There are a lot of smart, successful people all around us. However, not all of them can be self-employed and run their own business. This is a unique skill. In my mind, what differentiates entrepreneurs from other folks is their ability to wear different hats effectively. Remember the saying: Jack of all trades, master of none. I hate this saying. You don’t have to be a foremost expert in a particular “trade” to succeed. Your value might lie precisely in the fact that that you know several trades well enough to explore connections between them and leverage them together for your goals.
Recently we’ve been receiving a lot of inquiries about financing rehabs in Baltimore City. A significant portion of those calls is from borrowers looking to purchase homes with an acquisition price of $60k or below. While we are always happy to discuss any scenario, our 13-year experience taught us one sure thing: not everything is gold that glitters. To apply this saying to the world of real estate investing—not everything that’s cheap is a bargain.
Your first flip is a cornerstone of your investment career. It may launch a profitable side business that will steadily increase your net worth. Alternatively, it may sour you on real estate for years to come. Being a first-time real estate investor doesn’t necessarily put you at a disadvantage. However, since you are facing a slew of unknowns, this is not the time to be overly confident. Swaggering attitude is a sure sign of a first-time investor immaturity and a red flag for private money lenders like us.
Hard money loans offer unparalleled leverage, speed, and flexibility—something that conventional lenders cannot even come close to. To compensate for the risk, private lenders charge more for their money, making their loans more expensive than those offered by traditional lenders. If you are one of the traditional lenders, the only advantage of your product is the price you charge.
After analyzing a variety of Google search engine results pages, we found that one of the most popular search phrases involving hard money is “hard money vs. soft money.” I live and breathe hard money, but—I am the first to admit—it creates certain myopia when it comes to an understanding what people outside of our industry know about it. Ours is a highly specialized product, but many people, even those who are financially sophisticated, have little understanding of it. A couple of days ago I ran into my former boss, with whom I worked 20 years ago. He is a great, successful man who ran a multi-million insurance and financial services company for MetLife and retired as a multi-millionaire. We started catching up and discovered he has no idea what hard money is—and he is a former financial guru!
To be honest, until last year we hadn’t worked with many real estate investors who were purchasing a property with a specific purpose of offering it for rent via Airbnb. The majority of the deals we see are still your good ole’ rehabs: a buyer snatches a dilapidated property at the right price, invests blood, sweat, and tears into its renovation, and then sells it at a nifty profit. However, to make money in the tightening market, you have to think outside the box. The Airbnb route is not for every investor and not for every property, but it’s definitely a great example of creative thinking.