Tips on Buying Real Estate with your IRA in Pittsburgh – CZ Capital Group

While most people understand that real estate is an investment, many people are taking advantage of the qualified retirement accounts to purchase real estate as an appreciating or revenue-generating instrument like IRAs.

It’s really important to understand the tax implications, legal ramifications, and various other intricacies of purchasing Pittsburgh real estate within your IRA.

So, let’s dive into some tips on buying real estate with your IRA in Pittsburgh PA!

Tips on Buying Real Estate With Your IRA in Pittsburgh

If you don’t have a self-directed type IRA… first off… you’ll need to connect with your trusted financial advisor to find a reputable and low fee self-directed IRA. Or, connect with us and we can direct you to some very good self-directed IRA companies we’ve worked within the past.

Open a Self-Directed IRA

The first step for purchasing investment properties in Pittsburgh within your IRA is to open a “self-directed” IRA. You can do this by visiting a qualified financial advisor or other trusted fiduciary to act as the IRA custodian. A fee-only financial advisor can help you set up this account with minimal hassle, while a commission-based financial advisor may attempt to steer you clear of purchasing tangible assets within your IRA (he or she won’t earn much on the investment).

Types of Properties You Can Buy With Your IRA and Rules

You can own a wide variety of properties within your IRA, including residential, commercial, and industrial structures, as well as unused land. Many savvy investors choose to purchase parking lots, storage unit facilities, and other types of property that require little maintenance but generate steady income.

Your IRA cannot own any home where you live or vacation. Legally, you aren’t even allowed to spend one night on the property. You cannot avoid this restriction by “renting” the property from your IRA, or renting to your spouse, children, grandchildren, parents, or grandparents, nor can you use an IRA to purchase a property from a close family. You could, however, rent property to a sibling, cousin, or friend. A solution that many investors implement is to purchase a home for their IRA, rent it out for income until retirement, then assume residence upon retirement.

How Does Income Work With Real Estate In An IRA?

The income generated in your IRA may not be used for your “personal current benefit.” This means that all income generated by the property must remain within the IRA until you retire. Selling the property will require you to leave all profits within your IRA. Also, property taxes, insurance, improvements, and other costs associated with the property must be paid by the IRA. Failure to comply with these regulations could disqualify your IRA, subjecting you to income taxes on the entire value of the property, plus a 10% early distribution penalty.

It’s important the all distribution rules associated with an IRA (or Roth IRA) including taxation, required minimum distributions, beneficiaries, and other factors do not change when using a self-directed IRA to purchase a property. There can be a huge upside to real estate in your IRA, but it’s best to know exactly what’s in store.


Investment Property Tax Deductions List for Pittsburgh

Uncle Sam gives, and Uncle Sam takes away.

But in the case of buying local Pittsburgh investment properties… you can earn investment property tax deductions for your Pittsburgh properties.

For real estate investors, the United States provides the opportunity to earn a living purchasing investment properties… and holding those properties as investments, and of course, the income from those properties is taxed.

But many new investors often overlook tax deductions that could have an impact on their bottom line. Today, we’re going to take a look that Pittsburgh PA real estate investors can take advantage of.

Income Sources You Can Potentially Deduct

  • Repairs and expenses paid by rental tenants are considered income. This could include an emergency water heater repair that tenant took care of on his own. These repairs can be deducted.
  • In some cases, tenants will trade repairs and upgrades to a rental unit for a reduction of rent. These services can be deducted, so long as they’re claimed as income, and must be charged at fair market value. You cannot work out a deal with your tenant to fix a light switch for three months' rent, then deduct that ludicrous “income” on your tax return.

Security Deposits

A security deposit is not taxable, based on the thought that your intent is to return this deposit at the end of a lease term. However, if a tenant breaks the lease and forfeits his or her deposit, you can claim the security deposit as income, so long as the deposit is used to make repairs.

These repairs are deductible expenses.

