Do You Need a Real Estate License to Flip Houses in Arizona?

The hit TV house flipping shows make it look so easy. You’ve probably thought to yourself; I can do that. However, don’t be fooled; flipping houses and making a profit doing it is not as easy as they make it seem on TV. That’s why it’s important to know as much about the business before going into it. For example, you’re probably wondering if you need a real estate license to flip houses in Arizona. Technically, no. There is no legal necessity for you to take the realtor exam before you can flip a house.

However, with that said, it is important to consider either teaming up with a realtor who has flipping experience or just going ahead and getting the license yourself. Why? Because, as we mentioned, house flipping isn’t as easy as it seems and you’ll want as much knowledge and as many skills behind you before you take a hammer to the wall, especially if you plan on doing this full-time.

How is Success Measured When Flipping Houses?

You won’t get rich overnight flipping houses. In fact, a flipper considers a flip a success when they get a 10 to 15 percent gross profit margin. Make a mistake that costs thousands and watch those numbers shrink. Make another costly mistake and you might not even see a profit. That’s why it’s recommended to do it right by getting a real estate license before going in.

Benefits of Getting Your Real Estate License to Flip Houses in Arizona

It really only makes sense to get your real estate license if you plan on doing this as a career. Otherwise, if you plan to flip a house or two and then move on to something else, there’s no need. However, if this is your new, chosen career, here are some benefits of getting a real estate license that ends in success.

No Agent Commissions

Without your own real estate license, you’ll have to pay a real estate agent commissions on the sale of the property, which can be anywhere from 5 to 6 percent.

You’ll Have a Better Understanding

There’s a lot to know about flipping houses, like getting permits, understanding disclosures, housing discrimination, and more. This can all get confusing to someone who doesn’t know the real estate business. However, when you get your license, you’ll have all this knowledge tucked away inside your brain ready and waiting for you to use at a moment’s notice.

Get Access to the Multiple Listing Service (MLS)

In order to have direct access to the MLS, you need to be a registered real estate agent in Arizona. You’ll want access to the MLS to find houses to flip in a competitive market. The hardest part of flipping a house is not the actual work done, it’s finding the right property to flip. When you have access to the MLS, you can set up notifications that alert you when a new, hot property is up for sale. This gives you an advantage in the market.

Networking

As a working real estate agent who flips houses, you’re going to meet all kinds of people in this business, like contractors and other professionals. The more you people you meet and the more houses you flip will build your network and you’ll start getting word-of-mouth opportunities across your path.

Buyer Trust

When it comes time to sell your flipped property, buyers will put more trust in you when they know you have a real estate license. The majority of Americans prefer to use a real estate agent to purchase a home than go it alone.

How to Get Your Real Estate License

States follow the same basic process for obtaining a real estate license, which includes ensuring your eligibility (age and citizenship requirements), taking the pre-licensing course, passing the state licensing exam, and then activating your license, which costs between $200 and $400. You will also have to pay for access to the MLS on an annual basis. In Arizona, this is about $225.00 per year.

Arizona Construction Loans: The Benefits of Short to Permanent Financing

Arizona Construction Loans: The Benefits of Short to Permanent Financing

If you’re like most people with a construction project (either in mind or already underway), there’s a good chance you need to secure a loan in order to get it all done. But just when you think you’ve gotten it all figured out, you notice that your loan options are anything but straightforward. In fact, most of them are downright confusing!

What’s makes the average construction loan so complicated? Well to start, a single construction loan is often not singular at all, but rather multiple loans (with different purposes) all tangled up. This is because the first portion of a construction loan typically only is used to cover the cost of the project itself (construction tools and equipment, labor, etc.), but other costs (like refinancing) are put into a separate loan later on that acts more like a conventional mortgage. Because the refinancing terms often fluctuate upon the project being completed, interest rates can fluctuate wildly.

