As we get ready to say goodbye to 2023, and ‘Let’s do this’ to 2024, it’s an opportune time for real estate investors to reflect on their financial strategies and to set meaningful, relevant and measurable resolutions for the upcoming year.
When it comes to financing, nothing is more essential than establishing your preparedness action plan in order to pave your path for greater success and resilience in the dynamic world of real estate investing. Let’s explore some key funding resolutions you should be considering for the new year.
1. Diversify Funding Sources:
- Resolution: In the new year, I resolve to diversify my funding sources to mitigate risk and seize new opportunities.
- Rationale: Relying on a single funding avenue can expose investors to unnecessary risk. Explore alternative financing options such as private lenders, crowdfunding, or partnerships to create a more robust and flexible funding portfolio.
- RLG value add: As a lender, Ridge Lending Group offers a very wide range of products for its real estate investors. While we realize we can’t be everything to everyone, we have as close to a one stop shop as you’ll find. From Conventional to NON-QM (DSCR, bank statement, asset depletion), and short-term bridge loans and portfolio loans, to 1st and 2nd lien Helocs and commercial loan product and much more.
2. Improve Credit Scores:
- Resolution: I commit to improving my credit score to access better financing terms and opportunities.
- Rationale: A strong credit score opens doors to favorable interest rates and loan terms. Take proactive steps such as paying bills on time, reducing outstanding debt (optimal revolving debt utilization is 30% or less), and addressing any discrepancies in your credit report.
- RLG value add: If you need assistance with your credit, please reach out to Ridge Lending Group, we have an outstanding resource for credit review and repair that we can introduce you to.
3. Explore New Financing Opportunities:
- Resolution: In the coming year, I will actively explore and leverage new financing opportunities that align with my investment goals.
- Rationale: The financial landscape is continually evolving. Stay informed about emerging financing options, government programs, and industry trends to capitalize on innovative opportunities that can enhance your investment strategy.
- RLG value add: Ridge Lending Group works so closely with investors so we have our finger on the pulse for all pertinent updates, changes and additions to the available lending options.
4. Optimize Debt Structure:
- Resolution: I will review and optimize the debt structure of my existing investments for greater efficiency and profitability.
- Rationale: The way debt is structured can significantly impact cash flow and overall returns. Assess existing loans, consider refinancing options, and explore strategies to minimize interest costs while maximizing returns.
- RLG value add: One of Ridge Lending Group’s greatest support features for its investors is the constant support and review of their finances (income(s) and debts) in combination with their goals. From Annual reviews of draft tax returns (specifically the Sch E- where your rental properties will be found) to quarterly check ins to ensure you’re on the right track and then pivoting as appropriate.
5. Establish a Contingency Plan:
- Resolution: I commit to developing a comprehensive contingency plan for unexpected financial challenges.
- Rationale: Real estate investing comes with uncertainties. Having a well-thought-out contingency plan can provide peace of mind and ensure you’re prepared to navigate unexpected financial hurdles without jeopardizing your investments.
- RLG value add: Because your RLG team are investors themselves we are able to provide additional feedback or recourses that help prepare for plans B, C or D.
6. Regularly Review Financing Terms:
- Resolution: I will make it a habit to regularly review and stay updated on the terms of my financing agreements.
- Rationale: Market conditions, interest rates, and lending policies can change. Regularly reviewing your financing terms ensures you’re aware of any adjustments needed to optimize your investments.
- RLG value add: Your Ridge Lending Group dedicated loan specialist can help you interpret and decode some of the more technical language used in your loan documents or other financial statements.
7. Evaluate Alternative Financing Models:
- Resolution: I commit to exploring alternative financing models, such as lease options or seller financing, to diversify my investment strategies.
- Rationale: Alternative financing models can offer unique advantages and open up new possibilities. Understanding and incorporating these approaches can provide additional flexibility in structuring deals.
- RLG value add: Again because of our strong connection to investors we can help analyze the deal and provide feedback on alternative ways to make a deal work if the traditional methods fail. Even if that means Ridge Lending Group is not benefiting from the transaction!
8. Develop a Financing Calendar:
- Resolution: I will create a financing calendar to stay organized and ensure timely actions regarding loan renewals, interest rate adjustments, and other financing-related events.
- Rationale: A financing calendar helps you stay proactive and avoid last-minute decisions. It ensures you have ample time to explore options and negotiate terms effectively.
- RLG value add: Upon request we can establish this reminder calendar for you on your entire portfolio.
9. Engage in Ongoing Education:
- Resolution: I commit to continuous education on financing trends, strategies, and regulations in the real estate industry.
- Rationale: Staying informed is crucial in the ever-evolving field of real estate financing. As many of you can attest, the funding side of investing is a moving target. Very fluid and always changing. Without the leverage, use of ‘other people’s money’ our rates of return are greatly diminished. It’s an absolute must to stay informed.
- RLG value add: Education is above all where I think Ridge Lending Group shines brightest. And it’s delivered FREE of charge to anyone that wants it- in a group setting or one on one with me. One of our primary goals is to arm and inform RLG clients with the most real-time and relevant (to them) information available. Attend Ridge Lending Group’s Live with Caeli events, watch YouTube Videos, tune into the Podcast episodes “Calling All Real Estate Investors” or simply schedule time to connect directly. And if you haven’t already, join the Ridge Lending Group Community! It’s a great and again free resource with lots of good information.
By setting and committing to these funding resolutions, real estate investors can position themselves for a successful and financially rewarding new year. Remember, the journey towards financial success is ongoing, and each resolution represents a step toward building a more resilient and prosperous real estate portfolio. And while the income for the buy and hold real estate investor is meant to be considered passive, there is nothing passive about real estate investing. To be successful in this space you must be willing to have some skin in the game. Advocating for your financial freedom is key and Ridge Lending Group is here to help. Here’s to a year filled with strategic financing, timely and relevant education and lucrative investments!