Make sure with your accountant or local property manager that they’re handing your security deposit accounting correctly so you’re not paying income tax on security deposits that you’ll be turning right around and paying back when a tenant leaves.

Other Common Investment Property Tax Deductions

  • The portion of your mortgage that is directed towards interest is 100% tax-deductible. Your mortgage lender will provide you a form in January stating this total.
  • Travel to and from the property to make improvements, show the property, or collect rent are considered work expenses, and deductible.
  • Certain deductible expenses that investment property owners take advantage of include taxes, insurance, tax return preparation costs, lawn & garden care, losses resulting from theft or “acts of god” (floods, earthquakes, and other disasters), legal and professional services.
  • Depreciation on the value of the property is deductible. This can be complicated to calculate, and it’s recommended to speak with a local Pittsburgh accountant.
  • Your home office, if used to run your real estate investment business, can help generate tax deductions as well as long as the home office meets the minimum requirements (consult your tax advisor)

By taking advantage of all applicable tax deductions, investment property owners can increase their revenue and reduce their tax liability, opening the possibility to purchase additional properties. There may be other ways to decrease your tax liability. Talk to your financial advisor or certified public accountant, as they typically keep abreast of new tax deductions that Pittsburgh investment property owners can claim.


Self Directed IRA For Real Estate – What Are the Rules in Pittsburgh?

A self-directed IRA can be a great investment vehicle… even for real estate! Before you buy your next Pittsburgh investment property… read this article first!

We get asked questions all of the time from savvy investors who we work with here at CZ Capital Group.

Most of the questions surround buying investment properties in Pittsburgh PA… which we, of course, know a lot about.

But one part of buying an investment property / rental property is how are you going to pay for it?

And, can I use my IRA to buy local investment properties?

Self Directed IRAs for Real Estate – Can You Use Them To Buy Pittsburgh Rental Properties?

First off, IRA refers to an individual retirement account.

IRAs traditionally hold investments like stocks, mutual funds, etc…. mainly because that’s the mainstream way most people save for retirement.

But, since you’re reading this article you know that real estate can be a GREAT option for increasing your wealth.

But… how can you use your IRA to grow your retirement fund, earn the tax benefits of the IRA, and the benefits of Pittsburgh real estate too?

Though the self-directed ira real estate is increasingly being taken up by investors, you should do certain things to ensure that the law is being followed to the letter when you use your IRA for local PA real estate investments.

Some Simple SDIRA (Self Directed IRA) for Real Estate Rules To Follow

No “Self Dealing”

If you’re using your self-directed ira for real estate in Pittsburgh you are forbidden from self-dealing.

Self-dealing is outlawed with your SD IRA in the sense that it can’t purchase land or property (both commercial and residential) for the owner or any family member to reside in.

It is also prohibited from selling property or land to the owner of the IRA or family members in the process of business dealings in Pittsburgh.

The Process of Buying Pittsburgh with Your Self Directed IRA

There are very specific rules that you have to follow if you’re using your SD IRA to pick up Pittsburgh PA properties.

After you provide the correct documentation for purchasing the local Pittsburgh investment property to the self-directed ira custodian, the custodian will start the purchasing process on behalf of the self-directed ira real estate.

All the costs related to the purchase of the property are channeled through the self-directed ira for real estate; hence it’s vital that it must have enough cash to pay for these costs.

Failure of this will lead to the forfeiture of tax benefits and the penalties to be paid by the IRA.

Choose The Type Of Self Directed IRA Wisely To Use It For Your Real Estate Investments

There are lots of options when it comes to self-directed IRAs.

Not all SD IRA’s allow you to buy real estate in them… so you’ll have to do your research to find the best SD IRA custodians so you can start buying Pittsburgh properties in it.

NOTE: We’ve worked with many SD IRA companies and we’ve found the best providers who are very experienced in working with real estate within an IRA. Call us today at (412) 529-1783 or email us through our Contact page and we can give you information on the best SD IRA companies for Pittsburgh PA real estate investments.

