the past five years, the real estate market has increased dramatically and if you bought real estate, chances are you have made money. This positive return for so many investors drove the market higher as more people saw this and decided to invest in real estate as well before they were ‘lost’.

The psychology of any bubble market, whether we are talking about the stock market or the real estate market, is known as ‘herd mentality’, where everyone follows the herd. This herd mentality is at the heart of any bubble and has happened numerous times in the past, including during the American stock market bubble of the late 1990s, the Japanese housing bubble of the 1980s, and even since. the US railroad bubble of the 1870s. The herd mentality had completely taken over the housing market until recently.

The bubble keeps rising as long as there is a “bigger fool” who buys at a higher price. With fewer and fewer “old fools” available or willing to buy houses, the mania goes away. When the hysteria wears off, the excessive inventory that was built during the boom times causes prices to plummet. This is true for the three historical bubbles mentioned above and for many other historical examples. It is also important to note that when these three historical bubbles burst, the United States entered a recession.

With the change of mentality related to the real estate market, investors and speculators are afraid of being left with real estate that will lose money. As a result, they are not only buying less real estate, but they are also simultaneously selling their investment properties. This is producing a large number of homes available for sale on the market at the same time as record new home construction floods the market. These two increasing supply forces, the increasing supply of existing homes for sale coupled with the increasing supply of new homes for sale will further exacerbate the problem and reduce all home values.

A recent survey showed that 7 out of 10 people think the housing bubble will burst before April 2007. This shift in market psychology from ‘you must own real estate at any cost’ to a healthy concern that real estate is overvalued is causing the end of the housing market boom.

The aftershock of the bursting of the bubble will be enormous and will greatly affect the world economy. Billionaire investor George Soros has said that in 2007 the United States will be in recession and I agree with him. I think we will be in a recession because as the housing bubble bursts, jobs will be lost, Americans will no longer be able to withdraw money from their homes, and the entire economy will slow down dramatically, leading to a recession.

In conclusion, the three reasons why the housing bubble bursts are higher interest rates; first-time buyers are excluded from the market; And the psychology about the real estate market is changing. The recently published e-book “How To Thrive In The Changing Real Estate Market. Protect Yourself From The Bubble Now!” discuss these items in more detail.

Pros and cons of owning various types of commercial properties

Do you want to invest in commercial real estate, but don’t know what type of property to consider? Here’s a comprehensive guide to the five most common types of commercial properties.

1) Multi-family (apartment buildings) – Multi-family refers to apartment buildings of all sizes. It is classified into garden apartments, apartments without a lift, mid-rise apartments, high-rise apartments, and special purpose housing.

Garden apartments are low-rise apartments with less than 3 stories, built in a garden-like setting. The apartments without elevator are apartments with 4 to 6 floors without elevator. The mid-rise apartments are 4-8 floor apartments with a lift. The skyscrapers are more than 9 floors with at least one elevator. Special purpose housing is a multi-family property that targets a segment of the population, including student housing, senior housing, subsidized housing, etc.

Advantages of multi-family properties:

• Easy access with smaller properties and slow transition to larger properties

• Fiscal benefits

• Use current rents to finance

Cons of multi-family properties:

• Tenant management 24 hours a day, 7 days a week

• Legislation in favor of tenants

• Rent control

two) Industrial – Industrial is normally used to produce, manufacture or store products. Includes warehouses, garages, distribution centers, etc. It is often divided into heavy manufacturing, light assembly, flexible warehouse, and bulk warehouse, depending on the size and use of the property.

Heavy manufacturing often uses machinery heavily and typically requires a substantial amount of renovation before it is rented to another tenant. Light assembly includes storage, product assembly, and office space, which is easier to reconfigure than heavy fabrication. Flexible warehouse typically includes office and industrial space, making it easily convertible space. Bulk warehouses are massive properties, typically 50,000-1,000,000 square feet of space, generally used for regional product distribution.

Advantages of industrial properties:

• Single tenant deal

• Long-term and stable leases

• Relatively small initial investments

Cons of industrial properties:

• Specialization of the area, which makes it difficult to find new occupants.

• Large and extensive reconfiguration expenses

• Higher tax rates, depending on the area

3) Office buildings – This category includes single-tenant properties, small professional office buildings, downtown skyscrapers, and everything in between.

Office buildings are the Central Business District (CBD), which is located in the middle of a city, or suburban office buildings. There are three categories: Class A, Class B, or Class C, which is determined by the quality of the construction and the convenience of the office location.

Advantages of office buildings:

• Less turnover

• Longer lease terms

Cons of office buildings:

• Less frequency to raise rents

• Emphasis on parking

• Expensive financing options

4) Retail / Restaurant – Retail includes shopping centers, community shopping centers, energy centers, regional shopping centers, and outdoor parcels.

