My best TRICKS, TIPS and HACKS on how to make your airport and airplane travel better!
It’s not the amount of money in your bank account. It’s not the car that’s in your driveway. It’s not the number of pairs of shoes you have in your closet.
Yet, why is it that many people make these trivial nothings their main focus in life? Remember, when you die, you can’t bring your expensive BMW with you.
Would you be content telling your children that you trade your most valuable asset (TIME), your happiness, AND your health to work some job that you hate, surrounded by people you hate all for a small sum of money?
Sorry, not me.
I’m going to break down the things that matter the most at the end of the day:
Health. “Take care of your body. It’s the only place you have to live.”
- By far, my health and well-being are the most important aspects of my life. I make health and nutrition my primary focus every day, and so should you.
- I’d much rather be broke and healthy than to be rich and sick.
- Health brings a freedom very few realize until they no longer have it.
- Imagine your body as a high-performance sports car like a Lamborghini or a Ferrari. Anyone who owns one of these beautiful machines knows that they require only the most high-grade fuel. Our bodies are no different.
- If you don’t fuel your body with the nutrients it desires on a daily basis, it will perform like a broken-down Honda from the 80’s. Sure, it still runs, but good luck getting on the freeway with that thing!
- Try starting every morning with a green smoothie packed with highly nutritious fruits, vegetables, seeds and nuts.
Happiness. “Happiness is a journey, not a destination.”
- What most don’t realize is that happiness is a choice. It’s the choice you make every morning when you wake up and when you put your head on your pillow at night.
- Are you unhappy with your job right now? Choose to do something about it. Are you unhappy with where you live? Choose to relocate or move elsewhere. Are you unhappy with your financial situation? Choose to start building your dream and stop building someone else’s.
- The number one regret people have on their deathbed is: “I wish I’d had the courage to live a life true to myself, not the life others expected of me.” When people realize that their life is almost over and look back on it, it is easy to see how many dreams and visions have gone unfulfilled.
- I get seasonal depression, so I chose to relocate to Mexico for my winter months. Many say I’m lucky and that they wish they could do the same. I always ask them, “What’s stopping you?” I’m in no way lucky. I chose to make reading and perfecting my skills a priority. I chose to pursue an online job so that I could make money working from anywhere in the world.
- Start making better choices, and you’ll be surprised with how fast happiness will flow to you. Fear is the only thing holding you back.
Family. “You don’t choose your family. They are God’s gift to you, as you are to them.”
- When you accomplish something great, who is always there to congratulate you? When something terrible happens to you, who can you turn to for advice and support?
- Friends will come and go from your life, but your family is FOREVER.
- They will always have your back, no matter what. They want only the best for you and would do anything to make it that way.
- I am eternally grateful for my family. Without the love and support I’ve received from my amazing mother and father, I would not be the man that I am today.
LOS ANGELES – Webster dictionary defines the word Bankable as – bank·a·ble: 1. Acceptable to or at a bank; 2. Guaranteed to bring profit
As investors, we hear and see all of the opportunities related to owning rental property: rents are up; prices, vacancies and rates are down. We are being told that there has never been a better time to buy real estate, with lending guidelines changing drastically from just a few short years ago.
That being said, it is now incredibly important to stay “Bankable”. When I first heard this term it made perfect sense to me. As investors, we often need to borrow money meaning that, in our everyday lives we needs to keep control of debt to income ratios, claiming enough income on tax returns to qualify for loan programs and keeping a safe amount of reserves available. I have said it before and still truly believe that the most important piece of the investing puzzle understands the financing. Once you understand how to leverage your money, acquiring properties becomes much easier.
Most of the topics I will touch on are more stringent in the long-term financing world and not always true for hard money. We have been able to close deals while facing over 200% DTI, unemployed or 550 credit score; because other qualifying factors in each case allowed us to get comfortable with the borrower.
When we think we have seen it all we take an application from a client that surprises us. One of my best client’s tax returns show year-over-year losses in excess of $100,000 and this particular client hoped to acquire some buy-and-hold properties. When I told them it wasn’t going to work and why, they explained they worked their entire life to not have to pay taxes/show income and now I am telling them that they need to show income in order to buy rental properties.
I have seen applicants that hope to buy and hold rentals as an investment when they are in foreclosure on their own home and taken phone calls from individuals that want to get a loan but all of their cash is in the sock drawer because they do not believe in banks. Some pretty extreme examples, but the point is that staying bankable is important in a lending environment where it takes more than a pulse to obtain a loan. Here are some tips to staying Bankable:
Income is Important When Being Bankable
Income: For some, income is much easier to verify than others. Namely, W2 income vs. self-employed. A borrower with decent W2 income that does not take a lot of deductions is typically the easiest borrower to approve for long-term financing. Because the income can be verified so easily, with one piece of paper, these borrowers can find out “how much they can borrow” with little hassle. For those who are self-employed however, a trip to the dentist might be more enjoyable than proving income. Keeping good books and not writing off everything under the sun will make documenting your income much easier. The easier your income, not losses, can be seen, the less trouble you will have obtaining financing.
