If you’ve spent time driving around Orange County California or browsing Craigslist or other sites, you may have seen advertisements that read, “Own a home for $500/month. No credit check!”
While it seems too good to be true, local rent-to-own homes are a viable option that many Orange County residents are taking advantage of.
But...
In any business there are a few hucksters who aren't doing the right thing that give everyone else a bad name. But renting to own / lease option homes aren't a scam and they're a really great way for people get on the path to home ownership if your financial situation prevents you from getting a home loan right now. You can find hundreds of great articles online from reputable resources that back up the fact that rent to own (also called a lease option by many people) is a legitimate and great way to work your way into home ownership.
Really the rent to own process is a relatively simple concept:
While rent-to-own homes in Orange County are a valid business venture, there are many things that buyers must consider.
Purchasing a home is one of the most complex financial decisions that Americans make every year, and renting to own is no different. There are several potential pitfalls:
While renting to own is not without risk (and no financial decision is risk-free), there are a ton of advantages:
All things considered, not only is renting to own a home in Orange County definitely not a scam, but a legitimate option for both buyers and sellers. If you want more information on renting to own a Orange County house, the process, and our available list of local Orange County rent to own houses / lease options, click the big link below.
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Trust deed investments in Orange County California can be a fantastic way to earn solid returns and diversify.
In fact, trust deed investments are one of the methods that the wealthy use to make much bigger returns on their investments than anything you can get on the open market.
In a nutshell, a trust deed investment is a private loan that’s secured by real estate.
Most are short-term, generally under two years, and normally at a high interest rate – 7-15% is typical, even when banks are lending at 3-7%.
Surprisingly, there’s a lot of competition from borrowers who are willing to pay these kinds of rates to lenders – and an increasing number of investors who are interested in funding them.
There are lots of reasons, so let’s start with the basics.
Banks and lenders fall under a lot of regulations that private money lenders don’t necessarily have to follow, especially since they’re not federally insured.
Local trust deed investments are actually more like old-school investing. Trust deeds are built on trust – just like back in the day, when it was common for deals to be sealed with handshakes and there weren’t so many lawsuits.
For these deals, insider knowledge, relationships and potential value matters a lot more than the score assigned by a computer.
But like other high-return investments, there’s a lot of risk involved if you don’t know what you’re doing.
The investors who make a lot of money on trust deeds work with highly reliable brokers, attorneys and experts who help them evaluate the full potential of the loan – and assess the risks involved.
If you’re interested in capturing solid returns from the local Orange County trust deed marketplace, we may be able to help you.
We get requests from people who are looking to borrow money secured by real property (with equity!) who don’t qualify for traditional financing.
As a general rule, most investors want a high degree of security that the borrower stands to make 20-50% ROI with the funds he or she borrows. If the borrower’s plan is too risky or shows signs of probable failure, it’s wise to pass on the investment.
We’re not brokers – sometimes, we may partner with qualified investors to secure deals, and a trust deed is one tool at our disposal.
We’re happy to talk with you about our services and discuss how we can help you make money in real estate.
Real estate investing can be capital intensive. Sometimes you need money to do more deals or to get your deal to a level that you can make money off of it. When you need money, and if you don’t want to go through the typical bank-sourced lending, then you might want to borrow from hard money lenders. In this blog post you’ll read about what is the hard money lender process for California and how you can work within this process to borrow money efficiently.
For some investors, they need hard money to acquire a property; for other investors, they need hard money to fix up the property so it can be ready to be sold or rented. You need to identify your need and have a pretty good idea of how much money you need to borrow.
There are many hard money lenders out there but not all lenders are the same. Some will only lend to certain types of deals or in certain states; others will only lend a certain amount of money. So you may need to hunt around a bit to find the right hard money lender for your situation. If you want to know more about the hard money lending that we do here, and if you want to know exactly what is the hard money lender process for California (and how we work within that specific process) then click here and enter your information.
Once you’ve found a hard money lender who may work within the parameters that you need, talk to them about the deal or situation that you need funded. Share all of your information with them and help them understand why you think this is a good opportunity, what you plan to do with the money, how you plan to pay the money back, and how you plan to benefit overall from the project. Remember: hard money lenders are investors too, so they need to see that THEY will get a return for the money they’re lending, just as you’re thinking about getting a return on the investment overall. Help the lender see this from their perspective.
Once the hard money lender has evaluated the information that they need to make an informed decision, they will make a decision – either to lend the money, lend some portion of the requested loan, or decline the loan.
