Condos: Are They Worth the Investment?

Purchasing real estate is one of the largest financial decisions one can make in your lifetime. If you are considering purchasing a condo, you will need to consider the pros and cons of the investment. We have put together some of the pros and cons to consider before investing in a condo. 

Pros of buying a condo

Less maintenance 
One of the biggest pros of investing in a condo is that you are not responsible for the maintenance. The monthly fee you pay goes towards the management company to cut the grass, shovel the snow, and make repairs to common areas. A condo could be a good investment if you are a busy person who does not have time for home maintenance. 

Condos tend to have more amenities than single-family homes. People who enjoy a pool, fitness center, community center, or rooftop BBQ might want to consider a condo with high-end amenities. If you like to socialize, the amenities tend to be a great place to get to know your neighbors. 

Condos also tend to be located closer to downtown areas. So, if walking to restaurants, stores, and coffee shops is an important factor for you, a condo purchase would be a worthwhile investment. 

Cons of buying a condo

Monthly HOA fees
While you may be enjoying those amenities, they come at a cost. When you purchase the condo, you will know the current monthly fees, but you don’t know what the future increases might be. Condos fees will increase over time. In addition, if the condo needs to do a large improvement project such as a new roof, you could be hit with a one-time special assessment to help cover it. 

Slower to grow in value 
A condo will typically take much more time to grow in value than single-family homes in the area. So, if you are not planning on holding the condo for a significant amount of time, you may not see your value increase.  

Rules and Regulations 
If you do not like following the rules, a condo purchase may not be the right choice for you. The HOA will have a rule book that you will need to follow. These rules can include the rental policy, the pet policy, and the BBQ policy. If you consider purchasing a condo, you will want to read the HOA rules very carefully to make sure they will work for you. 

Difficulty with financing 
Sometimes it can be difficult to sell a condo because the lender will no longer issue a mortgage for a particular condo. Oftentimes this is because the building has too many units occupied by non-owners. In other words, a lender will not lend on a building if there are too many rentals. Check with the HOA and see if they have a cap on the number of units that can be rented simultaneously. 

Reality vs. TV Shows: Fix & Flips

Reality fixes and flip TV shows have given the real estate investment industry a boost. However, what you see on reality TV shows isn’t exactly what you could expect in reality. Understanding the differences will help you decide if this type of venture is right for you.

How Easy Is It to Sell?

If you’ve watched fix and flip reality shows, they make it seem like there’s always a buyer waiting in the wings when the project is over. It’s important to remember reality show hosts are well known, and people are eager to buy from them. For most real estate investors, you will likely need to aggressively market the home to reach potential buyers. Prepare to wait months to complete the sale.

How Common Are Big Surprises?

Fix and flip shows almost always discover some big surprise while renovating a house. It makes for engaging TV. There’s also the possibility they are already aware of these “surprises,” and it’s all an act. When completing your own fix and flip, it’s essential to look carefully at a home before buying. Look for severe problems like pests, faulty wiring, water damage, and foundation issues. It will save you money in the long run.

How Fast Is It Done?

It’s essential to remember fix and flip reality shows are taped over a long period and consolidated into the appropriate time frame. Some of these shows even use rapid flips as part of their appeal. For most real estate investors, however, renovating a home to make it profitable takes time, often weeks or months. If you’re not prepared to work over the long haul, fix and flip investments aren’t right for you.

How Easy Is It to Find Properties?

Fix and flip shows frame buying a home as a fast process. They may talk to fellow investors or real estate agents, browse through listings, or attend auctions, but you need to remember much of the time spent ends up on the cutting room floor. It’s unlikely you will find the most appropriate property in a short time. It’s essential to choose carefully, so you don’t end up working on a home you don’t have the money or time to complete properly.

What Kind of Funding Is Available?

Funding is one of the most essential aspects of a successful fix and flip. Few real estate investors have the capital available to handle financing on their own. Celebrities featured on fix and flip shows often use their own money or get funding from sponsors, making their tactics unrealistic for most investors. Instead, many real estate investors have to turn to options like a hard-money loan to afford the purchase and the renovations they need to do. This is often the best lending option available to real estate investors interested in the fix and flip process. You can make payments while renovating the home and pay off the remainder of the loan when it sells or roll it over into a new investment.

If you’re thinking about getting involved in the fix and flip real estate investment options, contact us. We can help you get the funding you need for your project.

