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What Is Collateral?

what is collateral?

Collateral is a term used to describe an asset that a lender accepts as security for a loan. Depending on the purpose of the loan, collateral can be real estate or other types of assets. For the lender, the collateral serves as a type of insurance. If the borrower defaults on their loan payments, the lender can seize and sell the collateral to recoup some or all of their losses.

how collateral works

A lender wants to ensure that you’ll be able to repay the loan before giving it to you. As a result, many of them require some level of protection. Collateral is a type of security that reduces the risk for lenders and ensures that the borrower fulfills their financial obligations. If the borrower defaults, then the lender has the option to seize the collateral and sell it, with the proceeds going toward the unpaid amount of the loan. To reclaim any leftover balance, the lender can take legal action against the borrower. 

As previously stated, collateral can take many forms. It usually refers to the type of loan; for example, a mortgage is secured by the residence, but a car loan is secured by the vehicle in issue. Other assets can be used to secure non-specific personal loans. For example, a secured credit card can require a cash deposit equal to the credit limit, such as $500 for a $500 credit limit.

Collateral-backed loans often have lower interest rates than unsecured loans. A lien is a legal right or claim on an asset to satisfy a debt that a lender has on the collateral of a borrower. The borrower has a powerful incentive to repay the loan on time because, if they don’t, they risk losing their home or other collateralized assets.

types of collateral

The type of loan frequently determines the nature of the collateral. Your home becomes the collateral when you take out a mortgage. If you take out a car loan, the car becomes the loan’s collateral. Cars, bank savings deposits, and investment accounts are all frequent forms of collateral that lenders accept. In most cases, retirement accounts are not accepted as collateral.

Future paychecks can also be used as security for very short-term loans, not just payday loans. Traditional banks provide such loans, which are typically for a few weeks. Even if you have a true emergency, you should read the fine print and compare rates before taking out one of these short-term loans.

COLLATERALIZED PERSONAL LOANS

A collateralized personal loan is a type of borrowing in which the borrower pledges an object of value as security for the loan. The collateral must be worth at least as much as the loan amount. If you’re looking for a secured personal loan, your best bet is to go with a financial institution with which you already do business, especially if your collateral is your savings account. If you already have a relationship with the bank, it will be more likely to approve the loan and provide you with a reasonable interest rate.

Examples of collateral loans

RESIDENTIAL MORTGAGES
A mortgage is a loan that uses your home as collateral. If a homeowner fails to pay their mortgage for more than 120 days, the loan company can initiate legal action, which could result in the lender taking possession of the home through foreclosure. The property might be sold to satisfy the remaining principal on the loan once it has been transferred to the lender.
HOME EQUITY LOANS
A home can also be used to secure a second mortgage or a home equity line of credit (HELOC). The loan amount will not exceed the available equity in this scenario. For example, if a home is worth $200,000 and the primary mortgage balance is $125,000, a second mortgage or HELOC will only be available for up to $75,000.
MARGIN TRADING
Margin trading also considers securitized loans. An investor uses the balance in his or her brokerage account as collateral to borrow money from a broker to gain shares. The loan increases the number of shares an investor can purchase, hence boosting the potential gains if the value of the shares rises. However, the risks are amplified as well. If the value of the shares drops, the broker will demand payment of the difference. If the borrower fails to cover the loss, the account acts as collateral.

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in BuyProperly, Editorial, Thought Leadership Posted by wpengine

The Top 50 Real Estate Investment Books

If you’re a real estate investor (or thinking about becoming one) you know how important it is to equip yourself with knowledge- from webinars and courses to seminars and mentors, the options are endless!

But what you may not realize is that books can also be a powerful investment tool. In fact, there are plenty of great books out there on investing that can help you make smart choices with your money. To help you get started, here are the top 50 best real estate investment books, based on our experts’ recommendations. 

Whether you’re a seasoned investor or just starting to learn the ropes, these books will provide you with all the information you need to make smart decisions about where to put your money. 

