by Kenbry Capital | Nov 3, 2023 | Blog
In the realm of real estate investment, timing is everything. Property flippers, those who buy homes to renovate and sell for profit, often operate in a high-paced environment where access to funds can make or break a deal. It’s in these circumstances where bridge loans prove their worth.
A bridge loan, as the name suggests, serves as a temporary “bridge” that enables investors to secure a property swiftly, even before they’ve sold their current holdings. But why do property flippers often prefer this type of financing?
Quick Access to Funds
The ability to move quickly is a significant advantage in the competitive real estate market. Bridge loans offer the promise of rapid access to funds, often within a week or less. This speed gives property flippers an edge when multiple buyers express interest in a property.
Flexibility
Bridge loans are designed to be short-term, allowing flippers to borrow for specific renovation projects and repay the loan after selling the refurbished property. This flexibility allows investors to use the loan for a variety of purposes, ranging from property acquisition to renovation costs.
No Prepayment Penalties
Unlike traditional loans, bridge loans usually have no prepayment penalties. This feature means that if a flipper finishes their project and sells the property quicker than anticipated, they can pay off their loan early without incurring extra costs.
Less Reliance on Credit History
While credit scores and history are important, bridge loan lenders are primarily interested in the property’s value and the investor’s potential profit. This focus allows flippers with less than stellar credit to still secure funding, provided they demonstrate a sound investment strategy.
Looser Requirements
Bridge loan lenders often have looser requirements compared to traditional banks. This leniency allows for a wider range of flippers to access funding and encourages entrepreneurial spirit within the property flipping industry.
While bridge loans are not without their risks – including higher interest rates and the potential for default if the property doesn’t sell – they offer a unique and valuable financial tool for property flippers. By offering quick access to funds, flexibility, no prepayment penalties, less reliance on credit history, and looser requirements, they allow flippers to seize opportunities and turn them into profits. Contact Kenbry today to get the financing you need for your fix and flip projects.
by Kenbry Capital | Oct 6, 2023 | Blog
When it comes to investment diversification, rental properties stand out as an appealing option deserving serious consideration. Here are five compelling reasons why rental properties should form part of your investment portfolio.
1. Consistent Cash Flow
With rental properties, you can secure a steady stream of income through rent, which can act as a safety net during market volatility. This income is often sufficient to cover your property-related expenses while providing additional cash flow.
2. Appreciation Potential
Over time, real estate has consistently proven to appreciate in value. While the market can fluctuate in the short term, the long-term trend has always been upward. This appreciation can be a significant wealth-building tool.
3. Tax Advantages
Owning rental property comes with several tax benefits. For example, you can deduct rental expenses like mortgage interest, property tax, operating expenses, depreciation, and repairs. These deductions can offset your rental income, thereby reducing your overall tax liability.
4. Inflation Hedge
Inflation erodes the purchasing power of money over time. However, real estate often acts as an effective hedge against inflation. As the cost of living rises, so too can rent prices, enabling property owners to maintain their purchasing power.
5. Control Over Your Investment
Rental properties offer a level of control not always available with other investment types. As the property owner, you can make decisions about property management, rent pricing, and when to buy or sell. This ability to directly influence your investment’s performance can be empowering.
In conclusion, diversifying your investment portfolio with rental properties can provide consistent income, potential appreciation, tax advantages, an inflation hedge, and control over your investment. As with any investment, it’s crucial to do your research and consider your financial goals and risk tolerance before diving in. If you need tailored funding solutions to help you diversify your portfolio, contact the team at Kenbry today.
by Kenbry Capital | Sep 29, 2023 | Blog
Investing in multifamily properties can be an excellent way to generate a steady stream of income and diversify your investment portfolio. Here are seven compelling reasons to consider this investment strategy:
1. Stable Cash Flow
Multifamily properties, such as apartment buildings, are designed to generate income. With multiple units for rent, these properties can provide a more consistent cash flow compared to single-family homes. Even with a few vacancies, you’re still likely to earn revenue from other occupied units.
2. Economies of Scale
Owning and operating multifamily properties can be more cost-efficient than managing multiple single-family homes. You can save on maintenance, renovations, and property management costs by having all units in a single location.
3. Lower Risk
The risk of income loss is lower in multifamily properties because the income doesn’t rely on a single tenant. If a single-family rental unit is vacant, you lose 100% of the rental income for that property. In contrast, a few vacancies in a multifamily property won’t significantly impact your overall rental income.
4. High Demand
With the increasing costs of homeownership, more people are opting to rent, driving up the demand for rental properties. This trend is particularly true for millennials and the elderly who value the convenience and flexibility of renting.