The risk here is that borrowers often end up paying multiple closing costs and fees on these different loans. Likewise, the terms may be stricter for construction projects that don’t go exactly according to plan, and borrowers may have to take out additional loans as a result (or even face penalties). And let’s face it, most construction projects definitely come with unforeseen circumstances and the occasional surprise! In many cases, it means developers having to charge higher costs to new tenants upon the project’s completion, and they may not be able to refinance with the initial lender due to the initial terms being “broken”.

So, what’s the alternative?

Though you’d be hard-pressed to find a lot of information out there on short to permanent financing options (many lenders will push hard on traditional loan options because it’s how they make the most revenue), the truth is that this is the ideal form of construction project financing for many.

What is a Short to Permanent Loan?

Like other construction loans, a short to permanent loan is essentially two loans. However, they are put neatly into a single package that allows the terms to be more clear (or at least way more clear than the average construction financing plan). The first loan or “short” loan is used to pay for the construction, while the second or “permanent” loan is used as the mortgage for refinancing. The loan package all comes from the same lender, allowing for there to be less confusion.

In a nutshell, short to permanent or simply, “short to perm” loans have refinancing already built in, so there are no questions later on. This is crucial, as many other types of construction lenders change the refinancing terms during the project or they will not approach refinancing until the project is already been complete.

Benefits of Short to Permanent Loans

One of the biggest benefits with this kind of loan is that the risk is far less great when refinancing is already built into the loan package. That said, here are the key benefits that come with short to permanent loans:

  • Refinancing rates already set, so they will not risk going up should other circumstances change
  • Flexible terms that accommodate for construction projects that take longer than planned or go in a slightly different direction than initially planned
  • Usually a single closing cost for the loan package as a whole (rather than having them spread out through various loans)
  • Often lower fees (as a result of the single closing cost and neat loan package)
  • Protects you from financial ruin should the project not go according to plan, as refinancing terms are already set

For all of these reasons, we anticipate that an increasing amount of developers and construction companies will be turning to this lending option in the future. Interested in learning more about your short to permanent loan or other construction financing options? Contact the lending experts at Barret Financial Group today!

3 Things to Successfully Flip Luxury Homes in Arizona

Flipping homes has become a popular and lucrative investment for individuals across the country. While many people purchase cheaper homes to flip and sell, flipping luxury homes has been growing in popularity. In order to be successful in this branch of real estate investment, it’s critical to consider the following obstacles that are unique to flipping luxury homes. Read more

Buying, Selling and Holding Arizona Apartments at the Top of the Market

The Phoenix metro area is currently one of the healthiest real estate markets in the country. It’s particularly a great time to invest in a residential property with multiple units (apartment building) right now, especially if you plan on flipping that property for a profit or holding it and renting the units out to tenants. Here are a few tips worth following to make sure you’ll always stay at the top of the market when it comes to Arizona apartments:

Take the Current Climate into Consideration

Though our real estate economy is strong right now, the current climate is very much a “sellers market”. This means there is a lot of demand to purchase apartments, and so as a seller you are able to price your property higher and get more gross profit in return. If you are fixing up a property and plan on selling it, make sure you do so relatively quickly because things will not always stay this way. Depending on your current financial situation, you may want to consider doing a 1031 exchange to delay your tax liability.

Likewise, if you are planning to buy, you should be prepared to shell out a bit more than you might have originally intended because you’re buying in a sellers market. You also need to do your research to make sure you’re still paying an appropriate amount and will meet your ROI (return on investment) goals if your intention is to buy and sell or rent out. That said, while it may seem like a good idea to wait to purchase until prices go down, the truth is that there’s no telling exactly when that will happen. Besides, wait too long, and there’s the very real risk of losing the property to another buyer.

Know That It’s All About Location

Even though Phoenix is a strong real estate market overall, not every piece of property here is a worthwhile investment. The “hottest” areas to sell in are those that already have been established as a longtme desirable location or those that are “up and coming” or “transitioning” neighborhoods. Renters and buyers will always be most drawn to areas they can see a future in.