So if you’re looking to boost your financial knowledge and invest smarter, be sure to check out this list of the best real estate investment books!

the top 50 best real estate investment books

 

1. “The Intelligent Investor” by Benjamin Graham: This book is considered the “bible” of value investing and is a must-read for anyone looking to get into this strategy.

2. “The Warren Buffett Way” by Robert G. Hagstrom: This book outlines Buffett’s unique investing philosophy and approach to building a successful portfolio.

3. “The Millionaire Real Estate Investor” by Gary Keller: This book is a comprehensive guide to real estate investing, covering everything from finding properties to financing and managing them.

4. “The Book on Rental Property Investing” by Brandon Turner: This book is a step-by-step guide to successful rental property investing, from finding the right property to screening tenants and managing your investment.

5. “The Real Estate Investor’s Guide to Flipping Houses” by J. Scott: This book provides a detailed, step-by-step guide to flipping houses for profit, from finding the right property to repairing and selling it.

6. “Build a Rental Property Empire” by Mark Ferguson: This book is a comprehensive guide to building a profitable rental property business, from finding the right properties to managing and scaling your business.

7. “The ABCs of Real Estate Investing” by Ken McElroy: This book is a great introduction to real estate investing, covering everything from the basics of property ownership to financing and taxation.

8. “The Real Estate Investor’s Bible” by William Bronchick: This book breaks down real estate investing, covering everything from finding properties to financing and closing deals.

9. “The Complete Guide to Flipping Properties” by Steve Chaderjian: This book is a step-by-step guide to flipping properties for profit, from finding the right property to repairing and selling it.

10. “The Real Estate Investor’s Guide to Financing” by Robert Shemin: This book is a comprehensive guide to financing real estate investments, from traditional loans to creative financing techniques.

11. “Investing in Real Estate” by Gary Eldred: This book is a great introduction to real estate investing, covering everything from the basics of property ownership to financing and taxation.

12. “The Real Estate Investor’s Guide to Tax Deeds and Foreclosures” by Jackie Beckham: This book is a great intoduction to investing in tax deeds and foreclosure properties, from finding the best deals to bidding at auction.

13. “The ABCs of Property Management” by Ken McElroy: This book is a great introduction to property management, covering everything from the basics of rentals and leases to marketing and maintaining your properties.

14. “The Real Estate Investor’s Guide to Leasing” by Joel Singer: This book is a comprehensive guide to leasing real estate properties, from Negotiating the best terms to managing the tenancy.

15. “The Real Estate Investor’s Guide to Business Plans” by Michael E. Gerber: This book covers everything you need to know about creating a business plan for your real estate investing business, from setting goals and objectives to outlining your marketing strategy.

16. “The Real Estate Investor’s Guide to Residential Properties” by John T. Reed: This book is a comprehensive guide to investing in residential properties, from finding the best deals to financing and managing your investment.

17. “The Real Estate Investor’s Guide to Commercial Properties” by John T. Reed: This book is all about investing in commercial properties, from office buildings to shopping centers.

18. “The Real Estate Investor’s Guide to Economic Indicators” by Sam Khater: This book is a comprehensive guide to understanding and using economic indicators to make better real estate investment decisions.

19. “The Real Estate Investor’s Guide to Market Research” by Steve cook: This book is a great guide to market research for real estate investors, from finding the best markets to invest in and analyzing demographic trends.

20. “The Real Estate Investor’s Guide to Property Management” by William Pivar: This book is an introduction to property management for real estate investors, from finding the best tenants to maintaining your properties.

21. “The Real Estate Investor’s Guide to Financing Options” by James A. Banks: This book is a guide to financing options for real estate investors including both traditional loans and private lenders.

22. “The Real Estate Investor’s Guide to Flipping Houses” by Suzanne Krauss: This book is a step-by-step guide to flipping houses for profit, from finding the right property to repairing and selling it.

23. “The Real Estate Investor’s Guide to Negotiating” by Dean Graziosi: This book is a comprehensive guide to negotiating real estate deals including buying properties at a discount to getting the best terms on financing.

24. “The Book on Rental Property Investing” by Brandon Turner: This book is a great introduction to the ins and outs of rental property investing, from finding the best deals to managing your properties.