Checkbook Control

Some Self Directed IRAs have more restrictions than others.

As an example… some of them require that you submit the investment details to them… they analyze it… then they send the cash from the account.

But there are accounts that give you what's called “checkbook control”.

An investor in self-directed ira for real estate with control of the checkbook is able to make purchases by just writing checks rather than having to go through the lengthy process of having to pass it through the custodian first. This lets you take advantage of deals that you have to act quickly on (which many of our local Pittsburgh investment properties go fast).

Your Role In The Investment After The SD IRA Purchases It

You as the owner of the self-directed IRA account has the ability to really manage the investment in a hands-on manner. The roles include: receiving checks for rent payments from tenants, managing the properties, etc… everything you’d normally do as the owner of an investment property.

Of course, there are more guidelines that you have to follow if you plan on using your self directed IRA for real estate in Pittsburgh… so make sure you do your homework and do these two things immediately:

  1. Find a great self-directed IRA company/custodian: This is the first step. You have to get this in place before you even think about purchasing anything through your IRA. If your current IRA holder won’t allow you to buy and hold real estate in it… call us at (412) 529-1783 and we’ll refer you to the best local custodians… and they’ll be able to help you transfer your current IRA to your new self directed IRA.
  2. Find a couple of great Pittsburgh investment property experts, like us at CZ Capital Group.  One of the best ways to get great properties here in Pittsburgh PA is by working with a professional investment property company like ours. We find high discount properties (both single-family and multi-family) all around Pittsburgh and sell them to investors like you at discounts so you can turn them into solid profitable rental properties.  Join our Preferred Buyers List Here >>

We Can Help You Get Rolling With Your SD IRA For Real Estate.

Just reach out to us at the phone number below or send us an email… and we’ll walk you through the process, point you to the best SD IRA resources locally in Pittsburgh, and get you on our Preferred Investment Property buyers list.


Questions To Ask When Buying A House Sight Unseen In Pittsburgh

 

Are you thinking about buying a house without seeing it first? In our latest post, we offer some questions to ask when buying a house sight unseen in Pittsburgh.

Buying a house without seeing it first may sound completely crazy. However, there are definitely some great benefits so long as you are asking the right questions. For starters, you will be able to quickly lock down a house, while others are still making appointments for showings. Knowing how to buy a house without seeing it first, will allow you to invest anywhere in the country… or even the world! Asking the right questions will minimize your risk and give you the confidence to buy the house sight unseen! Below are a few tips and questions to ask when buying a house sight unseen in the Pittsburgh area!

Choosing The Right Inspector

When you aren’t seeing the house personally, your decision to buy or not will likely be heavily influenced by what the inspection report tells you. It’s important to have an accurate and professional inspection done by an inspector you trust. Ask for references, experience, and training. Make sure you know what they are able to inspect and what things may require a specialist. You don’t want to find out down the road that a critical element of the property was never looked at.

Have Contingencies

When making an offer to buy a house sight unseen, it’s important to include an inspection clause in your offer. This will give you the ability to back out of the sale should the inspector’s report come back with many problems that will need to be addressed. You don’t want to find yourself committed to the purchase of a property that will ultimately cost you thousands more to fix up than you had originally expected.

Hire A Scout

Find someone in the area that you can trust. Someone you can hire to view the home and report back their findings. They’ll be able to tell you more about the home and the neighborhood than just relying on Google Maps and what the inspector has to say. Have your scout record videos and take photos of the house, the property, the street it’s on, and the local neighborhood. Make sure it is someone whose opinion you can trust but who won’t go out and try to buy the property out from underneath you.

Ask About Schools

Whether or not you have children going to school is the community, an area can often be judged by the quality of the school district it’s in. Look for highly-rated, award-winning districts. These areas will have more interested tenants and buyers and will help to ensure your investment property is located in a good neighborhood. Great Schools is an excellent resource to check out the school rankings in the areas you wish to buy. You can get a quick and accurate snapshot of the quality of the schools in your area.