If you currently have a property you are interested in selling or renting out, take a look at the surrounding area and recent real estate sales history. This will give you a more realistic look at what you can sell the property for. In many cases, it may be higher than you initially thought! In situations where the estimates are lower, you may be able to save yourself from doing some expensive renovations that are otherwise unnecessary.

Make Sure You Have the Right Financial Backing

Whether you’re buying apartments, looking to fix up and sell apartments or are simply looking to increase the value of your current property, it’s important to make sure you have the funds to do so. After all, the last thing you want is to get caught in the middle of a project without the financial means to finish it! Waiting too long to finish can even mean missing out on the current sellers climate. Getting a bank loan is one way to remedy the problem, but it takes a lot of time to apply and get approved. Even upon approval, there may be stringent rules of the loan that you have to follow.

It’s therefore worth considering far more flexible and fast-approval options, like a hard money loan. Contact the Barrett Group today to learn more about your hard money loan options and how we can help you achieve your real estate goals.

Growth Continues in the Greater Phoenix Area

The Greater Phoenix area has come a long way from its humble roots when it was created as a farm town back in 1881. If you aren’t from the area, it’s difficult to believe that Phoenix actually ranks number five on the list of the biggest cities in the United States.

The state of Arizona is considered one of the fastest growing economies in the entire country, with Phoenix at the top of the list. According to information from a recent U.S. Bureau of Economic Analysis State Data, the state is among the top five when it comes to fast growth, having an increase of 4.3 percent in total gross domestic product. Considered the most populous city in the state, the area of greater Phoenix is still a huge part of this growth and there is no sign it’s going to slow down any time soon.

The greater Phoenix area’s job market is also seeing significant growth. Recent statistics make it clear that the state of Arizona, as a whole, is going to outpace the country regarding job growth, with most of the opportunities being available in the capital of the state. Excluding the area of Phoenix, Maricopa County, there may be an increase in 2.1 percent in overall employment growth each year, with the greater Phoenix area experiencing an increase of 1.5 percent. What may be surprising to many people is that the job market has grown in some less than expected areas. Before the recession, the majority of the job opportunities were derived from construction, retail sales, and real estate. Now, however, business and financial services, along with manufacturing and healthcare, are meeting if not outpacing the industries that have been previously mentioned. Also, Phoenix has been dubbed as the “Wall Street West,” and it is ranked as number three on the list of different cities that have the highest number of workers in the financial sector.

The specific statistics surrounding job growth are further supported by the increase in overall demand for total office real estate, which actually outpaced the supply in 2018 according to information provided in the Phoenix Market Outlook Report that was conducted and then published by CBRE Research. The report also read that the net absorption has been outpaced by the supply since 2011 and is further pushing down the total office space vacancy from the recessionary peak that was 26.2 percent to 15.2 percent in quarter four of 2018.

Office space has not been the only portion of the real estate market in Phoenix that’s in high demand according to the above-mentioned report. There’s been a higher demand for multifamily housing which has outpaced the new supply for eight years in a row and has pushed down the increase from the recessionary peak which was 11.6 percent to under 4.5 percent during 2018. Approximately 8.300 new units, primarily employment centers and submarkets were added into the market, which is now up from the 6,300 new units created in the previous year.

With a beautiful and sunny state and a growing economy this state offers a vibrant community. The greater Phoenix continues to provide countless opportunities for both visitors and residents to enjoy virtually all hobbies imaginable.

How to Maximize ROI On Your Arizona Hard Money Loan

What’s the point of a fix and flip house project if you’re not going to get back everything you invested in it and more? After all, flipping a house the right involves not just the initial hard money loan financial investment but your own time, physical effort and even various other expenditures along the way. Fortunately, there are various measures you can take to make sure that none of this ends up being a waste of time.

Here are some fairly simple tips you can follow during the selling process to make sure that you are maximizing your return on investment:

Seize the Advantages a Hard Money Loan Has to Offer

By utilizing a hard money loan in lieu of a traditional mortgage or other bank investment, you actually have multiple advantages that other financial avenues may not offer. For example, hard money loans offer both conveniently fast approvals and flexible terms. This means you can get started on your fix and flip project much faster and can use the time that you need to make sure the project gets done right. And because the collateral for the loan is usually the property itself, you have the convenience of not having to make constant payments to a bank or having to come up with other assets.

