by Kenbry Capital | Apr 5, 2024 | Blog
Investing in real estate is a proven path to long-term wealth, and rental properties can provide a steady income stream. However, the world of real estate investment poses some critical questions: Should you invest in multifamily rentals, or is a single-family rental (SFR) the better option? Let’s delve into the pros and cons of each to help you make an informed decision.
Single-Family Rentals (SFRs)
SFRs are standalone homes with their own plot of land, offering privacy to the tenant and less maintenance for the landlord. Here are some key advantages:
Lower Acquisition Cost:
SFRs typically have lower purchase prices than multifamily properties, making them more accessible to beginner investors.
Market Liquidity:
SFRs tend to have higher market liquidity. It is generally easier to find buyers for single-family homes than for multifamily properties.
Flexibility:
With SFRs, you can sell off one property at a time, which provides more flexibility and doesn’t require you to liquidate your entire investment.
However, some challenges include:
Vacancy Risk:
If a single-family rental becomes vacant, you lose 100% of the rental income until a new tenant is found.
Scalability:
Growing a portfolio of single-family homes can be time-consuming. Each new property requires a separate transaction.
Multifamily Rentals:
Multifamily rentals are properties that have more than one unit, such as duplexes, triplexes, and apartment complexes. Here are some advantages:
Cash Flow:
Multifamily properties often provide more cash flow because you’re collecting rent from multiple tenants.
Economies of Scale:
With multiple units under one roof, you can achieve economies of scale, reducing the cost per unit for maintenance and management.
Lower Vacancy Risk:
If one unit becomes vacant in a multifamily property, you still have income coming in from the other units.
On the downside:
Higher Acquisition Cost:
Multifamily properties tend to have higher purchase prices than single-family homes, which can be a barrier to entry for some investors.
Complex Management:
Managing multifamily properties can be more complicated due to the number of tenants and potential disputes.
So, should you invest in multifamily rentals, or single-family rentals? The answer depends on your investment goals, budget, risk tolerance, and management preference. Consider the pros and cons of each carefully, and perform thorough due diligence before making your investment decision.
Whether you need financing for multifamily rentals or SFRs, contact the team at Kenbry.
by Kenbry Capital | Mar 8, 2024 | Blog
The real estate market has always been a lucrative platform for investors seeking tangible assets that generate both passive income and potential value appreciation. But the traditional approach of buying to let on long-term contracts has been somewhat outdone by a new strategy – short-term rentals.
High Revenue Potential
Short-term rentals, often facilitated by platforms like Airbnb, offer an opportunity for owners to generate significantly higher income. The ability to charge per night often equates to a higher monthly income than a traditional lease, particularly in tourist hotspots or during peak times. By adjusting rates based on demand, owners can maximize their income in a way that just isn’t possible with long-term leases.
Flexibility in Property Usage
Aside from the financial perspective, short-term rentals also provide flexibility. If you want to use the property for personal reasons, you can simply block out the dates you need. This is particularly beneficial for those who own properties in vacation destinations and want to utilize them occasionally.
Better Maintenance and Less Wear and Tear
On the surface, it might seem that short-term rentals would suffer more wear and tear than long-term leases, but that’s not necessarily the case. Because short-term rentals are cleaned and inspected regularly, any issues are likely to be caught and addressed early, preventing minor problems from becoming major repairs.
Diversifying Your Investment
The real estate market fluctuates, and having your investment spread across different types of rentals can help to mitigate risk. If long-term rental demand declines, the short-term market might still be thriving, allowing you to maintain a steady income.
Tax Benefits
Depending on your location, you may also be able to enjoy significant tax benefits from short-term rentals, with the possibility to deduct expenses such as mortgage interest, property taxes, insurance, and maintenance costs.
To wrap up, investing in short-term rentals is a promising avenue offering high potential returns and flexibility. Of course, as with any investment, it is not without its challenges. However, with careful planning, a well-chosen property, and effective management, short-term rentals can be a smart addition to your investment portfolio. Contact Kenbry today to learn more about our financing programs for short-term rentals.
by Kenbry Capital | Feb 2, 2024 | Blog
Navigating the landscape of home loans can be a daunting task for any prospective homeowner. Among the multitude of options available, two of the most commonly discussed types are Stated Income Loans and Traditional Loans. To help clear up some of the confusion, we will delve deep into each of these loan types, contrast their features, and aim to provide you with the information needed to make an informed decision.
Traditional Loans
Traditional loans are the most common types of home loans. They usually come in two forms: Fixed-Rate and Adjustable Rate Mortgages. With these loans, lenders require comprehensive documentation, including W-2 forms, tax returns, and bank statements to verify your income and ability to repay the loan.
The primary benefits of traditional loans lie in their relatively low interest rates and fixed payment schedules, making them a predictable option. However, they require a good credit history, a stable income source, and usually a substantial down payment.
Stated Income Loans
On the other hand, Stated Income Loans, also known as “no-doc” or “low-doc” loans, require less documentation. As the name suggests, borrowers simply state their income without needing to provide extensive evidence. These loans were designed for self-employed borrowers, or those with variable incomes, who may have a harder time gathering traditional income documentation.