25. “The Real Estate Investor’s Guide to Foreclosures” by Martin Welch: This book is a guide to investing in foreclosed properties including finding the best deals for repairing and selling them.

26. “The Real Estate Investor’s Guide to Short Sales” by Suzanne Krauss: This book is a great introduction to short-selling real estate properties, from finding the best deals to negotiating with lenders.

27. “The Real Estate Investor’s Guide to Fix and Flips” by Suzanne Krauss: This book is a step-by-step guide to fixing and flipping houses for profit and covers everything from finding the right property to repairing and selling it.

28. “The Real Estate Investor’s Guide to Rent-to-Own Properties” by Michael R. Lewis: This book is a great introduction to rent-to-own investing, from finding the best deals to negotiating with sellers.

29. “The Real Estate Investor’s Guide to Wholesaling” by Than Merrill: This book is a guide to wholesaling real estate properties including finding the best deals to negotiating with sellers.

30. “Long-Distance Real Estate Investing” by David Greene: This book is a wonderful introduction to investing in real estate from a distance, from finding the best deals to working with local property managers.

31. “The Real Estate Investor’s Guide to Incomplete Construction Projects” by James A. Banks: This book is a comprehensive guide to investing in incomplete construction projects, from finding the best deals to financing and managing your investment.

32. “The Real Estate Investor’s Guide to Bank-Owned Properties” by Jackie Beckham: This book is a great introduction to investing in bank-owned properties, from finding the best deals to negotiating with lenders.

54. “Build a Rental Property Empire” by Mark Ferguson: All about building a rental property empire including finding the best deals to managing your portfolio.

34. “The Real Estate Investor’s Guide to Pre-foreclosures” by Jackie Beckham: This book is an introduction to investing in pre-foreclosure properties, from finding the best deals to negotiating with sellers.

35. “The Real Estate Investor’s Guide to Online Marketing” by Than Merrill: This book is a comprehensive guide to online marketing for real estate investors, from creating a website to driving traffic and generating leads.

36. “Real Estate Riches” by Dolf de Roos: This book covers how to build wealth through real estate investing, from finding the best deals to creating a portfolio that will generate income.

37. “How to Be a Real Estate Investor” by Neil Weinberg:  This book is a great introduction to real estate investing for those who are new to the field. It includes information on finding the best deals and making your first investment.

38. “Investing in Real Estate” by Gary Wiltbank: A straightforward book about real estate investing, from finding the best deals to choosing the right properties.

39. “The Real Estate Investor’s Guide to Cold Calling” by Dean Graziosi: This book is a great introduction to good, old-fashioned cold calling for real estate investors.

40. “How to Be a Real Estate Investor” by Neil Weinberg:  This book is a great introduction to real estate investing for those who are new to the field, from finding the best deals to making your first investment.

41. “The Real Estate Investor’s Guide to FSBOs” by Jackie Beckham: This book is a guide to investing in for-sale-by-owner properties.

42. “Real Estate: The Ultimate Wealth Builder?” by John Trew:  This book covers the pros and cons of real estate investing, from finding the best deals to deciding if it’s the right investment for you.

43. “The Real Estate Investor’s Guide to Probates” by Jackie Beckham: This book is a great introduction to investing in probate properties including finding the best deals to negotiating with sellers.

44. “The Real Estate Investor’s Guide to Tax Deeds” by Suzanne Krauss: This book is a great introduction to investing in tax deed properties, from finding the best deals to bidding at auction.

45. “Making Money in Real Estate” by Matthew Puttock: This book is a great introduction to real estate investing, from finding the best deals to making money through different investment strategies.

46. “The Millionaire Real Estate Investor” by Gary Keller: This book is a journey into the mindset of a successful real estate investor outlining Keller’s own journey to becoming a millionaire through real estate investing.

47. “The Real Estate Investor’s Guide to Rent-to-Own Properties” by Jackie Beckham: This book is a great introduction to investing in rent-to-own properties, from finding the best deals to negotiating with sellers.

