Comparative Market Analysis - What to Know

as asset-based lenders, the most important part of the loan application is the property. this differs from traditional (federally insured) lenders where the most crucial component is the borrower. for hard money / non-traditional lenders, the property's value is of the highest priority. how this is generally determined is comparable properties. 

what should you use as a comparable? comparison properties should be at the level of improvement you plan to put into the home.

• if you are adding square footage, use homes with similar square footage as the additions.  
• don't use comparable properties that are so far above the quality that your fix up will be. someone may have paid for those upgraded finishes, but that won't translate to your project.
• location / location / location - neighborhoods are important. the home values on the south side of a particular street could vary drastically from the values of homes on the north side of that street. please pay close attention to the comparable properties you provide to your lender. as much as possible, try not to cross major streets and never highways. below are 2 examples of comparable properties that have been provided - the location of your comps are important. sell yourself!

poor comparisons

better comparisons

if the comparable properties are more difficult to find, a lender may request to have an appraiser perform an after repair value appraisal. not all appraisers offer this service. 

• the more comparable properties you are able to provide, the stronger your deal looks. 
• lenders consider true comparables only to be 'sold' properties. feel free to include 'under contract' and 'active' but these deals aren't closed so they don't carry as much weight.

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we hope this helps you present your projects as stronger and more desirable to lenders!

Our Loan Process

so you have a deal, now what?! we hope that this info graphic gives you an idea of our loan process, so that you can be prepared when the right deal comes up. remember, that we are accept-based lenders, so the property is the most crucial part of underwriting. and call us with ANY questions! we know it's tricky and we are here to help. 

Get To Know Us!

Have You Met Us? If not, that is a shame! We love the opportunity to get to know our clients in the hard money business.

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This is Brandi - she is a University of Denver graduate with a wide variety of experience in Project Management.

Meet Alex - she is a University of Denver graduate from the Real Estate Construction Management program with previous construction management and financial underwriting experience.

Finally, here is Todd with the team! He has over 35 years of heavy civil construction experience and nearly the same tenure in land development

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For those we haven't met, we hope that changes soon. Wishing You and Yours a wonderful New Year and many successes in 2016!

Title Issues

Title Issues crop up on many investment properties due to the distressed nature of the seller in most investment property purchases. It is important to know your risks and how to address these. TABS, LLC has come into contact with all of these scenarios on one project or another and hope to help you. Here are some examples of title issues that have required correcting in the past:

• errors in public records
• liens
• illegal deeds
• forgeries
• undiscovered encumbrances
• unknown easements
• boundary / survey disputes
• unpaid property taxes
• judgements

tip: title objection dates should be a part of your offer should you need to get out of a contract and save your earnest money. 

When working with title companies, TABS, LLC requires certain policies, exception deletions and endorsements for your protection. Use our experience to guard your investment!

progress check #denver #fixandflip #realestate #coloradohardmoneylender #instagood #instalike #like4like #follow4follow

kind words acknowledging our managing partner’s legacy in Colorado’s construction industry | humbled to be able to learn from him #realestate #coloradohardmoneylender #charity #scholarshipfund #passiton #legacy #instagood #instalike #like4like #follow4follow

finding bore holes for soils tests on 80 acres #whackamole #landdevelopment #coloradohardmoneylender #instagood #instalike #like4like #follow4follow

It was a beautiful day in #breckenridge checking out this #newconstruction ⛷🏠 #realestate #coloradohardmoneylender #customhomebuilder #spechome #hardmoney #instagood #instalike #like4like #follow4follow

when your final plat is (finally) approved! #landdevelopment #realestate #coloradohardmoneylender #colorado #hardmoney #instagood #instalike #like4like #follow4follow

Happy Anniversary To Us!

“THANK YOU / THANK YOU / THANK YOU”

Today is a day for THANK YOU's! While we have been investing, developing and lending in real estate for much longer, our branded company is now 2 Years Old! We thank you for allowing us to be a part of your projects in the past, present and hopefully in the future! It has been a real joy to work with all of you and now celebrate this anniversary. THANK YOU, THANK YOU, THANK YOU!

Property Management

“Ninety percent of all millionaires become so through owning real estate.”