Take Some Great Photos or Hire a Professional Photographer

Think about how you’re going to draw in prospective buyers. These days, people often browse through dozens– if not hundreds– of real estate listings online before they finally narrow down a list of houses they would like to see in person. It is therefore important to not just write up a great listing that can be posted on various high-traffic real estate sites, but also to post some appealing photos.

If you have a high quality camera and have an eye for great lighting and space, you may be able to take professional-looking photos yourself. If not, you may want to consider hiring a professional photographer to come do the job for you. After all, the photos are arguably the most important part of any real estate listing, and a great one can be the difference between prospective buyers clicking to see more and scrolling on past.

Stage the House for Showings

Selling the house is the very last stage of a fix and flip project. So why stop putting in effort now? Stage the house to make it look like a home, not just a project. You don’t need to go filling it up with furniture and hanging pictures, but putting in at least some home items will help. After all, people are better able to envision themselves living in a place if they see some furnishings already in place.

To keep costs low, consider picking up some nice-but-cheap furniture from Goodwill (always make sure it is clean before putting it inside the house). If you won’t miss it during the showing process, you can also borrow some furniture from your own home.

That said, you might also want to consider enlisting the help of a professional staging company if you really want to go the extra mile. Often used by realtors, these companies require minimal effort on your part and will stage the house for you to make it look like a real attractive home. When a house is staged right, you are more likely to get a higher selling price.

Consider Hiring a Professional Real Estate Agent

Let’s be real– you’ve already put in a lot of effort on your own by this point, and if you’re like many people you probably want to see your fix and flip project right on through to the very end. While it is certainly possible to sell the property all on your own, the truth is that you are far more likely to attract buyers (more specifically, high-spending buyers) if you enlist the help of a professional real estate agent. They can get your listing on high-traffic websites more easily and can use their industry connections to get the word out to local realtors working directing with buyers.

While you will have to pay a fee to a realtor, the truth is that using one is the best way to bring in as much revenue as possible.

 

Arizona Fix and Flip Tips

Fixing up and flipping a house is a great opportunity to make a substantial profit, but only when it’s done right. A lot of people get into this business thinking that a few coats of paint and maybe some new fixtures is all it takes to flip a house for a fast profit, only to find themselves either stuck with a property they can’t sell or construction and repairs they can’t finish. And in booming real estate markets like Phoenix AZ, it can be a simple matter of ignoring the local weather conditions the property is in and not making repairs accordingly.

If you have no prior experience in fixing up houses, you may want to consult with an experienced contractor. That said, it is possible to take things into your own hands if you’re willing to put in the time and effort required. In Phoenix (and other parts of Arizona), you’ll also need to take into account the hot and arid climate before making any repairs or modifications.

Here are some tips you can follow to make sure your fix and flip job is done right:

Install Drought-Friendly Appliances

As anyone who’s lived in Arizona for a while can tell you that droughts are common. You’re probably already planning to put in some new appliances to up the property value, so why not boost your house’s appeal more by installing some water-saving appliances?

The good news is that there are more water-saving appliances available these days than ever before. The main ones you’ll likely want to look into are low-flow faucets and shower heads, as well as double flush toilets (toilets with different flushing power available).

Consider Alternatives to Water-dependent Plants and Lawns

We all want great curbside appeal, and the front yard is a huge part of that. In some cases, it can be more of a selling point than the house itself. But here in the Phoenix region, it just doesn’t make sense to invest in a lush green lawn with grasses that require heavy watering, nor is it worthwhile to have a lot of other foliage that requires a lot of water to survive. So, stick to plants that thrive in desert climates like cacti, California lilacs, yucca plants, etc. Some examples of drought-resistant glasses include Bermuda grass, Buffalo grass and Bahia grass, but there are actually a surprising amount of low-water varieties out there.