Strip centers are small retail properties that may have an anchor tenant, which is a larger, more well-known tenant that will attract small retail tenants. Community retail centers are between 150,000 and 350,000 square feet with multiple anchors, usually supermarkets and drug stores. The energy centers have several smaller retail stores with some retail stores like Wal-Mart, Lowes, Staples, Best Buy, etc. occupying between 30,000-200,000 square feet, containing various parcels. Regional shopping centers are between 400,000 and 2,000,000 square feet with many anchor tenants. Our parcel is land reserved for individual tenants, such as fast food restaurants or banks.

Advantages of retail / restaurant properties:

• Security and profitability of an Absolute Triple Net (NNN) lease

• Less turnover

• Less tenant management

Cons of retail / restaurant properties:

• Less frequency to raise rents

• Depends on the tenant’s performance

• Location and foot traffic are extremely important

• Emphasis on parking

• Visual maintenance

5) Land – The land is self explanatory. It is often classified as new land, fill land, and abandoned land.

Greenfield land is underdeveloped land, such as farms and pastures. Infill lands are vacant lots located in cities that have already been developed. Abandoned land is typically environmentally damaged land that was previously used for other industrial or commercial uses. The land is available for reuse.

Advantages of the land:

• Fiscal benefits

• Less expensive

• More rental possibilities (depends on the location)

Cons of the land:

• No immediate income from tenants

• Few financing options

• Requires development from scratch

The above are the most common types of commercial properties. There are several others that have not been discussed above such as hotels, funeral homes, nursing homes, theaters, etc., which are special purpose type properties.

Buying a house? Make sure to use a property record check – here’s how

One of the most exciting times in anyone’s life is buying a home or condo, but it can also be a bit stressful. It is not as easy as spotting a house and handing over a bank check. One of the easiest methods to make sure you get the home you really want and negotiate the lowest price is to use a property record check.

Deciding how much to spend on a home is usually the first decision. Naturally, you also need to find a location where you want to reside. You must decide how many rooms you need. If you want a backyard. Many factors to debate!

Once you’ve decided on all the ingredients you’re looking for, you can go out there and start exploring! It starts to get exciting when you find a house or two that you love. It is important to properly research the property and make sure that the home you are considering is actually a good one.

A property background investigation allows you to reveal a lot of information about any home you may be thinking of. It is very easy to do and you will discover tons of useful information.

A property records search will expose a lot of useful information, including historical owner information, past sale prices, property tax information, mortgage records, current value and home purchase statistics, neighbor information – it’s a list! long!

If there is a link in the house, the house may be taken away from you, even if you did not know it when you made the purchase. A property records search will reveal if there is a pending link and can avoid a great deal of stress later on.

The information you get from your property search also gives you a great advantage when negotiating the final price. This alone could save you a lot of money.

Simply go online to use a property background search. When you use a property record verification website, you simply enter the address and then you are given access to the property details. The cost of these searches does not cost much; Typically, you can only be charged a flat fee for unlimited property searches to help you if you are looking at more than one home.

If you’re going to be in the market for a home shortly, make sure you follow the right steps to land a great deal and your dream home! Using a property background check gives you the best means of ensuring that you are getting the home you want, that your purchase is safe, and that you are getting the lowest possible price.

Quick sale of real estate by owner when quick cash is needed

The good old days were refreshing. You can put up a sign in your yard and get quick responses from interested potential buyers, or hire a listing agent and not worry about your commissions eating up your cash. The time has changed.

The real estate sector has become competitive. In some areas, it is a sellers market. In others, the buyer takes the kidneys. However, whatever happens, there are many thousands more people in real estate now than there were then. With investment seminars and flipping programs becoming more common, the real estate group is growing by the day.

But what if you’re in a rush to sell? Does that mean you are motivated? Let’s take a look at what constitutes a motivated salesperson and whether or not some of these salesperson techniques will work for your situation …


  • You are facing foreclosure

Times can be tough. You may have been fired from that job and were unable to replace the earnings on time. The bank sent you a letter notifying you of a Lis Pendens (the beginning of foreclosure, also known as pre-foreclosure) You have no options and you don’t want foreclosure to end up destroying your credit.

  • You’re behind on taxes

As before, this is an immediate situation that can destroy your credit. Taxes will be charged no matter what, so there’s no need to add bad credit to the mix. Back taxes will not only consume your capital, but will also be attached to your future wages.

  • You have bad tenants

He constantly receives complaints about the tenants of one of his properties. The police are becoming a normal sight in front of the property. Perhaps the tenants are converting their planned investment into a drug house. You don’t want to deal with the situation and prefer to take cash out of the investment and walk away.

  • You are getting divorced

Let’s be honest. Not many are fair in divorce proceedings. Who gets the house? None of you? So, you have no choice but to sell quickly so you can avoid your ex like the plague and get some cash to start over.

  • You are retiring

Whether you’re a retiring business owner or a couple with a home you’ve owned for years, you just want some cash for your equity so you can move to warmer climates and bingo.