5. Tax Advantages
Investing in multifamily properties comes with several tax benefits. IRS allows investors to deduct expenses related to property ownership, management, and depreciation. Consult with a tax professional for detailed advice.
6. Appreciation Potential
Over time, multifamily properties can appreciate in value, especially if they’re in a growing market. This appreciation can lead to significant wealth growth down the line.
7. Control Over Value
Unlike stocks or bonds, real estate investors have more control over their investments. They can add value to their properties through renovations, adding amenities, or increasing rents.
In conclusion, investing in multifamily properties can be a smart move due to the potential for stable cash flow, lower risk, economies of scale, high demand, tax advantages, appreciation potential, and the ability to add value. If you need financing for multifamily investments, contact Kenbry today.
by Kenbry Capital | Sep 22, 2023 | Blog
In the complex world of construction, change orders are practically inevitable. They are modifications to the original contract that can occur due to unforeseen circumstances, alterations in design, or changes to the scope of work. While change is a natural part of progression, it’s important to understand how change orders can significantly impact your construction budget.
The Impact of Change Orders
Change orders often lead to an increase in project costs. The reasons for this can range from the need for additional materials, labor, or equipment, to extensions in project timeframes that escalate overhead costs. Occasionally, change orders can lead to a decrease in costs, but this is generally the exception rather than the rule.
Managing Change Orders
Understanding how to manage change orders effectively can limit their impact on the overall budget. This starts with careful planning during the pre-construction phase and continues throughout the project lifecycle. Having a robust change management process in place can help ensure that any changes are addressed promptly and efficiently.
Planning
During the planning phase, it’s crucial to anticipate potential changes and account for them in your budget. This involves understanding the project’s scope and identifying any areas that might be prone to alterations. For example, if you are renovating an old building, it’s prudent to account for potential issues that might arise once the work starts, such as the need for additional structural support.
Implementation
Once construction is underway, it’s critical to have a process in place for handling change orders. This involves understanding what triggers a change order, who can authorize it, and how it will be documented. Having a clear process helps manage expectations and prevent disagreements or misunderstandings.
Re-evaluation
After a change order has been implemented, it’s crucial to re-evaluate the project’s budget and timeline. This involves updating your cost and schedule estimates to reflect the changes. It’s also important to communicate these changes to all stakeholders to ensure everyone is on the same page.
In conclusion, while change orders are often a necessary part of construction, understanding their potential impact on your budget and managing them effectively can help ensure your project stays on track. By taking the time to plan, implement, and re-evaluate, you can navigate the change process successfully and maintain control over your construction budget. If you need ongoing or permanent financing for your construction project, contact the team at Kenbry today.
by Kenbry Capital | Sep 15, 2023 | Blog
Commercial real estate is a key arena for savvy investors looking to expand their portfolios. One financing option that has emerged as exceptionally beneficial is the use of permanent loans. These loans, also known as term loans or end loans, offer myriad advantages that can propel the success of commercial real estate ventures.
What Are Permanent Loans?
Before delving into the benefits, it’s essential to understand what permanent loans are. Permanent loans are long-term financing options, typically used to pay off construction loans, and may span 15 to 30 years. They are named ‘permanent’ because they are designed to be in place until the property is sold or the loan is fully paid off.
Why Choose Permanent Loans for Commercial Real Estate?
Long-Term Stability
One of the primary benefits of permanent loans is the financial stability they offer. With fixed interest rates over the term of the loan, investors can accurately forecast their financial obligations, mitigating the risks associated with variable rates and market fluctuations.
Lower Monthly Payments
Due to their long duration, permanent loans typically have lower monthly payments compared to short-term loans. This allows investors to effectively manage their cash flow and allocate funds to other critical aspects of their business.
Potential for Property Appreciation
Commercial real estate often appreciates over time, meaning that the property could be worth significantly more when the loan period ends. Therefore, a permanent loan lets investors potentially reap the rewards of this appreciation.
Considerations and Conclusion
However, just like any financial product, permanent loans are not without their risks and should be carefully considered. Prepayment penalties and longer time to equity are among the factors to account for when deciding on this route.
In conclusion, permanent loans offer numerous advantages that can make them an excellent choice for commercial real estate financing. They provide financial stability, lower monthly payments, and the chance to benefit from property appreciation. While the decision to use a permanent loan should be made based on individual circumstances, these advantages make them an attractive option for many. Contact Kenbry today to explore our permanent loan programs for commercial real estate.