Extending vs. Refinancing Your Hard Money Loan

Also referred to as a bridge loan or a fix-and-flip loan, hard money loans are essential for short-term real estate projects. Whether an individual or business is seeking to establish an effective fix-and-flip business, they will need to understand how to deal with their loans as they mature. Most hard money lenders tend to focus on short periods of time per loan, creating issues down the line if the receiver cannot fully repay their loan.

When dealing with a maturing hard money loan, it becomes important to understand your options. Today, we are going to highlight the age-old question: should you extend or refinance a hard money loan?

Pros & Cons: Extending a Hard Money Loan

Extending a hard money loan is often the easiest way to get the ball rolling with your debt. A hard money loan gets quicker approval thanks to the pre-existing relationship between the lender and their client. Additionally, extending a hard money loan is typically done after creating a steady and positive payment history between both parties.

Benefits of Extending a Loan

-Based on Established Relationship
-Quick Approval Process
-Positive Repayment History

Even though extending a hard money loan can be a frictionless approach, there are downsides to this effort. The primary reason fix-and-flip investors may want to avoid extending a loan is that the extension likely won’t be long enough to tackle the entirety of the debt. This creates a problem pertaining to timelines, so it is imperative to have a plan in place before extending your loan.

Negatives of Extending a Loan

-Short Term Extensions 
-Harder to Cover

Pros & Cons: Refinancing a Hard Money Loan

On the other side of the coin, investors may want to consider refinancing the entirety of their hard money loan. Working with groups like Hard Money Lenders AZ, clients can acquire a better interest rate while pursuing more convenient cash-out opportunities. Refinancing a new hard money loan will allow you to also bypass any extension fees that you might have struggled paying. Finally, refinancing a loan may lead you to better terms, particularly if your credit and cash flow has changed.

Benefits of Refinancing a Loan

-Get Better Interest Rates
-Avoid Paying Extension Fees
-Convenient Cash Out Options

Refinancing a loan helps in many situations, but that isn’t always going to be the case. When refinancing a hard money loan, you will have to work with a lender to complete an entirely new underwrite. You will also have to find an entirely new hard money lender, a process that can create some frustration and tension as you navigate the many options available to you.

Negatives of Refinancing a Loan

-Complete New Underwrite
-Find New Hard Money Lender
-Negotiate Completely New Terms

Contact Hard Money Lenders AZ!

When the time comes to refinance your hard money loan, make sure the team at Hard Money Lenders AZ is on the job. As the top-rated Hard Money Lender on Google for the state of Arizona, clients have enjoyed fast funding, proven results, and effective communication through a team of industry-leading specialists.

Contact Hard Money Lenders AZ today to see if you are approved!

How Hard Money Loans Can Help Grow Your House Flipping Business.

House flippers are some of the hardest working and most opportunistic people in the real estate industry. The talent it takes to evaluate a home, find the funds to repair it, and then flip the property for a profit can be staggering to consider. Yet, all the talent in the world won’t overcome a lack of financing.

Today, we want to underscore how hard money loans can help you grow your house-flipping business.

Gain Flexibility While Flipping Houses

If you are looking to become more than a one-property fix-and-flipper, you are going to want to familiarize yourself with hard-money loans. To grow your company and extend your reach into the market, borrowing capital will give you the means to purchase and restore multiple homes. If you work intelligently with a larger loan, you can improve your cash on cash ROI, allowing your money to work for you while you work on the homes that will fund your retirement.

Not only will you gain more flexibility as you flip houses, but your company’s projected growth will exceed that of a cash-only business. The more you put into your company, the more you will get out of it. Pretty nice, right?

Better Leverage Your Finances

If you are serious about growing a house-flipping business, you need to rely on more than just your own strict cash reserves. What does this mean in a practical sense? For someone who moves beyond their own capital reserves, acquiring a loan will allow them to leverage their cash, building bigger projects as the years go by.

As an example, let’s say that you borrow $100,000 to spend in your market. This will allow you to fix and flip three properties, realizing a net return of $50,000. Now you have $150,000 to spend in your market. Repeating this process will allow you to scale your business efforts to the growth within the market that you are experiencing.

Continued growth is integral to capitalizing on hot markets. With Arizona’s real estate industry primed for a huge 2021 and beyond, properly scaling your hard money loans to your anticipated efforts can lead to serious success. Remember not to outkick your coverage and only to chew what you can handle swallowing. There is no point in failing from overworking yourself.