  • You inherited real estate

You have just inherited a home or multi-unit property, but prefer to have cash instead. You want a quick sale and you don’t want maintenance to bother you.

  • You are a landlord from another state

He thought he could manage investment property in California while relaxing at his home in Maine. Unfortunately, good help is hard to come by and all property managers turn out to be drunk. The grass is tall and you’re getting letters. It’s causing more headaches than it’s worth.

  • You just want some extra money

You do not need the property in question and simply want to refill your bank account.

These are all valid reasons that would make you a motivated salesperson. The only question I have for you in this case is … are you greedy?

A number one killer of real estate sales is a homeowner who takes too much pride in accepting that the market will not support his outrageous property valuations. Fair market value may be high, but no one bites. How are you doing with that quick sale? The first step to selling your home quickly is recognizing that you need to be open-minded. If you can be open-minded about the selling price or terms, selling fast will be a breeze.

Where are my target buyers?

You have quite a few options. Some will take longer than others. Probably the number one way to sell quickly is to find a wholesaler. A wholesaler is a real estate investor who searches for discounted properties, writes an offer, and then assigns the contract to one of his many cash buyers. Often times, the wholesaler will have hundreds or even thousands of investors on their contact list who are ready to buy right away. Your investment partners have been rated by the wholesaler with proof of funds, and will have shown the wholesaler multiple deals they have closed in the past.

There are wholesalers who buy properties in multiple states, while other wholesalers are limited to a single state. Some of them even stick to a specific city or regional area. They are known for the use of phrases like “we buy houses, any area, any condition”. While many wholesalers stick to deeply discounted properties, others work with low-capital deals in which Subject2 and seller financing can be put into play. These are some of the techniques that require you to be an open-minded and truly “motivated” salesperson.

Another option for a quick sale is Craigslist and other classified websites. If you’re going the classifieds route, you need to be prepared for “tire kicker” responses. There can be a lot of newbie investors, and people who are just looking for that will take a long time to filter before finding a true buyer. When including a classified ad for your home, be sure to include as much detail as possible in the ad. Leaving out rooms, bathrooms, parking, and other features will only mean that you will have to spend time discussing these things when you take the multitude of calls you will receive.

If classifieds aren’t your thing, you’ll want to find buyers through a more direct route. Go where they hang out. There are forums like EquityPaper and BiggerPockets that have premium subscription options for real estate listings and other networking tools. These are forums where investors meet to discuss real estate issues on a daily basis. If you list your home in these professional member areas, or markets, you can get pretty quick responses from interested buyers.

Determining the value of the property for an investor

When listing your property, there are a few things potential buyers will want to know in addition to the standard property details. ARV (after repair value) is one of them. To find your ARV, go to Zillow, Trulia, and Redfin. On each of those websites, search for your property and write down the estimated value of each one. Add the 3 values ​​and then divide the sum by 3. The result will be your ARV.

Once you have your ARV, you will want to determine what the new buyer will have to put into the property for repairs. If your home is in excellent condition, you just need to consider simple things like paint, appliances, and other things related to the buyer’s tastes. You would multiply your square footage by $ 10 to get the full credit the buyer will want. If the property needs some updates, like floors, new toilet, etc., it will multiply the SF by $ 15. Windows, doors, etc. Broken will cost $ 20. If the house is a disaster and a complete rehab, then the multiplier is $ 30. Now subtract that number from the ARV.

Whether the buyer is a wholesaler or a flipper, they need to get something out of the deal. This can range from $ 2,000 to $ 50,000 or more, depending on the location, value, and other factors of your property. However, many good wholesalers will stick to or come close to the $ 10,000 price. So, take your new ARV and subtract the buyer’s earnings by an expectation of how much money you will be offered for the property.

Creative financing for a quick sale

Assuming the final number of calculations listed above doesn’t even come close to covering what you owe on the property, then you need to learn to be creative. Some wholesalers and fins will continue to acquire property with little or no equity.

Topic 2 Financing

Topic 2 is a technique that allows new buyers to take over their mortgage payments and take control of the property. Sub2 investors are looking for leverage so as not to pin their credit, but they can get a rental property at the same time.

A seller may have a concern when it comes to a sub2 offer. For example, what if the buyer defaults on the mortgage and it ends up as a bad credit item for the seller? Well, there are protections for sellers during subject 2’s existing financing arrangements.

  • A single late payment can be a deal breaker. It can be done so that, in this case, the buyer is in default and loses the property to the seller. This only possibility is ratio n. 1 for which this is a rare scenario. Most of Subject 2’s investors are experienced. They have been doing it for years and have made millions through rentals with such deals.
  • Limitation clauses, such as the one requiring the buyer to refinance the property in their own name within a set period of time, further reduce risk. Let’s say that in 2 years, the buyer must refinance. By then, you will have built up enough equity by paying off your loan for this to be a possibility through traditional lending methods. Even in the worst case, they can secure hard money after that time to take advantage of additional time to change ownership or obtain other financing.

