Lenders and Investors
HOLLY LYNN The Queen of Capital, Holly Lynn specializes in helping people with their real estate needs. She is a creative and results-driven resource who can help investors at every level. Her authentic, personal relationships with both lenders and investors coupled with her vision, work ethic and endless desire to make the deal work position her as a sought-after, leader in the industry. Holly can help you with hard money, private financing and other funding for your investments and projects.
- Private Financing
- Hard Money Lending
A business can finance its operations either through equity or debt. Equity is cash paid into the business by investors; the business owner is usually one of these investors; investors receive a share of the company, in effect a percentage of it proportional to total investment paid in. The share or stock may appreciate in value in proportion to the increase in the business's net worth—or it may evaporate to nothing at all if the business fails. Investors put cash into a company in the hope of stock appreciation and the yield of dividends which the business may (but need not) pay to the investor; dividends are a portion of the net profits of the business; if the business does not realize a profit, it cannot pay a dividend. The investor can get his or her investment back only by selling the share to someone else. In a privately held company, investors have less "liquidity" because the shares are not traded on the open market and a purchaser may be difficult to find. This is one reason why successful and rapidly growing small businesses are under pressure by stockholders to "go public"—and thus to create an easy way for investors to cash out.
by contrast, is cash borrowed from a lender at a fixed rate of interest and with a predetermined maturity date. The principal must be paid back in full by the maturity date, but periodic repayments of the principal may be part of the loan arrangement. Debt may take the form of a loan or the sale of bonds; the form itself does not change the principle of the transaction: the lender retains a right to the money lent and may demand it back under conditions specified in the borrowing arrangement.
Lending to a company is thus at least in theory safer, but the amount the lender can realize in return is fixed to the principal and to the interest charged. Investment is riskier, but if the company is very successful, the upward potential for the investor may be very attractive; the downside is a total loss of the investment.
A central component to growing as a real estate investor is networking. This strategic marketing tool has the power to not only build beneficial relationships within the industry but also establish trust and credibility. Although the primary objective of real estate networking is to generate real estate leads, it also aims to cultivate long-term relationships, which are key to your business, whether a beginner or seasoned vet. Real estate networking is a crucial tool for investors, as it ultimately holds the power to both open and close opportunities.
As an investor, real estate networking is key to not only meeting more people and gaining more contacts but also finding more deals. Because of real estate networking centers around communication and developing a working rapport with individuals, it’s important for investors to first understand the etiquette surrounding networking and getting started. That said, there are certain criteria that need to be met when networking in real estate.
- Make High-Quality Contacts
- Network with Deal Makers, Financiers and Industry Leader
- Receive Real Estate Investment Education at Live Events & Webinars
Short Term Rentals
Go on craigslist and look at furnished apartments, condos, and homes for rent. Note the number of bedrooms, location, parking, etc. Look at condos in great locations. Look at homes near beaches or conference centers. Places near campus in a college town. Those are good targets because they will rent for much more on Airbnb than they would as a monthly rental.
Go on Airbnb and compare the asking rents based on all of these factors.
Create an extremely detailed month to month pro forma (cashflow projection model). Property taxes are listed on the public record. Estimate insurance. Estimate utilities. Estimate all the related expenses.
Now estimate the income. It all depends on your town and the location of the property. Not all of the events and raise the prices on those days. Note all the of times and price reasonably and assume lower occupancy.
Compare the rental returns vs the home values. Is it nearing a 10% annual return on overall value? That's really good.
Could the property do better on Airbnb than on a monthly rental plan with a tenant? If so then what's good and you might be able to convince the owner to let you try it.
Now find a way to reach the people who own the homes that are ideal short term rentals. A lot of them are listing their rental themselves on craigslist so you’ll reach them when you call the number. Another option would be to find their information on the public tax records. Send them a handwritten letter.
Show them the projected income. Let them know you are estimating based on the research you’ve done. Convince them to let you give it a shot. Agree to share the profit 50/50. Be upfront with them, let them know the risks, get the required insurance, and manage expectations. Make sure to check your local regulations around short term rentals.
Get very aggressive with the pricing strategy. Most people underprice their short term rentals. Read and study ideal occupancy rates. Read and study ideal times to rent and raise prices. Study events in your town when demand will skyrocket. Learn and learn and learn about this space.
Outsource the cleaning to yourself to make more money.
Collect data. Data will be your biggest asset. Its what will allow you to predict income and sell new property owners on hiring you. Once you can reliably predict a 10% return (on total value) for an investor they will gladly buy properties and hire you to manage them.
Eventually, you can expand and try to get people to let you manage their homes who will be traveling for long periods. Or people who want to spend a month abroad. Or people who simply want to stay the night with a friend and make money when there is a college football game in their town. Some of the property owners might pull the listing and just decide to own the income-producing asset and let you manage it full time.
When you have data you can eventually predict the value of the properties. You can begin to find investors to buy properties with the sole purpose of having you manage them as short term rental properties.
The data will start to pile up and you will get more and more confident in the income projections. You will have a track record.
Now you will have the cash to put a down payment on a cheaper house or condo and own it yourself. Enjoy all the cashflows.
There are a ton of advantages to this from a tax perspective over a typical service business. You can depreciate your asset each year. Your tax rate on it is 15% vs standard income tax rates as long as it is a passive asset (which it is because your rental company is your main business). Your asset will appreciate by 2-5% per year. When you sell it you can do a 1031 exchange and put off those taxes even longer.
Buy 1 property the first year. Then 2 or 3 the second. Then 5 a year for 2 more years. Whatever pace you are comfortable with here. Soon you’ll have your own portfolio and you’ll be on your way to real estate wealth.
Holly Lynn, the Queen of Capital handles all aspects of short- term rentals such as Airbnb including creative financing, management, housekeeping, hospitality and more. She can help you choose the best rental strategy for cash flow and profit.
Holly Lynn is a naturally social, Master Networker who is passionate about helping others achieve success. She sees networking as the key to turning your real estate goals into reality.