Resources for New Real Estate Investors

Resources for New Real Estate Investors | Kings of Capital

Starting out in real estate is exciting and confusing in equal measure. Every site says something different. This guide pulls together the resources a new investor can use right away, using pages the lender already publishes. Program terms mentioned here are offered only to qualified borrowers and subject to change.

Start with your strategy

Then list what you have. Count your cash, your credit and your time. Time is easy to forget. A flip needs weekly attention. A rental needs steady management. A small apartment building needs both. Be honest about how many hours you can give.

Before you read a loan page, decide what you want to do. Some beginners flip houses. Others buy rentals and hold them. A few go straight to small apartment buildings. Your strategy picks your loan, so settle it first.

Write one sentence about your plan. For example: buy a dated house, renovate it in four months and sell it. That sentence tells you which program to read first.

Learn the loan programs

Do not try to learn every program on day one. Read the page for your chosen strategy, then skim the others. You will notice how loan length, payment type and rehab funding change from one to the next. That comparison is worth the time.

Each program serves one use. Fix and flip loans cover purchase and rehab. Rental loans fund long-term holds. Bridge loans cover timing gaps. You can read the fix and flip loans overview for new investors seeking resources if you plan to renovate.

The lender states that it serves beginners with thin credit files as well as experienced operators. It also serves borrowers with past foreclosures, short sales or credit issues. Credit is a factor, not a deciding one. Approval is never promised.

If you plan to rent

Read the rental loan resources for building a long-term portfolio page. It lists up to 80% LTV and no W-2 requirement, offered only to qualified borrowers.

Use the calculators

Add a cushion to every cost line. Repairs blanket loans for rental properties run over, sales take longer than expected and insurance bills rise. A deal that works with a 10% cushion is a deal worth chasing. A deal that needs perfect luck is a pass.

Numbers keep beginners out of trouble. The lender hosts a page of calculator tools that help beginners test a deal. It is described only in general terms here, so visit it to see the current options.

Run each deal three ways: a good case, an expected case and a bad case. Look at the bad case first. If you can survive it, you can proceed.

Read the occupancy rules

Why read this early? Because it can end a plan before it begins. A beginner who falls for a fourplex hoping to live in one unit will learn the rule only after wasting weeks. Learn it first and you can aim at the right property type. For an independent explanation, see house flipping.

Many first-time buyers hope to live in their investment. Check the occupancy rules resources before you plan to live on site early. One to four units are investment-only. At five or more units, most states allow owner occupancy up to 50% of livable space. New Jersey needs six or more.

Build a small team

Hire for fit, not for price. A cheap contractor who disappears mid-job costs far more than a fair one who finishes. The same goes for agents and insurance providers.

No investor works alone. A good team usually has these people.

• A real estate agent who knows investor deals
• A contractor with references and a written bid
• A title company and an insurance agent
• A CPA or attorney for tax and legal questions
• A lender who answers the phone

Ask for references and check them. The lender does not give tax or legal advice, and neither does this article. Consult your CPA or attorney.

Understand the process

Know what to have ready. For a purchase, that means the address, the contract price, your rehab plan and your exit. For a refinance, it means the property details, current balance and the value you expect. Documents come later, once you move past the survey.

The process has four steps, the lender states. First, a 60-second survey about your property, purpose and timeline. It asks for no documents, fees or hard credit pull. Second, a lending expert answers within one business day. Third, underwriting reviews cash, equity and experience. Fourth, you close.

The site lists bridge closings at 10 to 21 days and rental closings at 22 to 35 days. Those clocks start after the appraisal payment and borrower conditions are met.

Avoid common beginner mistakes

Another mistake is chasing volume. One well-run deal beats three sloppy ones. Slow down, check each number twice and ask questions until the answers make sense.

The biggest mistake is underestimating rehab cost. The next is skipping reserves. The third is picking the wrong loan for the plan, such as using a short loan for a long hold. Another is ignoring the exit. Know how you will repay the loan before you borrow.

Read the hard money loans resources and short-term loan basics page to see how short-term debt is structured. Learn the vocabulary in a glossary and keep it open while you read term sheets.

Get answers from a person

Come prepared. Know the address or area, your budget, your timeline and your plan for the exit. A short, clear summary gets you a faster and more useful reply.

Reading helps, but a conversation helps more. Start at Kings of Capital resources and tools for new investors and complete the survey. Or book a call to discuss resources and your first deal with a lending expert.

You may also contact the lender with FAQ questions as a new investor by phone at (267) 630-2875 or by email at [email protected]. Ask early and ask often. A good lender is happy to explain.

Your first deal teaches you the most. Start small, model it carefully and keep your reserves intact.