Deed or lease option

If you’re not in a rush to get a ton of cash, you can sell with a deed or lease option. This will ensure that the buyer is responsible for maintenance, insurance, taxes and everything else, while providing a monthly income stream with little risk. With either technique, you will get a quick sale. The best part is that it keeps the deed to the house until the buyer’s obligations are fulfilled. If they default, you can simply evict them and start over with a new buyer. The best part is that you are earning interest on your principal at the rate you agreed to on the sale.

FSBO (for sale by owner) doesn’t have to be difficult. It can be quite lucrative and surprisingly fast when you learn to be creative and open-minded.

Investor News: Downtown Los Angeles is Changing

Architects, designers, builders, the mayor of Los Angeles, and their fans have long known this fact: Downtown Los Angeles has finally caught on. Shoppers come to the same conclusion: Downtown Los Angeles is the most underrated major city on planet Earth.

Well, actually downtown Los Angeles has done great since 1995, during which time the City of Los Angeles Community Redevelopment Agency committed to leveling homes and clearing the ground for future commercial skyscraper development. This period saw the cleanup and zoning of the entire neighborhood, more Broadway department stores closed, and many of the remaining downtown Los Angeles financial corporations moving into vacant Class A office space on Bunkers Hill.

In mid-2013, the center stood out as “a neighborhood with an increasingly fashionable and affluent residential population.” It began to attract foreign millionaires as well, mainly from China, who rushed to invest in it, sometimes with a down payment. Downtown Los Angeles is the central business district of Los Angeles, as well as a diverse residential neighborhood of about 50,000 people at the time of writing. A 2013 study found that the district is home to more than 500,000 jobs. Wikipedia mentions that the district deteriorated economically and suffered a recession for decades until the early 2000s. Now, construction is fast. Old buildings are being modified for new uses and skyscrapers have been built. Downtown Los Angeles is known for its government buildings, parks, theaters, and other public places.

In 2013, a Downtown Center Business Improvement District (DCBID) study showed that of the 52,400 people residing in downtown Los Angeles, the demographic breakdown was 52.7% Caucasian, 20.1% Asian, 17.0% Latino and 6.2% African American; 52.9% women, 47.1% men; and 74.8% of the residents were between 23 and 44. The median age of the residents was 3. The median household income was $ 98,700. The median household size was 1.8. In terms of educational attainment, 80.1% of the residents had completed at least 4 years of university. The study was a self-selected sample of 8,841 respondents in the downtown Los Angeles area. It was not a “census” but rather a comprehensive survey of downtown Los Angeles consumers.

More recently, downtown Los Angeles has attracted a commercial yuppie New York sector that is too keen on redefining ground for their projects.

The latest news is that a British company plans to remodel a historic building in downtown Los Angeles.

Hoxton and Los Angeles

Hoxton is a British Hotel Operator Who: Breaking News! – Just today (Dec. 29) he bought a historic building in downtown Los Angeles for $ 30 million and plans to transform the decaying structure into a sleek, modern hotel, according to JLL, the brokerage involved in the deal.

Hoxton owns hotels in London and Amsterdam and plans to open another in New York and one in Paris next year. The fact that he chose Los Angeles, the center of the city, says something significant about the growing appeal of the area.

Hoxton describes his brand as the “anti-hotel,” where travelers find not just a bed, but “a place where people can eat, drink, work and play at any time of the day.” Its character is indicated by the description given to it by the British newspaper The Independent, which called Hoxton’s outpost in Amsterdam “an almost painfully fashionable hotel in the most modern city in the Netherlands.”

Downtown Los Angeles seems to be perfect for that.

JLL has described downtown Los Angeles as the area where people seek to eat, live and work. It is a trendy area with a diverse residential neighborhood of about 50,000 people at the time of this writing. According to a JLL map that tracks millennials and baby boomers, downtown Los Angeles outnumbers baby boomers by 10% in a consumer market. In most industry markets in Los Angeles, the breakdown is from 25% of millennials to 21% of baby boomers. Sara Lo, a senior manager specializing in the hospitality business at the accounting and consulting firm Ernst & Young, says Sara Lo, “Downtown is thriving and international companies are taking notice.”


The area’s hotel market has long been dominated by corporate giants catering to business travelers. Tourists flocked to West Hollywood or beach communities like Santa Monica and Marina del Rey. The city area was once derided as a ghost town after five o’clock, but is now home to a lively restaurant and bar scene. Developers draw pages of small boutique “lifestyle” hotels, with uniquely designed rooms and high-end dining and nightlife offerings. And a recent Los Angeles Times commented that the investment is the latest sign that the neighborhood’s rebirth has created a place where tourists, not just business travelers looking for a comfortable environment, want to unwind. Proof: now the money comes from abroad. Investors around the world also value the place.

A Hoxton hotel at 11th Street and Broadway would join several others nearby.