Stated income loans offer flexibility that can be attractive to some borrowers, but they often come with higher interest rates to offset the perceived risk by the lender. They also require a higher down payment and a good credit score.
Comparison
When comparing the two, Stated Income Loans offer convenience and less documentation, but they come at a cost. Higher interest rates can significantly increase the amount paid over the life of the loan.
In contrast, traditional loans require more paperwork and have stricter qualification criteria, but they typically offer more favorable terms, including lower interest rates.
Final Thoughts
In summary, the choice between a Stated Income Loan and a Traditional Loan depends largely on your personal circumstances, including your income structure, credit score, and your ability to provide documentation. Before making any decision, it’s always best to consult with a mortgage professional who can guide you based on your unique financial situation.
Remember, the key to successful homeownership is not just getting a loan, but getting the loan that’s right for you. Contact Kenbry today to learn more about our stated income loans for commercial real estate.
by Kenbry Capital | Jan 5, 2024 | Blog
When it comes to financing commercial real estate, Small Business Administration (SBA) loans hold a prominent position. These loans, designed by the U.S. government, aim to support small businesses by providing them with capital at favorable terms. Here’s why SBA loans could be an excellent choice for your commercial real estate ventures.
Lower Down Payments
One of the primary advantages of SBA loans for commercial real estate is their lower down payment requirement. Traditional loans often require a down payment ranging between 20% to 30% of the property’s value. In contrast, SBA loans allow down payments as low as 10%, making it easier for small businesses to acquire commercial properties without draining their cash reserves.
Longer Repayment Terms
Another significant advantage of SBA loans is the extended repayment terms they offer. With traditional commercial loans, typical repayment periods range from 5 to 20 years. SBA loans, on the other hand, can have repayment terms of up to 25 years for real estate loans. Longer repayment periods mean lower monthly payments, improving cash flow and financial stability for businesses.
Competitive Interest Rates
SBA loans offer competitive interest rates, often lower than those of conventional commercial loans. The rates are usually based on the prime rate plus a markup rate. The government caps the rates, ensuring that they remain affordable for small businesses.
Flexible Use of Funds
Unlike some traditional loans where you might be restricted in how you use the funds, SBA loans offer more flexibility. Funds from an SBA loan can be used for a variety of purposes, including purchasing land or buildings, construction or renovation costs, or even refinancing existing debt.
Greater Accessibility
Lastly, SBA loans provide greater accessibility to small businesses. For businesses that might not qualify for a conventional loan due to a limited track record or lack of collateral, SBA loans can be a viable alternative. The government guarantees a portion of the loan, thereby reducing the risk for lenders and increasing the likelihood of approval for small businesses.
In conclusion, SBA loans are a powerful tool for financing commercial real estate, offering lower down payments, longer repayment terms, competitive interest rates, flexible use of funds, and greater accessibility. If you’re considering purchasing, building, or renovating a commercial property, it’s worth exploring the benefits an SBA loan from Kenbry.
by Kenbry Capital | Dec 8, 2023 | Blog
Commercial real estate (CRE) financing is a critical aspect of any business venture. Traditionally, businesses have leaned towards banks and other institutional lenders for financing. However, the rigid structure and stringent requirements of these traditional lending institutions may not be suitable for every business. That’s where private lenders step in, offering flexible, fast, and personalized financial solutions.
Quick Financing
One of the standout advantages of using a private lender is the speed at which they operate. Traditional lenders have to follow a lengthy underwriting process that includes several levels of bureaucracy. Private lenders, on the other hand, have the flexibility to make swift decisions, thereby accelerating the loan approval process. This speed can be particularly advantageous in a competitive real estate market where securing a property rapidly is crucial.
Flexibility
Private lenders provide a higher degree of flexibility compared to traditional lending institutions. They generally function on a case-by-case basis, considering the unique needs and circumstances of each borrower. This flexibility extends to loan terms and repayment options, allowing borrowers to tailor the loan structure to their specific needs.
Less Stringent Criteria
Private lenders often have less stringent eligibility criteria than their traditional counterparts. Where banks may decline applications due to poor credit scores or lack of sufficient collateral, private lenders may still consider the viability of the project itself, offering loans based on the potential profitability of the property.
Personalized Service
Private lenders often provide a more personalized service than traditional lenders. They take the time to understand the borrower’s needs, goals, and plans. This personalized service can be beneficial, particularly for complex or unconventional financing needs that traditional lenders may not understand or accommodate.
In conclusion, private lenders for CRE financing provide an efficient and flexible alternative to traditional lending institutions. They can respond quickly to financing needs, offer significantly more flexibility, have less stringent criteria, and offer a more personalized service. While each financing option has its pros and cons, it’s clear that private lenders fill an important gap in the market and are an option worth considering for commercial real estate investments.
Kenbry is a private lending firm, committed to providing tailored solutions to meet the needs of property investors. If you need CRE financing, contact Kenbry today.