Grow Your Business With Hard Money Lenders AZ

In March 2020, Arizona saw its home-flipping market reach an 8-year-high. As the market continues to grow and improve in the post-COVID landscape, Hard Money Lenders AZ makes itself available to savvy fix-and-flip investors looking to acquire hard money loans.

Hard Money Lenders Arizona is based out of Phoenix where it focuses on providing private funding experience in every aspect of real estate. From refinancing and bridge loans to your next fix-and-flip project, Michael Iuculano and the team can support your business endeavors.

Contact Hard Money Lenders AZ to discuss your project, today!

What You Need to Get Your Hard Money Loan Approved

Acquiring a hard money loan doesn’t have to be the toughest task you’ve tackled this year. In fact, working with the right lender can make the process as simple as can be. Before meeting with your potential lender, there are a few ways that you can maximize your chances of approval.

Understand Your Collateral

One of the easiest ways to make your hard money lending experience a simple process is by having collateral available. Collateral is simply property that you own which can be held against the finances that you are pursuing. Hard money lenders tend to work in a host of different spaces within the real estate field.  Lenders may offer to finance an industrial, commercial, or retail property. Hard money lending with collateral is also a common prospect for people looking to fix and flip homes.

Typically, the toughest hard money loans to acquire approval for are to finance the purchase of land. Land intrinsically does not produce income until it has been modified. Borrowers looking to finance a land purchase will require strong credit, provable cash flow, and a rock-solid exit strategy — with a 50% deposit.

Loan to Value Ratio

Otherwise referred to as ‘LTV Ratio’, your loan to value ratio is one of the most dominating factors that a hard money lender will consider during a request. Borrowers looking for a hard money loan typically struggle with credit or minimal cash flow, making it hard to get a loan without collateral as payment.

A lender that focuses on your loan to value ratio will instead prioritize the loan amount against the value of your property/purchase. A house that costs $100,000 with a loan of $50,000 would have an LTV of 50%. Keeping this number under a certain percentage point will make acquiring your loan more possible. Most lenders tend to cap their percentage position at 70% LTV.

Create a Repayment Plan

While hard money lenders won’t focus as much on your income as a conventional private money loan, they will still want to know how you plan to repay the provided finances. This may include asking about sale dates, ideas for improvements to a property, or what you plan on putting in the active listing agreement.

Take some time to craft your plans for the hard money loan that you are pursuing. Do you plan on repaying your loan through specific home improvement upgrades that result in a higher ROI? These are things that have to be discussed prior to sitting down with your hard money lender.

Call On Your Friends at Hard Money Lenders AZ

Dealing with loans can be tough in even the best of circumstances. For entrepreneurs and investors looking to acquire a hard money loan, contact the team at Hard Money Lenders AZ to discuss your goals and desires!

How to Protect Your Rental Income During (And in the Aftermath Of) the Pandemic

It’s no secret that COVID-19 has affected the bottom line of many hard-working Americans. If you own residential rental properties, you have probably experienced this first-hand if your tenants have struggled to pay rent or if you’ve had a hard time filling vacant units. Fortunately, there are some steps you can take to protect your rental income not just during the pandemic, but as the world begins to slowly return to some semblance of normal.

Offer Payment Plans to Tenants

Many tenants are having a difficult time paying rent, especially if they have been furloughed from their jobs as a result of the pandemic or have had hours cut. If this is the case with any of your tenants, you may be understandably worried about how you will collect your rental income.

This is where it can be wise to begin offering payment plans to tenants who are struggling financially. In doing so, you can ease some of the financial burden on your tenants while ensuring that you receive at least some of the funds to which you are entitled.

Screen New Tenants Thoroughly

One of the biggest mistakes landlords are making right now is rushing to fill vacancies in their rental properties without properly screening their prospective tenants. The problem with this is that you could end up with tenants who don’t have sufficient income or even a reliable job to pay rent. This means that not only will you lose out on rental income, but you may even end up having to go through the drawn-out (and expensive) eviction process. Even though you may be eager to fill vacancies in your rental units during this time, proper screening is actually more important than ever.