You may also want to user stones as decoration or even tasteful, contemporary ornaments for extra pops of color. If you really want to boost the home’s value, look into building in tiered plant or rock beds (adding dimension can add just as much value or even more than a traditional open lawn).

Make Ventilation and Interior Shade a Priority

Especially in hot, desert regions like Arizona, the home should serve as an oasis against the bracing heat and dry air. Buyers will flock to your house if air flows freely through it and they can escape the dangerous temperatures outside.

With these things in mind, you may want to install new windows or a sliding door that allow for plenty of air flow. Take a look at the existing ventilation system too, as it may be due for some updates.

Putting in some nice thick doors will also help keep the house insulated and cool. They will also instantly add much-desired value to the property, especially since this is an area where a lot of people tend to skimp on.

To make sure the house is kept as comfortably cool as possible, make sure that the walls are properly insulated as well. A lot of buyers will also appreciate it if the windows already come with some good quality shades or blinds that block out bright sun and heat.

Make Sure You Have the Finances You Need to Complete Your Project

One of the biggest things you can do to ensure a successful fix and flip project is to secure the financing you need ahead of time. Hard Money Lenders Arizona makes it easy, with fast approval rates and a simple application.

Have more questions about how you can make your fix and flip house ideal for the Phoenix market? Or just want to get started already with your investment? Contact us at Hard Money Lenders Arizona today. We’re here to help make your house flipping dreams become a reality!

Differences in Arizona Fix and Flip Loans

Fixing up and flipping a house can be a lucrative investment, but first you need the investment. In the state of Arizona, many savvy investors use what are known as “fix and flip” loans to purchase and then quickly renovate a property to get ready for sale.

Keep reading to learn more about fix and flip loans and to determine what type may be the right choice for you and your project.

Why a ‘Fix and Flip’ Loan?

You may be wondering why you should consider a fix and flip loan as opposed to a regular bank loan. Well, fix and flip loans actually come with many advantages over traditional loans.

To start, fix and flip loans are intended for shorter designated periods of time and can even be approved faster than traditional bank loans. Experienced fix and flip lenders also do not require as much background investigation or have as stringent qualification standards as traditional banks, giving people a greater likelihood of getting approved.

Types of Fix and Flip Loans

There are three main types of fix and flip loans in Arizona. These include the following:

  • Hard Money Loan – this is highly convenient type of loan that is intended for people of all skill and experience levels (when it comes to flipping houses). Funds are approved (within 24 hours) and received quickly, allowing projects to get underway fast. While these types of loans do often come with higher interest rates, they usually include shorter terms that many people use to make a profit off of their house quickly.
  • Home Equity Line of Credit loan – A Home Equity Line of Credit or “HELOC” loan works kind of like a credit card. The investor is given a designated line of credit that is based on their existing property’s value. While the project is underway, interest is only charged on the amount borrowed during the credit line period. Now, it is important to note that this type of loan usually comes with repayment terms that may not be right for everyone: interest-only payment for the initial 5-10 years, followed by both interest and principal payment. Furthermore, while interest rates are lower, approval can take up to a month or longer.
  • Bridge Loan – This is a temporary short loan that is used only during the gap between real estate transactions. In other words, you can purchase a house you intend to flip without having to sell another property first. Interest rates are usually mid-range, but it’s worth pointing out that this type of loan often results in the investor having to pay two mortgages at once. And while the loan period is shorter, approval time may still take a bit longer than a hard money loan.

Which Loan is Right for Me?

The right kind of fix and flip loan for you will depend on a few different factors, namely your personal experience in flipping houses, the amount of time you have and the type of property. For example, those who need to close extremely quickly may benefit from a bridge loan, while those who need longer terms may look to a HELOC loan.

Nevertheless, hard money loans will be the right way to go for many due to this type of loan’s lenient requirements and fast approval / fund delivery. If you already have your project planned out and need financial assistance fast, this will likely be the best choice for you.

Are you ready to learn more about how a fix and flip loan can get your project underway? Contact the experts at Barrett Financial Group today!