Ask About The Local Economy

Learn about the local job market and plans for growth in the area. It’s important to have a strong market if you want your tenants to be able to find gainful employment, allowing them to pay you rent each month! A community with a strong job market will attract more tenants and buyers, ultimately making it easier to rent out or sell the property when its time.

Ask For A Floorplan And Additional Photos

When choosing to buy a house sight unseen in Pittsburgh, you’ll want to be sure you have a floorplan of the property that is to scale. You’ll want to be able to get the most accurate sense of the layout as possible in order to get a real idea of what the house is like. In addition, request additional photos of the property, not just pictures used in the listing. Listing photos can often be doctored making spaces appear larger than they actually are. In order to get a true sense of what you are buying, you’ll want some candid photos, covering multiple angles of a room.

Don’t Forget The Yard

Even if the house checks out ok, you’ll still want to know what you are working with in terms of the yard. Are there stumps to be removed? Foundations from old structures that need to be dealt with? Large tree roots that may lead to structural trouble with your house over time? There are a number of things within the yard that can affect the value of the home. When requesting photos and videos, don’t forget to see what’s outside. Knowing about the ground in which your property sits will allow you to get a better sense of the potential of the home.


Foreclosure property listings in Pittsburgh – what’s real and what’s not?

There’s a ton of information on finding foreclosures in Pittsburgh and lots of services that will charge you for access to their data. In fact, we have our own foreclosure property listings in Pittsburgh PA right here. Join our Foreclosure Property Alert List here >>

But…

How do you tell the difference between credible information and useless marketing gimmicks with local foreclosure properties?

Foreclosure property listings in Pittsburgh

Some services – like foreclosure.com – are doing a great job consolidating information from many sources. Investors like us use them all the time because it’s cheaper and faster to use their information rather than combing through the classifieds ourselves. But the major drawback with online services like that is the information in them can be a tad old.

You may be looking at foreclosures that other investors who got their info directly from the courthouse got weeks or months ago.

We also use other sources too.

Lots of real estate agents who “specialize in foreclosures” publish their own lists, but these are often just marketing gimmicks to trade your contact info for stale goods.

There’s no harm in signing up for free lists – if the info is no good, just unsubscribe.

You’ll probably spend a lot of time getting excited about properties that are already sold or no longer available, but that’s part of the learning curve when you’re just starting out in the foreclosure market.

When you’re evaluating a new list to see if it’s worthwhile, compare the properties on the list to what’s published in other lists.

If you consistently don’t see any new or exclusive information on the list that you can’t get elsewhere, don’t use it.

We’re not real estate brokers, so we don’t sell information or give away crummy lists.

The properties we advertise are our own investments that we’ve picked up or have on contract, so it’s a short but exclusive list.

We’ve built a small, tight network of long-term investors who want to purchase credible investment properties in Pittsburgh PA.

We find deep discounts and pass them along – while keeping a reasonable return that allows us to stay in business.

When we lock up a great deal on a cheap foreclosure (or non-foreclosure – distressed house), we put it out to our list and sell it fast.

If you’re ready to buy and looking for cheap property, sign up – you’ll only hear from us with exclusive deals in Pittsburgh you won’t find anywhere else.


Using A Lease Option To Sell Your House in Pittsburgh

Thinking about selling your Pittsburgh house? Consider a lease option to get the price you want! Learn more in our latest post!

Lease options can be a better selling strategy than most people realize. It will help you get the best price overall while providing you with extra income until the house has officially sold. Below we will answer some of the most common questions we see about how to use a lease option to sell your house in Pittsburgh.

What Is A Lease Option?