48. “The Real Estate Investor’s Guide to Lease Options” by Suzanne Krauss: This book is a great introduction to investing in lease option properties, from finding the best deals to negotiating with sellers.

49. “The Real Estate Investor’s Guide to Private Lenders” by Than Merrill: This book is a great introduction to raising private money for real estate investing, from finding the best deals to negotiating with lenders.

50. “The Real Estate Investor’s Guide to Business Plans” by Michael R. Lewis: This book is a guide to creating a business plan for your real estate investing business, from finding the best deals to negotiating with lenders.

These are just some of the best real estate investment books out there. If you’re looking to get started in real estate investing, or if you’re already an experienced investor, these books can help you learn everything you need to know about building a profitable portfolio.

So what are you waiting for? Start reading and get started on your real estate investing journey today!

Looking for a low-cost, high-return option to start your real estate journey? Check out our latest campaign with BuyProperly, the Karma Candy Building, where you can invest with as low as $2,500 today.

in BuyProperly, Editorial, Thought Leadership Posted by wpengine
Business person sitting at laptop

How to Create a Real Estate Investment Business Plan

How to Create a Real Estate Investment Business Plan

Starting a real estate investment business can be a great way to grow your wealth. However, it’s important to have a well-thought-out plan in place before you get started. In this article, we will discuss the steps you need to take to create a successful real estate investment business plan. We’ll talk about setting short-term and long-term goals, as well as how to financially plan for growing your real estate portfolio.

If you’re ready to start investing in real estate, let’s dive in!

Before creating your real estate investment plan, it’s important to know why you’re investing in the first place.

What is your motivation for wanting to invest? Are you getting in the market now to save up for retirement? Are you hoping to become a full-time real estate flipper?

Once you have a good understanding of why you’re doing this, it will be easier to come up with goals, strategies, and action plans that fit with what you want to achieve.

Why create a real estate investment plan?

There are a few key reasons why you should create a real estate investment plan:

  1. To set short-term and long-term goals for your business
    Without having clear goals in place, you may be prone to making impulsive or impractical decisions as you begin your investment journey. Use your goals as a barometer.
  2. To figure out how much money you need to save up for your investments
    Creating a business plan means getting crystal clear on what out-of-pocket expenses to expect as you grow your portfolio.
  3. To develop strategies for finding good deals and growing your portfolio
    Your business plan should have a clear and repeatable strategy you can use to source, acquire, and manage your investments.

Now that we know why a plan is so important, here are the 10 steps you need to follow in order to create a real estate investment business plan.

Step 1: Define your short-term goals

What are your goals for the next 12-24 months? What do you hope to achieve in that time frame? Your short-term goals should be realistic and achievable, and they should help you move closer to your long-term goals.

Here are some ideas to help you get started:

  • When do you want to buy your first property?
  • How much do you need to save up for a down payment?
    (If you think you need tens or hundreds of thousands to get your first investment, check out BuyProperly. They help investors get started for as little as $2,500 using a fractional ownership model.)
  • What sort of returns (if any) are you looking for in your first 12-24 months?
  • What other expenses are you saving up for?

Step 2: Define your long-term goals

Here’s where we get into the fun stuff! Your long-term goals should be even more ambitious than your short-term goals. What do you hope to achieve in the next five, ten, or 20 years? How will your real estate investment business help you reach these goals?

Are you hoping to build a nest egg so you have money for your child’s college tuition? Are you planning on saving up for retirement?

Remember, real estate is a long-term game that works best when you’re prepared to hold onto your properties. When setting financial goals, look at both the potential rental income and appreciation over time to get a better idea of your return.

Step 3: Assess your current financial situation

Before you can start investing in real estate, you need to know where you stand financially. How much money do you have to invest? What is your credit score? How much debt do you currently have? Answer these questions and more in order to get a clear picture of your current financial situation.

Once you know how much money you’re working with, assess whether it’s enough for you to get started (comfortably) in traditional real estate investing.