Across the street will be the 148-room Downtown LA Proper Hotel which will be housed in an empty building dating from the 1920s. Two blocks away is the popular Ace Hotel, a boutique that opened last year in the Historic United Artists Building and is credited with bringing more investment to the area.

Even the big chains are getting in.

A Hotel Indigo, a fashion brand operated by InterContinental Hotels Group, is under construction as part of the Metropolis development of a billion-dollar Chinese company near the Staples Center.

The downtown market is strong, with a 77% occupancy rate that exceeds the 75% average for the country’s top 25 markets, Lo said. Some predict an imminent threat of overbuilding, but the designers don’t want to think about it. Ernest Wooden Jr., president of the Los Angeles Convention and Tourism Board, builds momentum. It says: “The projects currently underway are critical to our long-term ability to attract both business and leisure travelers,” it said in a statement.

Areas around 11th and Broadway that saw little investment in the past are now increasing and several residential complexes are under construction, including approximately 650 apartment units from luxury developer Geoffrey Palmer. New York developer Georgetown Co. announced a $ 40 million project in September to remodel the historic Herald Examiner building into creative offices and ground-level restaurants. Several buildings on Broadway are decrepit and have been empty for decades. Others are chipped, covered in graffiti, bent under crumbling roofs and bruised with peeling paint. It doesn’t matter: they are being dismantled at unbreakable speed.

With New York yuppies, British shoppers, locals, and expats gambling their land in the region, downtown Los Angeles has outgrown its faltering footsteps in the early 19th and early 20th centuries. It has become an area to be reckoned with.

And local commercial hard money lenders are there to help investors. See http://www.HMLInvestments.com for more details.

How to Calculate Cut and Fill for a Construction Site

Before you can build an office building, a house, a shopping center, a parking lot, or any other structure, the site must be qualified.

Estimating the amounts of cut and fill required to grade the construction site is one of the most complicated and tedious processes in estimating construction. Calculation of construction materials, areas to be painted, number of doors and windows, etc. is child’s play compared to estimating cut and fill amounts for a construction site. The reason for this is that the unenhanced site almost always has an uneven surface. The amount of dirt to be removed from the unimproved site or introduced can be very difficult to determine because of this.

There are three main ways to calculate cut and fill for a construction site. The first two are “by hand” and require the construction site plan, a ruler, a pencil, a calculator, and hours of time. The third method requires excavation software, a computer, and some computer skills.

The first “by hand” method uses the grid method to calculate cut and fill for the building site. In this method, the site is divided into grids of equal size. Grid squares are typically 1 inch to 2 inches in size on the paper plane. For each corner of each grid, both the existing elevation and the proposed or final elevation are calculated and noted on the plan. Once all elevations are determined, the difference between the existing elevation and the proposed elevation at each corner is also noted on the plan. Then, for each square on the grid, these elevation differences for each of the four corners are added and averaged by dividing the sum by 4. If the average of the elevation differences for a square on the grid is negative, then this is a cutting area. In cut areas, existing elevations must be reduced to proposed elevations or “cut”. If the average elevation difference is positive, that means the existing elevations must be raised to the proposed elevations or “filled in.” Then all the negative numbers are added and added to determine the total depths of cut. Then the positive numbers are added and added as the total fill depths. Then each of these cut and fill totals is multiplied by the area of ​​the squares on the grid to determine the number of cubic feet of cut and cubic feet of fill. And finally, these volumes of cut / fill are divided by 27 to determine the total number of cubic yards of waste and cubic yards of fill at the site (excavators work in cubic yards instead of cubic feet). Finally, the difference between the total cut volume and the total fill volume is calculated. If there is more cutting than filling, then the dirt must be removed from the construction site and trucked. If there is more fill than cut, then soil must be imported to the construction site. The time required to calculate cut and fill using the grid method is approximately eight hours for a single sheet site plan of moderate complexity. Accuracy with this method is +/- 20%.

The second method used to calculate cut and fill is called the cross section method. In this method, the estimator draws a set on equally spaced horizontal lines along the site plane 1 to 2 inches apart. Then, for each cross-section line, the estimator plots, on graph paper, both the existing surface and the proposed surface vs. the distance along the cross section. Then count the number of squares on the grid where the existing surface is above the proposed surface. This is the cut area for that cross section. Then count the number of squares on the grid where the existing surface is below the proposed surface. This is the fill area of ​​the cross section. Repeat these steps until all cross sections of the site plan are completed. Then you average the cut area between each pair of cross sections and multiply it by the distance between the cross sections and divide that number by 27. This is the cut volume between the adjacent cross sections. Then repeat these steps for the infill areas to determine the infill volume between all adjacent cross sections. Then add up all the cut volumes and all fill volumes to determine the total cut and fill for the construction site. If there is more cut than fill, then construction site dirt must be removed. If there is more backfill than cut, the earth must be imported to the construction site. The time required to calculate cut and fill with the cross section method is approximately 20-30% longer than with the grid method. Accuracy with this method is approximately +/- 15%.