Direct Tenants to Resources

With so many Americans struggling financially as a direct result of the pandemic, the government has made many assistance programs available. Some of these even include rental assistance. Take some time to research these options for your tenants and point them in the direction of these resources when appropriate. From the Housing Choice Voucher Program to unemployment assistance, there are plenty of resources available to those struggling.

Fill Vacant Units Remotely

Even though more people are getting vaccinated, many people are still hesitant to go out in public. This may make it difficult to fill vacancies in your rental units unless you’re offering virtual tours, digital lease signing, and other means of finding and approving new tenants remotely. Make sure you’re posting detailed listings of your vacant units online and accepting lease applications digitally as well. When tenants are approved, you can even collect rent and security deposits online to make things more convenient for everybody.

By taking the right measures, you can protect your rental income even in the midst of the COVID-19 pandemic. For more financial assistance as a real estate investor, reach out to our team of Arizona hard money lenders today by calling (480) 576-5788. We offer a number of loan programs and other options to help fund your next real estate investment quickly, easily, and remotely!

image of 2021 calendar

Fix & Flip Investments in 2021: An Industry Assessment

As the world continues to normalize in the wake of the global COVID-19 crisis, fix and flip investors have their eyes on the global rebounding housing market. After a year of suppressed sales and diminished showings, what can these property flipping investors to expect as 2021 becomes more fully realized?

Let’s take an assessment of the fix and flip industry in 2021 by highlighting what savvy professionals should expect in the coming year.

Pro: Rising Real Estate Demands

In response to last year’s COVID-19 crisis, the Federal Reserve would make global headlines by announcing an eye-popping adjustment to the interest rate. Borrowing rates have bottomed out in a way that we might never see again, thus leading to affordable rates that we could only dream about several years ago.

Simple adjustments to your mortgage by even a quarter of a percentage point can translate to thousands of saved dollars over the duration of your mortgage. As long as the Federal Reserve holds strong to its commitment to reducing interest rates, investors in fix-and-flip properties are going to find constant activity within the industry.

There is some hope throughout the country that the nation will rebound with a Roaring ’20s style economic revival, led in part by affordable mortgage rates and a buying populace ready to live again. While much of this is conjecture, there is hope that real estate demands will meet realty as property buyers hit the market yet again.

Con: Limited Inventory of Properties

As COVID-19 settled into America, housing markets around the nation went dormant. Many homeowners who were looking to unload their property would opt instead to take their homes off the market, thus reducing potential exposure to the coronavirus. This is an issue that was only exacerbated by compounded stay-at-home orders and extended lockdowns.

Fix-and-flip investors are going to need a larger inventory of properties to choose from to enact their winning investment strategies. A limited selection of housing options can severely limit the upside of a fix-and-flip investor.

A limited amount of properties can cause a fix-and-flip investor to go against their strategy for the sake of making a purchase. Be wary of feeling compelled to rush. Focus on making good purchases instead and allow the market to catch up.

Pro: Potential Foreclosures in the Future

One individual’s loss is another person’s gain. As homeowners struggle to keep up with expenses incurred during the pandemic, bankers and lenders are going to get serious about recouping their expenses. This could lead to a swathe of foreclosures spreading across the market, leading to potential jackpot gains for savvy and alert investors.

While it is hard to look forward in anticipation of a foreclosure, fix-and-flip investors are going to have many opportunities in the coming year. Dates and times for these foreclosures will vary based upon the market, especially as you shift from one state to the next, so pay attention as the foreclosure market begins to heat up.

About Hard Money Lenders Arizona

While the housing market is going to continue marching toward recovery, fix-and-flip investors will have encouraging positive signs to hang their hats on in the coming months. Flipping investors in Arizona looking to make a leap into their next investment can turn to Hard Money Lenders AZ for help.

Hard Money Lenders Arizona is a private team of funders based out of Phoenix and experienced in every aspect of real estate lending. With decades of experience and unbeatable customer service on their side, help from the team at Hard Money Lenders Arizona is just a click away!

In the Rehab Process? Here’s How to Stay On Track and Under Budget!

Taking on a fix-and-flip project can be a great way to make a profit in residential real estate. With a smart investment and the right planning, you stand to make a significant profit by flipping a property and selling it. Before you get started with any rehab project, though, there are some things you need to know about staying on-track and sticking with your budget.

Plan Your Rehab Accordingly

Start by planning your fix-and-flip project during the right time of year. In general, the easiest times to sell residential real estate are during the spring and summer. With this in mind, it may make the most sense to tackle your renovations during the fall and winter months.