Make sure you have enough money to cover:

  • The closing costs (lawyer’s fees, surveys, title search, realtors, etc.)
  • One-time repairs
  • Property management fees
  • Utilities, mortgage costs, and taxes
  • Ongoing maintenance and repairs

These expenses can really add up, so be sure to factor them into your financial plan. In fact, it’s often this step that makes many people rethink real estate investing altogether.

When new investors check out BuyProperly, they’re often shocked to learn that traditional real estate isn’t the only way to grow a lucrative portfolio. BuyProperly helps people get started in real estate for a small fraction of the cost of traditional investing.

Are you curious about accredited investing?

Accredited investors have special status and are able to invest directly into:

  • Private equity
  • Venture capital
  • Angel investments
  • Hedge funds

Find out more — Schedule a call with us today!

STEP 4: CREATE A SOLID FINANCIAL PLAN

Now that you have an idea of what you need to begin investing in real estate, it’s time to build out a solid financial plan.

Investing in real estate can be a great way to grow your wealth, but it’s important to understand how to invest and what to expect before you get started.

Anticipate your monthly expenses
In your area, what are average management costs? What about heat, electricity, and water?

Look at potential rental income
What can you expect for a 1, 2, or 3-bedroom rental in your area?

What monthly net income can you expect?
After all expenses, work out what you expect to receive monthly.

What annual appreciation are you expecting?
Look at your local market to determine these rates.

How will you continue to invest?
Will you be able to leverage your current assets to continue growing your portfolio?

STEP 5: RESEARCH THE MARKET 

Before you invest in any property, it’s important to do your research and understand the current real estate market conditions.

First, decide on the area you want to invest in. Do you want to stay local or are you open to investing out of your city or province?

Next, take a close look at your chosen area. Are prices rising or falling? What are the current vacancy rates? How much competition is there for properties in your area?

Knowing this information will help you make smarter investment decisions.

STEP 6: CHOOSE YOUR INVESTMENT STRATEGY

There are many different ways to invest in real estate, and each comes with its own set of risks and rewards.

First, do some research and decide which investment strategy is right for you. Maybe you want to buy and hold properties for the long term, or maybe you’re interested in flipping houses for a quick profit.

Next, decide on which type of real estate investment you’d like to start with. Are you looking for single-family dwellings with lower repair and maintenance costs, or multi-family buildings that can yield a higher return but are more expensive to get underway?

Are you hoping to quickly leverage your properties to grow your portfolio, or are you more interested in buying properties that have the potential to appreciate over time?

Having a clear strategy in place before you start investing is the best way to ensure you’ll meet your short and long-term goals.

NOW IT’S TIME TO CREATE YOUR BUSINESS PLAN

Even if you’re not raising funds or seeking outside investment, it’s always a good idea to have a business plan in place. This will help you stay organized and keep track of your progress over time. It can also be helpful when applying for loans or other financing.

Now that you know your goals and what you need to do to achieve them, it’s time to put together a real estate investment business plan. This will act as your roadmap for growing your portfolio and achieving success in real estate investing.

Your business plan should include the following:

– A description of your business

– The goals you hope to achieve with real estate investing

– How you plan to finance your investments

– Strategies for finding and evaluating deals

– Plans for managing your properties

– Marketing and sales strategies

– Projected income and expenses

– A risk management plan

Creating a business plan is not easy, but it is essential if you want to be successful in real estate investing. It will help you stay on track and make smart decisions as your business grows. So take the time to create a plan that is tailored to your specific goals and needs.

With a well-constructed business plan, you can confidently move forward with your real estate investment business and achieve the success you desire.

CONCLUSION

Real estate investing can be a great way to build wealth and create financial security for you and your family. But like any business, it takes planning, hard work, and dedication to succeed.

By following the steps outlined in this article, you can create a real estate investment business plan that will help you reach your goals. Stay focused on your goals, do your research, and take action to make your dreams a reality!

So what are you waiting for? Start planning today and see how real estate investing can change your life.

Learn how BuyProperly helps investors get 10-40% projected annual returns for a fraction of the cost of traditional real estate investing.

in BuyProperly, Editorial Posted by wpengine

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