The loan-to-cost ratio (LTC) measures the percentage of a property’s acquisition, rehab, and construction costs that’s financed by a loan. It is typically used for commercial mortgages, fix-and-flip loans, and construction loans. The LTC helps investors set budgets for their down payment and expected monthly payments and calculate potential profits. Loan-to-Cost Ratio (LTC) Formula Calculating…
Real Estate Investing
What is After Repair Value: How to Calculate + ARV Formula
The after repair value (ARV) estimates the future value of a distressed property after it’s been repaired. ARV is not a property’s current value when purchased but rather the estimated value of the property once improvements are made. ARV is commonly used by fix and flip investors who purchase, renovate, and sell properties within 1…
8 Steps to Buying a HUD Home: An Investor’s Guide
HUD homes are 1- to 4-unit residential properties that have been foreclosed on by an FHA insured lender. As an investor, buying HUD homes is more involved than buying other foreclosed properties. Those purchasing a HUD property will find important differences in everything from finding HUD leads to financing the purchase of a HUD home….
Gross Rent Multiplier (GRM): How to Calculate & Formula
Gross rent multiplier (GRM) is a figure used to evaluate multi-unit and commercial income producing real estate investments. It uses the price of the building, divided by the gross rents to arrive at a ratio that may be compared and contrasted with similar investments in a similar market. How Gross Rent Multiplier Is Used The…
Pre Foreclosure Leads: 5 Ways to Find Pre Foreclosure Listings
Pre foreclosure leads are properties in the beginning stages of the foreclosure process. The borrower has defaulted on their mortgage payments, but still has the opportunity to keep the property, sell it, or conduct a short sale. Investors find pre foreclosure listings through online directories, real estate agents, public records, local newspapers, attorneys, and real…
Buying vs. Leasing Commercial Real Estate
A common question among small business owners is whether to buy or lease commercial property. The most important thing they want to know about are the costs. To help, we ran an analysis on a real commercial property for sale and created a detailed example of the costs and benefits of buying vs. leasing commercial…
Probate Leads: Where to Find Them to Buy Probate Property
What are Probate Leads? Probate leads are potential seller clients who inherit properties they often want to sell quickly after going through the probate process (the legal process of transferring the assets of a deceased person to heirs). Since many heirs live out of state, or are otherwise not prepared to maintain the property, they…
Cash for Keys: How to get Bad Tenants Out in Days, Not Months
If you’ve been researching real estate investing or own a rental property, you’ve likely heard horror stories about evicting tenants. 9 months to evict! Legal bills that could buy you a pre-owned Mercedes! While they stories may be true, you can avoid most of the drama and potentially save a ton of money by offering…
Yellow Letters: The Best Lead Gen Strategy for Investors?
Yellow letters are handwritten prospecting letters that real estate investors or real estate agents send to homeowners in order to generate seller leads. They’re called “yellow” letters because they were historically handwritten on yellow legal pads. We interviewed successful real estate investors for their yellow letter strategies and best practices in 2017. Why Yellow Letters…
Commercial Leasehold Improvements: Payments, Financing, and More
Landlords often offer payment or a discount on rent so that tenants can make necessary commercial leasehold improvements. Rented commercial property may need some work before it’s suitable for your small business. For example, an office business may need cubicles for employees, and a restaurant may need a new kitchen. These are called commercial leasehold…