A lease option will allow a potential buyer to lease the property for a specific term, with the option to buy at the end. The lease will typically last 1-3 years and if they are not able to purchase it at that point, the property will remain in your name and everyone can move on. During the lease term, the tenant will pay you a “rent” that is typically higher than average. Some agreements are arranged so some of this money goes toward the down payment if they opt to buy. However, whether they choose to buy or not, the amount you have collected during the rental term is yours to keep. So either way, you will come out ahead.

How To Set It Up

It is important to set the right terms from the very beginning. You want to make sure both parties have a clear understanding of their responsibilities and the timeframe in which the agreement covers. In most cases, you will set up a traditional rental agreement, with an option to buy at the end. There are a few key differences with a rent to own agreement as compared to a standard lease. First off, the tenant will likely be responsible for the repairs to the property. This will equate to even more cash that will stay in your pocket during the duration of the lease. You will also need to decide how funds will be allocated. While the rental payments are typically higher than average each month, you will need to decide where that money goes. Will, you set aside a percentage to go toward the tenant’s future downpayment? Or will the rent payments become pure profit for you? Some agreements will also require a down payment or deposit of sorts to ensure good faith by the tenant.

A Whole New Market Of Buyers

Using a lease option will open your home up to a whole new market of buyers. There are tons of people out there who are ready to buy but are not quite able to get the financing they need. They are good people, who may have a blemish on their credit report from years ago. Or maybe they have been hit with unexpected debt, keeping their loan from going through. By leasing your property with the option to buy, they will be able to get their credit and finances in order, buying your property outright when the time comes. This opens the door to a whole new group of buyers who may be interested in your home.

What’s The Risk?

There really isn’t one. Worst case scenario, they don’t buy end up buying your Pittsburgh house at the end of the lease. You will have made some good money, and the property will still be yours to do with as you please. You can opt to list it on the MLS with a whole new pool of potential buyers, you can rent it out in the traditional way, or you can take on another prospective rent to own tenant. No matter what, you will still come out ahead.


How to Use Your IRA to Buy Real Estate in Pittsburgh – Part 2

Putting your money into an IRA or similar investment vehicle can be a great idea.

Everybody knows that.

But with taxes on their way up, it might be an even better idea to create a self-directed IRA, which will allow you to widen your investment options to include local Pittsburgh investment real estate in order to defer your taxes and end up earning a better rate of return in the long run.

If you are considering this option, it might be a good idea to determine if it’s a good move for you and if it is, here’s how to use your IRA to buy real estate in Pittsburgh.

A Few Quick SD IRA for Real Estate Facts

  • In order to use your IRA to buy Pittsburgh real estate, that property must be a business, not a personal home, a second home, or a rental (but there is a simple way to put rental properties into an SD IRA… below)
  • The property you buy must not be something you already own
  • It must also be a purchase directly into the IRA

How to Use Your IRA to Buy Real Estate in Pittsburgh

It is possible to buy a rental property with an IRA, but you must open a custodial account then transfer money into it. It’s a simple process that we can help you out with. Just give us a call at (412) 529-1783 and we can walk you through the process.

There are many rules associated with this type of transaction, so be sure you understand and agree to them before you buy them. It is also possible to buy a home for the purpose of “flipping” it, but only if you are in the flipping business.

Furthermore, there is a limit to the number of flipped properties you can purchase in one year in Pittsburgh with your self directed IRA.

Again, the best course of action is to determine the rules for the process to make sure you can live with them.

SD IRA Investing Limits

The rules that govern these types of investments do not allow a traditional mortgage with an IRA.

Instead, you need to have enough money in your IRA to make the purchase. There are costs associated with administering the IRA, so you must make sure that your IRA has enough money in it to cover those expenses too.

Again, if you don’t already have a great self-directed IRA custodian… reach out to us and we can connect you with the ones we know of who are very real estate friendly. Just give us a call at (412) 529-1783 or shoot us an email through our Contact form and say “I’m looking for SD IRA resources for buying Pittsburgh investment properties”… and we’ll get back to you right away.