The third and final method of calculating cut and fill for a construction site is to use excavation software. In this method, elevation data is plotted from the paper site plan using a large format digitizer, plotted on screen using a PDF of the construction site plan, or imported directly from an AutoCAD file. The computer then analyzes the drawing to construct both the existing and proposed surfaces. Then, for hundreds of thousands of points throughout the site, the software calculates the difference between the existing elevations and the proposed elevations to determine the total volumes of cut or fill for the construction site. The time required to calculate cut and fill using the excavation software is approximately one quarter of the time required for the grid method. Accuracy with this method is approximately +/- 5%.

The advantages of both the grid method and the cross section method for calculating cut and fill is that they both use inexpensive and commonly available supplies. The downside is that they both require long hours of work and have moderate accuracy.

The advantage of using excavation software to calculate cut and fill is a much higher estimation speed and much higher precision. The downsides are cost, which can range from several thousand dollars to several tens of thousands of dollars for software and hardware and requires the estimator to have some computer skills.

The appropriate method for your business to calculate cut and fill for your bids depends on the number of excavation takeoffs you need to do each year. If you are only doing a few excavation takeoffs per year and you or your estimator are not very busy, then “manual” methods are probably adequate. If you are an excavator or general contractor who does a lot of cut and fill estimates, purchasing the necessary excavation hardware and software will greatly increase your ability and accuracy in bidding for jobs that require excavation.

12 tips to avoid foreclosure and save your home

If you are in danger of facing foreclosure because you have defaulted on your monthly mortgage payments, you must act quickly before it is too late to negotiate a loan modification and your home is sold at a foreclosure auction. You may feel desperate now, but there is still hope until the auction date arrives. Here are some tips to help save your home from foreclosure.

  1. During foreclosure proceedings, do not move out of your home in order to claim benefits such as one-time FHA mortgage insurance, etc.
  2. Mark your mortgage due date in red and prioritize your most important financial obligations accordingly.
  3. Make a list of all your monthly payments. Your monthly mortgage payment should be at the top of the list. Credit card bills, personal loans, and other unsecured debt will have to suffer and go through the lists in the meantime as you catch up on your mortgage payments. In addition to damaging your credit score, these debts will have no major consequences compared to losing your home to foreclosure. The effects of foreclosure on your credit score are MUCH more severe anyway.
  4. Don’t ignore or wait for your bank’s foreclosure notice. Inform them ahead of time that you are in financial crisis because of a hardship. This act of good faith could generate some mercy from your lender. Provide the necessary supporting documents for the loan modification for evaluation. In all likelihood, your lender could extend the grace period or consider a forbearance agreement as long as you make the effort to catch up on your mortgage payments.
  5. Seek help from the credit counseling and debt management program. You can repair your own credit by downloading our free credit repair kit. Take advantage of lenders and local housing agencies or extension services that these programs offer, especially if it is free. The best place to look for free foreclosure and financial help is the U.S. Department of Housing and Urban Development (HUD), as there are lists of credit counseling and debt management agencies approved to work with HUD loans and possibly with your lender. In cases involving predatory promissory notes or loans, contact your bank directly.
  6. Consider options for affordable mortgage payments. It could be restructuring or refinancing your home loan. With the new Obama loan modification programs available today, deciding what to choose would be easy based on your financial ability. Be aware that mortgage refinance costs can be expensive due to processing fees, such as closing costs and points.
  7. If you can negotiate a lower monthly mortgage payment, get the resolution in writing. In fact, keep all loan modification documents that legally represent any agreement or arrangement with your lender.
  8. If not, sell unnecessary assets. You can raise money by doing this and pay off your mortgage until you recover from your financial difficulties. It is also a good time to reduce your monthly expenses. But doing both will not be enough in the long run if your financial situation remains the same.
  9. You can sell your home to a third party as an alternative. This could be called a short sale. Sometimes creditors accept this as a total debt settlement. However, the sale value of the home typically cannot cover the outstanding loan balance, so some banks will rob you for poor foreclosure if you have too many assets. Get the help of a housing counselor, real estate agent, or loan modification attorney. You can also buy your property back after the foreclosure auction.
  10. Negotiate a forbearance agreement. As much as you want to keep your home, it is as much as the lenders want to get paid. In the case of forbearance, your lender will temporarily halt the foreclosure proceedings until another payment option can be enforced.
  11. Declare bankruptcy. This could put your credit history in a bad position. Remember that you may or may not be able to keep your home with this option. If you seriously think this is your only way out, call your attorney to discuss what to do.
  12. Turn your home over to your lender. This is called a “deed in lieu of foreclosure.” This option will not affect your credit score, but you will be homeless. As you make things easier for the lender, this act can be recognized simply by eliminating your loan balance, even if the home sells less. Again, get the help of a mortgage attorney.

Be realistic when choosing your options because once an agreement is reached you must comply, otherwise you will surely face another foreclosure.

