If you don’t have any money and wonder if you can become financially independent through real estate investing, listen to Bryan’s story. You will be inspired.

http://eyesoninvestors.com/bryan-batson

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How would you like to learn from the best real estate investors? Check out my new web site, Eyes On Investors.

I’m interviewing successful investors from all over the country and sharing the interviews with you.

If you know someone please send me a referral and introduce me to them so I can talk to them. Email me at damon@luinc.com.

Be sure to leave comments and let me know how the interviews have helped you, and what I can do to make it better.

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The host of Fox News Houston asked this question yesterday to Steve Davis, one of our mentors at Lifestyles Unlimited, on live TV.

Watch the 3 minute interview to hear what he says:

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This post is for you my readers that are interested in technology and how things work.

Over the last couple weeks I’ve been migrating the Quest database and web site to a new server. That process was finally completed last night.

Quest is hosted with Hosting.com. Over the last year the cloud architecture has become mature enough that it was time to get Quest on it. We purchased a cloud enterprise platform in hosting.com’s Denver data center. It’s robust and gives us plenty of room to grow.

The database that contains all the MLS data for Quest is 33 gigabytes and growing every day. MLS data from Houston, Dallas, Fort Worth, San Antonio, and Austin is being feed into it around the clock. In fact it’s updated every 5 minutes so all the data is fresh and current.

Now that we are on a cloud platform we have more flexibility in configuring our environment. If we need more processing power a simple change dynamically adds more processors transparently.

Need more drive space or memory? Same thing, flip a switch and more is allocated.

The new platform is about 4 times faster than the old server. You can see and feel the application respond faster.

It was a lot of work to moved over to this platform but now that it’s complete it can grow with us without the need to move it again.

Some of these migration steps had to be done in the early morning hours to avoid kicking people off the system. After several of these in the last few days I think I’ll go get a little sleep

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Quest now let’s you hide calculator results you don’t need. For example suppose you are doing a hard-money loan for a specific property. You don’t care about the conventional financing. Just hide the conventional financing calculations and they won’t be around to clutter up your results.

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Hard-money loans have high interest rates and high closing costs. In today’s market the interest rate is about 15%. The points are around 4% of the loan amount. Conventional loans have an interest rate around 6% and no points.

At first glance you may be tempted to immediately dismiss a hard-money loan as something you will never do because they are expensive. Who wants to pay 15% interest on a loan?

Let’s look at this from a different perspective that perhaps you haven’t considered and see if it then makes sense to use hard-money loans.

Think from the perspective of leveraging your money and consider these two scenarios.

1. A conventional loan on a typical rental property in Houston in today’s market
2. A hard-money loan on the same property that is converted to a conventional loan after 3 months.

Scenario 1: Conventional loan

20% down payment, 6% interest rate, 30 year term, purchase price is $60,000 and ARV (after repaired value) is $100,000. Repair costs are $10,000.

Using the cash-flow calculator in Quest (also available here as an Excel spreadsheet) we have the following results…

Unrealized capital gain: about $30,000
Cash out of pocket: about $25,000
Cash on cash return: about 14%
Return on capital gain: about 116%
Monthly cash flow: about $300

These are great returns. As long as you have $25,000 cash (your cash out of pocket) you can do this deal. This is an awesome investment that increases your wealth and monthly cash flow very nicely.

Scenario 2: Hard-money loan refinanced after 3 months

Using the same purchase price, ARV, and repair costs, plus the parameters of a typical hard-money loan (14% interest, 4% points plus other fees, and 3 months until refinacing) we have the following results…

Unrealized capital gain: about $30,000
Cash out of pocket: about $4,000
Cash on cash return: about 43%
Return on capital gain: about 725%
Monthly cash flow: about $150

So check this out. Even though the hard-money loan costs more in interest and points, you only had to pay $4,000 out of your pocket to increase your wealth by $30,000.

The cash flow at $150/mo is lower on the hard-money loan because your refinanced loan is a higher amount (your hard-money expenses get rolled into the new loan) but percentage wise you are getting a much better return based on the amount of cash you put into the deal.

What’s so cool about this?

If you have $25,000 cash available for investing, how many houses can you buy with a conventional loan? One. How much wealthier would you be? $30,000 capital gain plus $300/mo cash flow.

With the same $25,000 cash how many houses can you buy using hard-money loans? Six! How much wealth would you have buying six houses instead of one? $180,000! ($30,000 x 6). And your monthly cash flow would be $900/mo ($150 x 6).

That’s the power of leverage. Use less of your own money and more of someone else’s money and you can grow your wealth and cash flow faster and higher.

This is why paying the extra costs on hard-money loans is worth it. So what if you pay 15% interest for 3 months and a few thousand dollars more in closing costs. Those expenses are inconsequential compared to the increase in wealth and cash flow you will have from leveraging your money.

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It’s so satisfying to say this: Quest has a hard-money calculator!

It just got deployed today.

Many investors are using hard-money loans to purchase their properties. If done properly it can increase your leverage and significantly increase your rates of return. I plan on writing a more detailed post about this.

A nice addition in this update is that you can now tell the calculator how many years your loan is for (for both conventional and refinance loans).

And in case you missed it, maps are available for your subject property, sale comparables, and rent comparables.

If you want all the gory details on how the new hard-money calculator works get this spreadsheet and have fun. The download requires Excel 2007 or newer.

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Here is the latest hard-money calculator we’ve created. Excel 2007 or newer is required to work with this spreadsheet.

This version is the one that is being integrated into Quest.

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Quest can evaluate and do a CMA (Comparative Market Analysis) on properties that are not listed on the MLS. These are properties that you may find from wholesalers or banks. It might be a private sale by an individual.

There are increasingly more houses being sold to investors before they get listed on the MLS so understanding how to do a CMA evaluation of them in Quest has become important.

Here is what you do. When you start a new evaluation fill in the box under “Enter subject property information”. It looks like this:

Evaluating a non-MLS property

Only the fields with an asterisk need to be entered. If you don’t know square feet, subdivision, or some of the other required information just look it up in the Tax Assessor web site. Quest has a bunch of links to the Tax Assessor web sites, just look in the Tax Links menu.

Once this information is entered you can proceed with your CMA evaluation just like you would if the property had been listed in the MLS.

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