Basic Rules of Investing (even with real estate)

There are many rules in investing that can help you determine a good purchase from a bad one. One of the most important is to diversify your portfolio.

As tempting as a real estate purchase might be in Pittsburgh, it’s a good idea to follow this advice when using your IRA to make a purchase. Just as is the case with any big investment, it’s always a good idea to check with a qualified financial adviser before you make a purchase to get an independent view of the long term as well as the short term outlook.

In the end, using your IRA to invest in local Pittsburgh PA investment properties can be a great route.

It helps you grow your portfolio using real estate with the tax benefits of the IRA.

If you’re looking for investment properties here in Pittsburgh join our CZ Capital Group Preferred Property Buyers List through the link below.


4 Tips For Buying A House In Another State For Pittsburgh Investors

Buying a house in another state can seem overwhelming and risky. However, if you are armed with the right information and ask the right questions, you’ll open the door to amazing real estate deals all over the country and even all over the world. In our latest post, we explore what you should be looking for when buying an out of state property!

Have you considered buying an out of state property? If you plan on buying without seeing the home for yourself first, you’ll need to do some more homework than someone seeing the property with their own two eyes. Below, we offer some tips to help you when buying a property out of state so you can find and choose the house right for you!

Tip #1: Work With The Right Team

When buying a home in another state, it is important to work with a team of people you can trust. You will need to lean on them to provide you with a clear picture of the property.

  • If you are using an agent, make sure it is someone who is highly reviewed and trusted in your area.
  • The inspector should have extensive experience and references in the area. You’ll want to make sure you know exactly what they are inspecting and what you may need to hire a specialist for.
  • When buying a house out of state, it is important you are working with a professional and trusted title company. You will need to have a comprehensive and complete title search done before buying the property.
  • Do you have a friend or a family member in the area? If so, you can have them scout the home on your behalf. You can even hire someone if you don’t know anyone in the area. Have them view the home, take pictures, and provide you with honest feedback. They will be able to let you know about the weird smell coming from the kitchen or the loud noises from the street outside. They will be able to tell you about all the things that photos just can’t capture.
  • When buying and selling an investment property, you should always have a good real estate lawyer at your disposal who is familiar with the real estate laws within the state you are buying.
  • A smart investor will have a CPA or financial planner they can turn to for a better picture of their financial picture, ensuring the don’t overspend or buy a house that won’t be profitable.

Tip #2: Ask About The Area

In addition to all of the questions you will have about the property itself, you should also consider things like local schools, the local economy, and job growth. Whether or not you have kids going to school in the area, school ratings greatly impact property values. You’ll also want to know about future development in the area and how it will potentially impact how much your house is worth. You’ll want a strong job market if you plan on renting the property out. Your tenants will need to be gainfully employed. Try to learn as much as you can not just about the house, but the neighborhood in which you are buying too. The geography of a property can greatly impact the profits you will be able to attain and will make all the difference when buying a house out of state.

Tip #3: Do Your Property Homework

You’ll want to learn about the background of the property to make sure nothing pops up out of the blue down the road. Make sure permits have been pulled for all previously completed work. You’ll want to research sales and tax history to ensure it is in line with what you are committing to the property financially. You don’t want to be surprised by high property taxes or find you have paid too much for the home. All of this information is public record and be found via your property appraiser and even through sites like Zillow and Trulia.

Tip #4: Include Contingencies In Your Offer

As with any offer, you should make sure to include contingencies. If after the inspection, something comes back as a major problem, you’ll want to have the ability to back out of the sale without any repercussions. Contingencies are fairly standard when buying a home, just make sure you don’t find yourself committed to purchasing even if the home doesn’t do well in the inspection. Contingencies are important to safeguard you from buying a home that won’t end up being a profitable experience. Have your lawyer review your contract to ensure you are protected before making an offer on a house that is out of state.