— Andrew Carnegie (1919)

• you aren't just looking for bodies to fill your property - you want QUALITY tenants
  • quality tenants who will rent from you for years, so that you don't have to worry about vacancy
  • did they spend a long time renting from their previous landlords? Or do they move every year?
  • do they have consistent job history?
  • do they have non-family references?
  • actually call previous landlords and references - it is VERY important to know who will be taking care of your investment property
  • consider pulling a background and/or credit check
• market your property ahead of vacancy
• put together the right team for success
• be aware of fair housing rules and regulations
• consider collecting rent via ACH - electronic funds transfer
• motivate your tenants to care for your property
• does your contract cover you? or do you need it reviewed by an attorney?

do you want to hire out these functions so that you can spend your time with your full-time job or acquiring other properties? we can refer you to a few companies that can help you with these very key processes.

hard money vs. the bank

comparing using hard money to a bank loan based on the cash on cash return of the investment

WHY USE HARD MONEY?

• hard money loans are based on the after repair value of an investment not the cost of that investment like most bank loans
• lower cash required per deal
• allows an investor to have cash in multiple projects rather than a huge sum tied to one
• hard money closes significantly faster than bank loans
• hard money makes your offer more desirable in a competitive market
• hard money is more flexible than bank loans
• should you decide to keep an investment, hard money can be re-financed to a bank loan after repair

How Do I Determine ARV?

When looking at purchasing a property for a fix and flip it is important to know what the ARV (After Repair Value) of the property will be after you are done rehabbing the property. The ARV will help dictate how much money you should purchase the property for and how much money you can put into the rehab.

When determining the ARV, you have to pull comparables within the neighborhood or surrounding neighborhoods. By comparables, if you are looking at rehabbing a home that is 1,200 sq. ft. and you aren't going to add square footage, you only look at homes that are near that square footage. It will not help if you are looking at homes that are 3,000 square feet because that won't give you a good idea for what the property will sell for. Choose 5-8 properties that have the following similarities:

• Square footage
• Style (ranch, two story, multi-level, etc)
• Exterior (brick, stucco, vinyl siding, etc) -Unless you plan on changing the exterior of the home
• Amenities (Backyard, Walkout, Attached or Detached Garage, etc) -Unless you plan on adding a garage or a backyard

After you have identified the 5-8 properties that are very similar to the property you are looking at rehabbing, with the exception of level of finishes and whatever you plan on adding, take the average sold price of the homes. That is your ARV.

To determine if the home will make you a profit, look for our future blogs!

What To Submit in a Loan Package?

As Lenders, we are very excited to hear about your project and look forward to a successful working relationship. We just can't give you any clear cut answers without information first.

Most lenders will need the following:

• their application filled out to the best of your abilities and as complete as possible
• application fee paid if applicable
• details on your rehab budget (don't just say you're going to put $50k into the home, what exactly will you do with the $50k)
• comparable homes (to the level yours will be rehabilitated, but same style i.e. ranch, two story, split level) try your best not to cross major streets to keep your comparables in the same area
• if you have experience flipping in the past or you work in the industry as a carpenter, handyman, etc.
• what cash are you able to put in
• what capital you need from a lender
• any other information you deem necessary

If you are able to submit a complete packet to a lender, you will be very pleased with their response time!

How to Make Your Curb Appeal!

Tips & Tricks

• Curb Appeal begins online: Most buyers in today's market look at homes online before ever speaking with a Real Estate Agent. Have professional photos taken that show the exterior of your property.
• Walk a Mile in the Buyer's Shoes: walk around the property and pretend you are purchasing it. What would you like fixed if you were buying this home? If you need a second opinion - get one, the more critical the better. You don't have to fix everything, but it is important to see what the buyer sees.
• How's the Roof?: Not only will most buyers be concerned about a roof, all inspectors they hire will be. Make sure you know if something needs to be done. Better to fix it before getting to the negotiation.
• House Numbers: Can a buyer find the house? If not, that needs to be corrected. With modern fonts, you can really dress up the exterior as well.
• Cleanliness is Next to Holiness: Rent a pressure washer and make sure the exterior is clean.
• Color: Either place or ask your Real Estate Agent to think about placing some colorful plants near the entrance.
• Freshen the Paint: If there is room in the budget, repainting the exterior of the home could add $10k+ to your offer says some Real Estate Agents
• Mow the Lawn: I know that it isn't a big ticket item that buyers get excited about like kitchens and bathrooms, but don't turn a buyer off before they get inside. Make sure the yard looks presentable.

Hope these tips lead you to quick closings!