If you receive some or all of the money, make use of it to complete the deal as you had planned, and repay the loan on time. If you did receive the loan, don’t despair. Compare the loan parameters with your deal to understand the difference and then seek to correct the misalignment or keep looking for a different hard money lender.
Should you get hard money loans for your real estate investing? In this blog post we’ll answer that question for you by sharing 3 potential disadvantages of using a hard money lender in California to help you decide whether hard money loans are right for you.
Real estate investors prefer not to tie up their own capital in a real estate deal but instead they’ll use other money sources to help them do deals. There are many money sources, and hard money lenders are one such source.
There are good hard money lenders out there and hard money loans are a common way to invest. However, every investor needs to decide for themselves if a hard money loan is right for them. To provide you with a balanced view, consider these 3 potential disadvantages of using a hard money lender in California.
A hard money loan is just that – a loan. And loans come with interest, which is the lender’s way of making money for the service they provide. There’s nothing wrong with them charging interest for the loan but you need to be aware that the interest exists and you need to factor it into your accounting. Are you prepared to make principal plus interest payments?
Another disadvantage of hard money loans is that it’s not a bottomless pit of money. You need to figure out ahead of time how much money you need and then you need to borrow that amount of money. Problem is, what if you counted wrong and need more? Either you go back and apply for more or you look somewhere for the extra money.
When you borrow money and have to pay it back with interest, this could potentially delay or reduce your return on investment. For example, if you borrow money to fix up a rental property and then rent it out at $500 a month, any hard money loan repayment of $500 a month will prevent you from seeing any return until the loan is paid off. (These are just example numbers and of course you should structure every loan in a way that makes sense for you.)
Hard money loans are one of many investment tools. They have many advantages to help real estate investors run and grow their business by doing more deals. And just so you know – we actually like hard money loans and believe in them. However, it’s important for every investors to know all the facts up-front, and this information about 3 potential disadvantages of using a hard money lender in California will help you figure out if they’re right for you.
Many investors rely solely on private lending to purchase properties. You can go for this method, or combine private loans with traditional bank financing to get the capital you need.
If you have not worked with a private lender, we can help you understand what to expect when using private lending in California.
We have put together a few things you should know about private lending. Ii may not work for everyone, but for real estate investors, private lending can be just the thing they need to see great profits.
Many investors are attracted to private money loans as the ability to qualify is often much more lenient. Private lenders are looking more at the project you want to finance, then they are at you.
The loan is typically backed up by the property being purchased. This allows people with lower credit scores to still have the ability to flip a home. If the lender sees very clearly that you are making a great deal, they will be quick to finance you as they know they will see a timely return.
A typical mortgage will take around 30 years to repay. A private money loan is typically paid back in months, not years. Private lending is usually expected to be repaid over a short period of time.
Private lenders expect quick returns, they aren't set up as a bank is, where they can be paid back over the course of 20 years. This is ideal for someone flipping homes. You can get quick access to the cash you need, and be expected to pay it back quickly too.
Typically a private money loan will require less red tape and be less time-consuming. Because of this, private lenders often require a higher interest rate. Rates are sometimes double what you see at the banks. (This is another reason to pay the loan back quickly.)
If you plan on holding the property for more than a couple months, you can always opt to refinance with a traditional loan from your bank.
Often times, investors will see a greater benefit in taking a loan with a higher rate in exchange for the speed and convenience they receive. Working with a bank can become a long and drawn out process, and by the time your financing is approved, the property you were after could be gone.
One of the first questions we get from potential tenant buyers of our local Orange County California rent to own homes / lease option homes is "how do rent to own homes work in Orange County?"
With a flooded real estate market, especially since the bubble burst of the mid-2000’s, rent-to-own homes have become a popular option for people who are deciding whether to purchase or rent a home.
Renting to own offers advantages to both buyers and sellers.
For the seller, they have steady income to make steady mortgage payments, while the seller has a period, typically a year or two to organize his or her finances and secure financing to buy the house.
Renting a home to own a house is a relatively straightforward process, though many people are confused.
A common misconception is that the renter can live in the home and pay rent over a period of 15, 20, or 30 years, then own the home. It’s slightly more complicated that that.
But here are the basic elements of a rent to own agreement.
• The buyer and seller draw up an agreement, covering all terms of a rent-to-own agreement.
• This contract will state the monthly rent, and a set period of time.
• The renter will have the option to purchase the home at an agreed upon price at the expiration of the agreed upon time period.
