Investing in real estate is widely considered to be one of the most effective ways to attain a level of financial security and develop multiple streams of income. However, the benefits of real estate investing are not inherent with every piece of real estate and there is risk associated with investing money into certain real estate projects. It is also important to know that investing in real estate, especially flipping homes, is extremely competitive. As a result, the best way to improve your chances of succeeding in real estate is to do your homework andutilize effective techniques and strategies.
Tip No. 1 – Ensure Necessary Funds
After you’ve done a thorough financial analysis of the overall cost, the next step is to secure funding for your real estate venture. There are an array of different funding options that may be available to you, ranging from a traditional mortgage to hard money loans in Los Angeles.If you are contemplating whether to apply for a mortgage or apply for a hard money loan, here are four reasons why it may make more sense to apply for a hard money loan:
- Less paperwork and quicker response from a reputable hard money lender in Los Angeles
- May be eligible to borrow a higher amount
- Opportunity to develop a long-term relationship with a hard money lender
- Assistance in growing your real estate business by potential opportunities to open a business line of credit, along with more favorable hard money loan terms after multiple projects have been completed.
Tip No. 2 – Be Cognizant of Taxes
A common oversight many people make is purchasing homes and/or flipping multiple propertieswithout having a thorough understanding of the tax ramifications. For example,if you flip more than one or two properties in a given tax year, there is a risk that the Internal Revenue Service will classify you as a self-employed “dealer” as opposed to an “investor.” This can have a major impact on your tax exposure, including having to pay double FICA taxes.
Tip No. 3 – Diversify Your Real Estate Portfolio
Whenever possible, do not put all of your proverbial eggs in a single basket.Diversification will help mitigate some of the risks associated with real estate investing, including the risk of a project falling through or flip getting delayed due to permitting issues or other problems.
Tip No. 4 – Take Action
If you are waiting to invest in real estate when the circumstances are perfect, you will be waiting for the rest of your life.You need to be proactive and embrace the old adage made famous by former President Teddy Roosevelt:
“The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause.”
If You Are Ready to Take Action, Contact a Reputable Hard Money Lender in Los Angeles Today
PB Financial Group is a premier direct hard money, private money and bridge lender, who has been providing quick funding since 2006 and have funded over 2300 hard money/private money loans. Our objective is to work to satisfy your financing needs on important real estate projects throughout California in an efficient and effective manner. To schedule a consultation or for further information please contact PB Financial Group at 877.700.3707 or visit www.CalHardMoney.com to learn more.
PB Financial NMLS #357614/DRE #01522495