Debt to Income is Crucial
DTI: Debt-to-Income is the most important part of obtaining long-term financing because it includes two parts of the equation that you have some amount of control over. Conventional financing requires a DTI ratio of 45% or less and, in some instances, up to 50%.
Every mortgage, loan, credit card, student loan, and time-share on your credit report stacks up against your income to create this ratio. If you want to acquire rental properties or financing, think twice before opening that Best Buy card for your new 100” flat screen TV and understand where your DTI stands. The good news is some debt, like mortgage on a rental property, can reduce your DTI because it creates income past the monthly amount owed. For example, let’s say that you purchase a property and the monthly PITI is $500 per month and you have it rented for $1,000 per month.
Conventional financing is going to count 75% of gross rent towards your income, so after debt service your monthly income increases by $250 per month. It is very important to understand your DTI ratio and where it needs to be to achieve your real estate goals.
If You Are Self-Employed You Have to Read This
Self-employment: Most investors and real estate professionals are self-employed, which creates challenges in lending if not done correctly. Trust me, I do not enjoy paying taxes any more than the next person, but it is a necessary evil in qualifying for long-term financing. Investors cannot expect to write off all of their income and obtain a mortgage. In fact, I have seen a married couple where one has W2 income and the other is self-employed but the self-employed spouse writes off so much that they show a loss large enough to eliminate the W2 income.
Typically, when self-employed, the lender takes a 2-year average so unless this couple amends taxes and belly’s up to the tax payment, they might be 2 years away from obtaining financing. I do not want to discourage any self-employed borrowers because there is financing out there, as evidence by the two rental properties that I just refinanced out of hard money. Just note that there are additional hoops to jump through and it’s up to you to decide how difficult it will be.
Dealing With Liquid Reserves
Liquid Reserves: Reserves is the number one most important qualifier for our hard money loans, also important in conventional financing and should be a priority for all borrowers. In this business, we all know some properties can be challenging, and as a hard moneylender, we want to know you have reserves available in case your project costs run over or it takes longer to sell or refinance than expected. In the conventional world, the underwriters assume that at some point all of your properties are going to be vacant for the same 6-month period, and they require reserves to handle such a phase. Once an investor has four or more mortgages, the requirement is 6 months of payment reserves for every property.
If you have 6 properties, all with a $1,000 per month mortgage, you need to have $36,000 in reserves. Check with your mortgage professional to see what they can qualify as reserves, 401k, HELOC, personal line of credit, etc., and how long the funds need to be seasoned. As an investor, everyone should find the value in having funds readily available as we never know when the buyer’s inspector will find that the sewer needs replaced or an appraisal comes in low requiring you to bring a chunk of money to closing. Although some deals are no money down, it doesn’t mean you qualify with no money in the bank.
Keep Your Paper Work Organized
Be Organized: I am often surprised at how unorganized investors can be. At the end of the day, we are running a business, or at least hoping to, so having the right documents in order makes life easier for everyone. Let’s remember we are obtaining loans for hundreds of thousands of dollars sometimes with no money down, so having your taxes in a place they can be easily accessible is probably a good idea.
I joke about this, but ask any loan officer which loan is on the top of their priority list and it will be the one in which they have what they need to complete the file. Most of the documents required for a loan can be stored electronically and very easily emailed. If you are actively doing deals or looking for financing, build a package and update it monthly to give your lender what they need when requested. This will keep your loan moving through the process and the lender won’t bother you for missing pages.
Banks Around Your Area
Local Banks: Occasionally, investors can find funding through local banks, either through lines of credit for operating capital or financing non-owner-occupied properties. Freddie and Fannie, the largest buyer of conventional loans, will only allow a borrower to obtain 10 mortgages but your local bank does not have a limit other than their own risk tolerance.
The terms are different from 30-year-fixed so you should expect to pay a slightly higher rate and with shorter terms such as 5, 7 and 10-year balloons. Depending on the bank, they may be more interested in the property than the borrower, but most cases will also require a banking relationship (deposit accounts).
I hope you find this information valuable and can better plan ahead for your real estate investment goals. If you have any questions about the article please feel free to contact us at our office.
To learn more about real estate and Local Records Office click here
Follow us on Twitter twitter.com/RecordsOffice
Like us on Facebook facebook.com/localrecordsoffice
Watch us on Youtube youtube.com/user/LocalRecordsOffice
Review us on Yelp yelp.com/biz/local-records-office-las-vegas-2
Watch on Vimeo vimeo.com/localrecordsofficevideo
Talk to us on Disqus disqus.com/by/local_records_office/
Look for us on LinkedIn linkedin.com/in/localrecordsoffice
Pin us on Pinterest pinterest.com/localrecords/
Tumble with is on Tumblr localrecordsoffice.tumblr.com/
Watch us on Dailymotion dailymotion.com/local-records-office
Find us on WordPress localrecordsoffices.wordpress.com/
Try these tips to renew your love of life through a lens.