By giving a potential buyer a year or two to get their financial house in order, the seller can continue to make mortgage payments on the home, while living elsewhere. This is beneficial to the buyer, as if they’re sure that they can acquire financing, they can usually begin customizing the home to meet their needs and preferences... essentially treating it like you own the house (because you may own it someday!) and having that sense of home ownership during the process.
Really it depends on the location of the house (there may be different laws that dictate what you can do in different states) and any new federal guidelines that may come out that may limit what the property owner of the rent to own house may do.
But the standard guidelines of a rent to own house are pretty simple.
So, for the question of "how do rent to own homes work in Orange County"... well that's the basic process.
While there are lots of benefits of renting to own a home here locally... every housing option has pros and cons.
Just do your research, talk with reputable and experienced companies like Pellego who can walk you through the local Orange County rent to own house process... and make the smart financial decision for you and your family.
Many people choosing rent-to-own may have past credit problems, or may just be unsure if purchasing a home is right for them. If that's you and you want to look into the rent to own process and even see the available rent to own / lease option houses here in Orange County California, click the link below and fill out your basic info to get on our Orange County rent to own home list.
In an era of uncertainty in the real estate market, many Americans are finding that rent-to-own homes provide them with both flexibility, and the option of purchasing a home at the end of the term. By understanding how rent-to-own homes work, you can position yourself to take advantage of the many benefits of renting to own, and realize the American dream, despite past credit problems.
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If life were predictable, we'd always have as much money as we need. But life isn't predictable, so once in a while we need a personal loan to help cover a shortfall or to consolidate some high interest expenses.
Since this isn't something that people do very often, we don't always know how to find private lenders to get the cash we need. Most people just assume that they can go to the bank and get a personal loan when necessary, but this isn't always possible. Perhaps a loan is needed faster than the bureaucracy of the bank will allow, or perhaps some financial hardship in the past is preventing you from getting any money at all from a bank.
That’s where private lenders for personal loan come in: private lenders lend money to individuals but those lenders are not banks. They can move faster than banks, and they have different lending criteria than banks!
In this blog post you'll read how to access cash from private lenders for personal loan in Orange County California. Read the following steps on how to access money from lenders.
Step One: Look for a lender or lenders
For you to borrow the money you need for your personal loan, consider approaching several lenders and make sure you read though the applications and also the negotiation process.
Look for lenders who are in the personal loan business. Seriously consider private lenders who are working in Orange County California specifically. You can also look for credit unions or individuals who know you well. If you connect with people who have a good relationship with you, it will make the lending process much easier.
Step Two: Evaluate alternatives
Once you have one or more lenders to consider, evaluate what they are offering you. You might evaluating several different private lenders; or, you might be evaluating multiple loan options from a single lender.
Every private lender is different so there might be different terms for you to weigh. For example, one lender might offer a lower interest rate but need to be paid back sooner; another lender might offer a longer pay-back period but require more interest. It depends on the lender and how much money you need and what the lender's criteria are.
Step Three: Present credit to the lender of your choice
Once you have chosen a private lender and loan that fit your needs, you'll need to establish your credit worthiness to that lender. Different lenders will have different requirements: some might want to see proof of income, others will want to see income and a list of the assets you have.
Want to get a personal loan from a private lender fast? We at Pellego can help you by connecting you with private lenders in Orange County. Simply fill out the form or give us a call at (949) 625-4533.
If you’re a real estate investor who needs a hard money loan for your deal, then you might be wondering which hard money lender to work with, how to find them, and what to look for in hard money lenders in California. In this blog post, we’ll give you 4 of the top qualities to look for in a hard money lender in your state.
You want a hard money lender who is experienced and who can help you. Their experience will be an invaluable guide to you as you borrow the money, pay it back, and borrow again in the future. An experienced hard money lender will be able to look at your deal and help you understand it. Even if they choose not to fund your deal, their knowledge will be extremely valuable to you.
(Of course all hard money lenders had to start somewhere so that’s not to say that you should avoid a lender with no experience but if all else is equal, you’ll probably want to work someone with experience). One way to measure their experience is to find out how much money they’ve loaned or have available to lend.
While testimonials won’t be the only factor in your decision, they should help you figure out who is a good match. What do those other testimonials say about the hard money lender? Were they easy to work with? Was the loan funded quickly? Did the borrower go on to successfully complete their deal?
One of the most important things to learn when you’re figuring out what to look for in hard money lenders in California is a transparent process – a clear and straightforward step-by-step method that the lender has laid out for you.