How to Bid On a Short Sale Property Pittsburgh – CZ Capital Group

Short sale properties can be a great source of income for investors and a great deal for home buyers.

It’s important to keep in mind that a short sale is one where the bank has approved a loss on a current loan. They’re losing money, so they want to unload.

Generally, the current owner is in a rough time, or wouldn’t be facing the loss of the property. Difficult times mean tremendous amounts of stress and emotional turmoil.

How to Bid On a Short Sale Property Pittsburgh

Managing relationships is always the key to any negotiation.

For the bank, a short sale is an unemotional transaction. An owner may be letting go of a property with great emotional significance.

You’ll have to take different approaches with every party to a short sale transaction to get the best result.

Data is on your side. Look up comps to get an accurate picture of the market, and seek out justifications for your offer prior to submitting a written bid.

In a short sale, you have to get agreement from the owner and the bank(s) involved in the purchase price and the terms.

Getting written permission from the owner to discuss terms with the bank can be really helpful, but check with a good lawyer to make sure you have the right documents before you ask the seller to sign anything that might violate PA law.

Your relationship skills are super important during this process. The bank will often require days, even weeks, to respond to offers and move forward. Often they request additional BPOs (Broker Price Opinions) or modify appraisals, and they sometimes like to involve different negotiators.

It can be intensely frustrating, so prepare yourself and don’t stress.

Get fully approved for any loan you plan to take long before you make an offer. Make sure your lender can close at the drop of a hat because once the approval comes for the short sale transaction you need to be ready for escrow.

We secure properties via short sale, and we work with many investors and buyers who are looking for great deals on properties in the Pittsburgh area.


4 Situations Where Hard Money Loans Are Ideal

If you’re a real estate investor you need to know about hard money loans because they can help you invest! As a service to investors, here are 4 situations where hard money loans are ideal.

Real estate investors know: it can sometimes take money to make money! In other words, if you want to acquire a property, fix it up, and generate a return, you sometimes need some extra money to help you acquire the property or make repairs. But what if you don’t have money or don’t want to spend your own money? That’s where hard money loans come in – they’re loans for real estate investors to help them invest. Here are 4 situations where hard money loans are ideal…

4 Situations Where Hard Money Loans Are Ideal

#1. Acquisition

The first step of any investment is to acquire the property! However, this can tie up your capital in the property for a long time before you’re able to generate any returns from cash flow or the resale. Why tie up all your money in a deal when you can instead just borrow a hard money loan and acquire the property you need. Hint: this is a great way to scale if you need the capital to buy larger properties or more than one property at a time!

#2. Flips/Rehabs

If you buy houses and fix them up to sell at a higher price, you might describe yourself as a “flipper” or a “rehabber”. As you know, this kind of investing ties up a lot of money – first there’s the money needed to acquire the property and then you have to spend even more to repair the property! Investors discover that they tie up a lot of money before seeing a cent of profit in a sale! A hard money loan can help cover some of your renovation costs so you can fix and sell even faster.

#3. Turnkey Wholesaling

Turnkey wholesalers are a special breed of investors: they acquire a property, fix it, rent it, get a management team in place, and then sell the property. That can be a capital-heavy business, depending on the cost to acquire and the cost to repair. Hard money loans give you the capital to acquire and repair properties so you can start making money on them.

#4. Post-Tenant Repairs

Cash flow investors know that tenants don’t always leave at a convenient time, nor do they always leave the property in pristine condition. If your tenants trashed your property before leaving then you may want a hard money loan to cover repairs so you can make quick repairs and get it rented again fast (instead of trying to finance the repairs yourself).

Summary

If you want to invest, you’ll probably discover that you need more money than you want to pay out yourself. Fortunately, hard money loans can help. Hard money loans are tools used by many investors to help cover different situations they face. If you’re an investor, these are 4 situations where hard money loans are ideal – so make sure you take advantage of hard money loans when they’re available.