Most mortgages are guaranteed or financed by government programs such as HUD, FHA, or VA. If your mortgage belongs to one of these agencies, ask what options they offer to save your home. But first you must approach your lender to negotiate personally openly and honestly. By doing so, you will save paying for credit counseling agencies or attorneys.

Hard Money Lenders in Los Angeles and the Real Estate Market

Los Angeles remains a very attractive market for those who can afford it. Tea California Association of Realtors reports that Los Angeles home prices have risen 6.1 percent this year to date and are projected to show a 6.5 percent increase for all of 2015. Meanwhile, in Los Angeles County , prices have soared 5.4 percent so far this year. These figures include detached and semi-detached single-family homes and duplexes. Century City Real Estate Report says that some upscale Los Angeles neighborhoods are past the 2007 peak. This creates a wonderful market for hard money lenders as many investors are preparing to buy but are tied by ratings. bad credit and credit histories. Denied borrowers turn to hard-money lenders in their area who deliver funds to them based on their collateral.

Here is the Los Angeles real estate data for 2015-2016

The California Association of Realtors projects sales figures of 407,500 single-family homes by the end of 2015. This will be a 6.3 percent increase over the homes sold in 2014. The projections for 2016 are also for a 6.3 percent increase at the end of 2015. 433,000 units planned next year.

In Los Angeles, some data sources, such as the California Association of Realtors, show median sales prices for single-family homes and condos soared 8.1 percent to $ 950,000 for the third quarter of 2015; a record for the Los Angeles metropolitan area. The regions include Westside, Downtown, and coastal cities like Malibu, but skip low-priced areas like South LA.

One way to understand real estate price cycles is to look at building permit numbers. If developers are investing in new properties, as has happened in the general Los Angeles area, it is a good sign that demand and prices are increasing or holding steady. Statistics show a growth of 2.4 percent in construction projects.

Observers worry that Los Angeles may be approaching another housing bubble, but William Yu, an economist at UCLA Anderson School of Business, strongly denied this prediction in a recent UCLA Anderson forecast. Prices have skyrocketed (he said) in a Los Angeles market that is already expensive only due to excessive demand and limited supply. It is not a real estate bubble, but a tremendously expensive and inaccessible situation in which those who have money invest or would like to invest. In fact, the market primarily targets the very wealthy. Typical reports show that builders and investors are looking to the high-end luxury market where the potential returns far outweigh the returns an investor can make from a mid-priced home. This type of high-end residential development needs investors with the right types of funds. Some people go to banks for their loans. Another approach alternates traditional credit institutions.

And those who don’t have money? Or with bad credit that you can’t get a loan?

This is where hard money lenders come in.

Los Angeles Hard Money Lenders

The Los Angeles money loan directory lists 56 hard money lenders and the list is growing all the time. Experts in the field know that there are many more that are listed elsewhere or are not listed. These (and other) brokers lend their personal funds to residential and commercial borrowers. Hard money lenders ignore the credit history and FICO scores of these borrowers, focusing instead on the value of their collateral. If the borrower defaults, the lender sells his property as a refund.

Many investors are quick to turn to hard money lenders for their quick turnaround (usually less than a week) and for the simple and easy procedure (just a few documents and a handshake). They loathe high interest rates (twice that of banks) and low-value loans (sometimes as low as 60% -50%). Many borrowers tend to borrow hard money for the immediate short-term future and then repay with bank loans or cover the remainder with alternative financing. Hard money loans are expensive, so most borrowers try to use them for the shortest possible time.

The Los Angeles hard money brokerage is diverse and broad. You’ll find lenders dabbling in all kinds of deals and making loans to a variety of investors. Lenders also offer variable amounts and for variable periods of time. Since lenders work independently, after all, it is their own funds that we are talking about, they set their own terms and hours. If you go that route, make sure your lender is certified by the Los Angeles Real Estate Regulatory Board and the National Mortgage Licensing System (NMLS). Also look at their credentials and loan history. And best of all, have an attorney review all agreements before signing them.

The conclusion is this …

Los Angeles’ rising prices and tight inventory have driven more investors into the high-end market. Investors have been left unchanged, but there is a larger market for the higher paying population or wealthy foreigners. This type of inventory drives prices higher and is expected to increase them further in the coming years, as there are few new construction in the works to meet demand.

For those in Los Angeles who want to make the most of this upscale market but lack the funds to do so, hiring a hard money loan broker may be a viable solution. This type of broker ignores credit history and focuses on the asset. Luxury assets appear to have great potential. If the borrower can show the broker his ability to pay and convince him of the value of his property, the borrower can find an alternative means of securing a place in the Los Angeles luxury market.

The California Association of Realtors predicts that home prices will likely “grow steadily” into late 2015 and into 2016. Many investors in Los Angeles are reaching out to brokers to finance their immediate needs. What do you think of these solutions? Feasible?