A transparent process tells you that the lender has experience, they’ve perfected their system, they have an emphasis on efficiency, and they’re interested in helping you. A clear and detailed process will help you know exactly what information is needed and when so you can work together with them to get your deals funded.
The most important thing to look for when figuring out what to look for in hard money lenders in California is alignment. Different hard money lenders are motivated and guided by different things: some might want a highly profitable loan; others might want to help a certain demographic of investor; others might prefer to lend only to certain kinds of deals.
It’s all good – but you just need to find a hard money lender who is aligned with your goals and your deals. When you find that lender, you’ll discover that it’s so much easier to work with them (than with someone who is not aligned with your goals and deal).
Are you wondering what the difference is between Residential vs commercial hard money loans? Look no further because we’ll help you out in this informative blog post that should answer all of your questions. (And if you have any more questions, feel free to reach out to our friendly and helpful team at (949) 625-4533!
Real estate investors acquire properties, they fix them up and either sell them or rent them out to tenants. This sounds like a great strategy to make money (it is!) but the problem is: it can be VERY capital-intensive, which means it can take a lot of money to run and real estate investing business – and that ties up your money for a while (and what if you need that money?)
Worse yet, investors discover that they can only grow so far using their own capital. Even if you don’t mind your money being tied up, you can only do so many deals at once. If you want to grow, you need even more money.
That’s why many investors are turning to hard money loans as a source of capital to help them. A hard money loan is a special loan for investors to help them acquire properties and renovate them.
Perhaps you’ve been researching hard money loans and are wondering what the difference is between residential vs commercial hard money loans, and which one is right for you.
The answer is that it depends on a lot of situations, but here are some general rules of thumb to help you…
It partially depends on the end-use of the property. Is the property going to be a place for people to live? Or will they be working there? In general, if someone is going to be working on the property, it’s very likely a commercial loan. If someone is going to be living there, then it could be a residential or commercial loan…
If people are living on the property, then it comes down to the size of the structure. A single family home, or perhaps a duplex or triplex, might only need a small amount of repairs so a smaller loan is necessary. This will end up being a residential loan. However, if it’s a large multi-family unit, such as a condo or apartment building, then it will probably be a commercial hard money loan.
Other factors that could determine whether it’s residential vs commercial hard money loan include: whether it’s a new development or a smaller renovation of an existing property; whether it’s a structure or an set of structures (such as a mobile home park), and what the end use will be (such as if you’re renovating a house to be a retirement home for several non-related renters).
Which do you need? Residential vs commercial hard money loans? It depends on a lot of factors so be sure to reach out to us and tell us about your project and we can tell you what kind of loan will help you the most.
Selecting a lender can be a difficult process if you don't know the right questions to ask. This article features 5 questions to ask when looking for the lender in California who is right for you!
While the process might seem arduous, you must remember that you have the upper hand. There are a variety of lending options available, and in theory, these lenders are competing to have you as a customer.
As an investor looking for a lender, your process might be different than someone looking for a traditional mortgage of a home they plan to reside in. Here are a few great questions to help you in your search.
You will obviously want to know the interest rate, the LTV (Loan to Value) and the number of points you will be paying. In addition, you should always ask if there will be additional fees. These can be legal fees, underwriting fees, administrative fees, etc.
These fees can greatly impact your profits if they are not accounted for from the beginning. Make sure you are of any prepayment penalties you might be charged as well.
Geographic boundaries, as well as limitations on the type of property you are able to purchase, might be put in place by the lender. Make sure you fully understand what types of properties the lender will allow you to buy.
If you are looking for a two bedroom, fix and flip, but the lender requires 3 bedrooms and a price point of 250k+, you might be out of luck.
In many cases, a real estate investor will need to make some repairs. Will you have to pay for this out of pocket? Or will your lender provide funds for rehab and upgrades?
This is important to know when you are looking at potential properties for investment. While the ability to borrow more money to fix up the home might seem appealing, make sure the value is there as you will be paying additional interest on these funds.
Many companies will sell the loan to a 3rd party after the loan has been originated. This means that there is a possibility that you will be working with a yet to be determined 3rd party. If they flip the loans, you will be making payments and working with a different company once your loan has been processed.
Someone who is familiar with what you are doing and who see's what a good deal you are making, is more likely to provide you with better terms. They will see the loan as low risk, and be able to help you maximize your profits.
As with any decision in real estate, it important to know all of your options and shop around. Remember to ask questions about ANYTHING you are uncertain about.