Set Aside a Contingency Fund

No matter how carefully you plan and budget for your rehab project, there are almost always going to be surprise repairs and other unexpected expenses that arise. The last thing you need is to end up going over your budget as a result. By setting aside a contingency fund that makes up between 15% and 20% of your total renovation budget, you can avoid running out of cash.

Account For “Hidden” Costs

There are a lot of obvious expenses you’ll undertake during any fix-and-flip project. Hiring contractors and buying building supplies are a couple of those given costs. However, there are plenty of less obvious expenses you may end up facing that you won’t want to overlook.

Specifically, be sure to budget for costs related to permits, property taxes, ongoing HOA dues, and closing costs/Realtor commissions once you sell the property. These can quickly add up and affect your bottom line if you don’t plan accordingly.

Don’t Overlook the Location

Location is one of the most important factors prospective buyers look at when buying a home. With this in mind, you’ll want to do plenty of research on the location of a potential property before you buy. While you may spend more money up-front investing in a property that’s located in the middle of a busy city, you’re also likely to get a larger return on your investment than a property in the suburbs.

Always Have a “Plan B”

Any experienced real estate investor will encourage you to have an exit plan in place for any project. While it may not be fun to think about, it’s important to plan for a “worst-case scenario.” For example, what will you do if your flipped property doesn’t sell within a few months of being on the market? Perhaps it will be necessary to rent out the property to begin bringing in income and try selling again when the market is looking more promising.

Borrow Responsibly

No matter what your plan is for fixing and flipping a property, borrowing from a reputable lender that you can trust is vital. Looking for a hard money loan for an Arizona real estate property? Hard Money Lenders AZ has you covered! Contact us today at (480) 576-5788 to find out more about our borrowing options, especially as they pertain to our excellent rehab and fix-and-flip loans.

image of fix and flip for sale

How to Market Your Fix & Flip to Sell Fast!

You’ve got your fix and flipped all fixed — so what about the flip? With a fix and flip, you want to sell as fast as possible. But that’s the rub, isn’t it? How do you sell fast? You can’t control the market. But you can control a lot of elements of your listing.

1. Price your fix and flip properly.

The worst thing that can kill a fix and flip is pricing it too high. Look at the comparable properties and think about your financial situation. If you’re going to be losing a lot of money holding onto the property for an extra couple of months, it may be better to discount the property now and sell it right away. A lot of fast-talking isn’t going to make up for the fact that you’ve priced yourself out of the market. And even a smooth operator isn’t going to be able to defeat most bank appraisals. Price correctly and fight less.

Of course, there’s always the chance someone will fall in love with a property priced over the market; but that’s a gamble. It’s best used when a property has something very unique about it.

2. Use your media wisely.

Video walkthroughs are practically expected now. Spend the time to get a professional photographer and videographer. Have them do video walkthroughs or even 3D walkthroughs. Stage the property nicely. Many people look online before buying a home. A lot of them aren’t even using a real estate agent; they just want to contact you directly after seeing the home. Don’t bother trying to obscure things about the property, such as making it look bigger with a fish-eye lens; that’s a waste of your time and theirs. You want the property to shine, not be misrepresented.

3. Invest in content marketing.

A blog and social media account is a great way to start reaching out to people. People who are looking to purchase a home in a year might follow you today, but that can secure a sale in a year. The more people you have exposure to, the more likely you already have a buyer watching. And content marketing pays for itself over time; though it may take some time and money to build it up now, it’s going to start bringing you in more people as you scale.

4. Build your following.

The more followers you have, the more exposure you have. A lot of people ignore followers because it’s not likely that they’re going to build a house. But build a following of real estate agents and professionals, and you’ll be in direct contact with people who are looking to buy properties. You can network with real estate professionals in your area and find out more about what their clients are looking for. And that’s only going to help you in future, because it also means that your renovations are going to be more applicable to the desires of the market. The more you can connect with people and interact with them, the more ammunition you’ll have.

What about showings? The truth is that open houses and scheduled showings really don’t matter as much as they once did. Often, people already kind of know what property they want (from all their research online) before they even take a look at it. So, don’t rely on the traditional methods to help you sell your fix and flip. You’ll need to be using the new media and reaching out to a broader audience if you want to sell.