Risks of the BRRRR strategy

It is fashionable, and for good reason. I remember doing my first BRRRR strategy in 2004. I bought a house in Arvada, Colorado with hard money to fix and refurbish. You wouldn’t believe it; the flip was a failure and i ended up with a problem. I was over budget and was forced to cut back on my rehab. Like way back. I no longer had confidence in the sale price and decided that I would keep that as a rental. It was a nice big house in a desirable area, and I had a rent-to-own tenant in no time. Now to the problem. That damn hard money loan. Fortunately, this was when I was still able to report my income, and since I had good credit, I was approved. I kept that house for over 10 years!

Little did I know at the time, but I just fell for the BRRRR strategy. I bought a property, rehabbed it, rented it, refinanced it, and then repeated the process. I bought that house with no down payment and received a monetary option and positive cash flow. The term BRRRR had yet to be coined, but he knew he was onto something.

The entire Pine Financial team talks about this strategy for a few reasons. First, we can help with the loan to make it, but it also works very well. This is one of the best strategies when it comes to buying a property with little or no down payment. Do you want more information about this strategy? I wrote a FREE report here. (See below)

Although this is one of my favorite buying strategies, it is not risk free. Here are three risks when using the BRRRR strategy:

  • Different view on value: Outside of all the typical risks of owning a rental, BRRRR’s risks come down to your ability to refinance private money or hard money loan. The easiest way to stumble upon that is if your refinance appraisal is low. In my world, we get an appraisal up front with the appraiser’s opinion of what the property is worth after repairs. Also known as ARV or after repaired value. The key word here is opinion. It is quite possible that another appraiser has a different opinion. This is even more likely if you only do minor repairs. It can be very difficult for an appraiser to understand a large increase in value in a short period of time. Major repairs help with this. Even though you are only rehabbing for rent, you still want to show that you did improve the property to justify the value.

The good news about appraisal when you refinance is that you should let the appraiser in the home. This means that you can meet him or her at the property. I highly recommend that you do so and that you bring your hard money loan appraisal, lists of repairs performed, and any up-to-date compensation to support its value. With these documents, we have seen fantastic results, but you must understand that this is always a risk. If the appraisal is low, you may have to cover the difference out of pocket or, in the worst case, sell.

  • Initial loan was incorrectly made – I have not seen this, but our preferred underwriting lenders have told me this is common. If you are dealing with someone who does not understand this strategy, it could ruin the initial loan and make it difficult to refinance. Some common mistakes are:
    • What’s It Titled: The best loan right now to refinance is a Fannie Mae loan. They have fantastic 30 year fixed rates and no season titles. Title seasoning just means how long you need to be on the title or own the home before you can refinance it. Many banks or lenders have title seasoning guidelines. Fannie Mae doesn’t. What they do have, however, is a guideline for not lending to an entity. This means that they want you to be the owner of the house personally. It might be possible to waive claiming your entity’s home deed in your personal name, but the loan process is much easier if you purchase in your personal name. Once your loan is in place, it might be a good idea to stop claiming the property in your entity at that time.
    • Sweepstakes – I’ve heard of some lenders not holding construction money. When a lender does this, they will get the full loan amount at closing. If the lender loaned money for repairs but did not include it correctly at closing, it will appear that you received a cash refund and the refinancing lender will not make the loan. These are rate and term refinance loans, which means they will only refinance the debt that was used to purchase the property. If they cancel a loan that was used to put cash in your pocket, it is considered a cash refinance and you will not qualify.
    • Link: It sounds simple, but the link that the lender places in the title is very important. The biggest problem is that, in fact, they place a lien. This should appear in the title search and be disclosed in the closing disclosure, making it clear that your refinance loan is being used to pay off purchase money debt. The lien must also match the amount on the settlement statement, and it is best not to modify that loan or increase it in any way after purchasing the home. Either of these could create a problem separating a rate and term refinance from a cash-out refinance.
  • Tight DTI: In 2004 I had a problem with DTI. Debt to income. I was making money, but a lot of that money was not showing up on my taxes. These could be non-refundable deposits that would be reported at a later date, money from the Army to pay for some of my expenses while I was in college, or amortizing or depreciating assets. I also had some roommates who helped me with my bills. If you look at my tax returns and mortgage payments, I would not qualify for the loan. I only qualified because declared income loans were allowed. Since we no longer have established loans, we must be very careful here.

For Pine Financial, we require our client to be pre-approved for refinancing before lending them money IF they plan to refinance. That’s not a requirement for flippers, but we want to help our clients succeed, that’s why we pay attention to this little detail. Once approved, it would be a good idea to do a stress test. What if the rent is $ 100 less per month than you project? What about $ 200?

I hope I did not scare you. The point is not that, it is to stay safe. If you haven’t experienced the BRRRR strategy, it’s hard to understand the power behind it. If I had to give advice, it would be to explore this, but also to understand the risks involved. As a strong money lender, we’ve been involved in several hundred of these specific transactions and we’re happy to help guide you if you need a little help.


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