Posts

Fix and Flip Your Property with a Hard Money Lender

The concept of the “fix and flip” property loan is one that has grown substantially in the past few years. This is because more and more people are looking to invest in real estate and take advantage of the additional income opportunities this provides. However, these loans are different than the ones given when a property is bought with the intention of selling it one day.

Understanding Fix and Flip Loans

A fix and flip loan mean that the property that is being bought is typically distressed or run down. The investor is purchasing it with the intention of renovating it and then selling the property for a profit.  The lenders providing these loans are at somewhat of a higher risk, since there’s no guarantee the property will sell for a profit, but there are more and more lenders coming into this space due to the demand that is now there.

Finding a Fix and Flip Loan

It can be extremely challenging to get funding for a fix and flip property the traditional way. Also, paying for this type of property out of your own pocket is also pretty risky. The majority of banks aren’t going to provide any type of long-term financing option for fix and flips, nor will they provide short term loans because the returns aren’t very good. The majority of fix and flip properties are sold within 12 months or so of being sold. As a result, a hard money lender may be the best option for obtaining the funding needed to purchase the property in question.

Why Use a Hard Money Lender for a Fix and Flip Loan?

The fact is, hard money loans offer competitive rates. Even better, there aren’t any requirements regarding bank statements, tax returns or a person’s credit score. AS a result, the company is able to help the investor with their fix and flip project.

Finding a Hard Money Lender

In some cases, the real challenge is finding the right hard money lender. Not all of these service providers are created equal and it is necessary for you to take your time to find a reputable company to work with. This is the only way that you can feel confident you are protecting the investment you have made.

If you are thinking about seeking out a fix and flip loan, then don’t rule out the possibility of working with a hard money lender. The fact is, these companies make it easy for you to make the investment and then earn a profit. Just make sure to chose the right company to work with before moving forward with the project at hand.

How to Make a Profit with a Fix and Flip Loan in Arizona

Flipping homes has rapidly increased in popularity over the past decade or so. Today, it seems like just about everyone has built an interest in buying undesirable homes and making repairs and other renovations that will significantly impact the value of the home, making it easier to sell it at a profit. While these changes often require an additional investment, these costs can sometimes be built into the initial loan and are likely to be more than recovered when the home is ultimately sold.

How to Qualify

First and foremost, it’s important to learn how you can qualify for a fix and flip loan in Arizona. For many people, qualifying for a traditional mortgage is a lengthy and often difficult process. However, it can actually be easier to qualify for a fix and flip loan than it can be for other options. For starters, most people who choose this type of real estate investment don’t go through traditional channels when it comes to getting a loan. In fact, hard money lending is often the most commonly used method of funding these ventures. In these situations, the private money lender is looking more at the potential for the property rather than the financial background of the borrower. This means you could potentially get the money you need to flip a  home without having good credit or even any credit at all. However, it’s important to remember these types of loans are designed to be offered over the short term. You will need to make any fixes and renovations to the home as quickly as you can and sell the home. If the home goes into foreclosure, the lender will gain control of the home.

Finding the Right Lenders

Unless you have a strong credit history and a solid foundation in the field, you are unlikely to find a traditional lender that will provide you with the funds you need to flip the home. For starters, you may need to borrow more than the value of the home in order to finance the renovations you would like to complete in order to increase the value of the home. Hard money lenders are often private investors who want to get into the real estate market without being as hands on. This means they are happy to work with investors who want to do the work but don’t have the funds necessary to do it. If you search for hard money lenders, you will be able to get the financing you need to make all the changes you want to make the highest profit from the sale of these homes.

Few people want to purchase a home that is run down and outdated. This means you can often purchase these homes for less, allowing you to make renovations to the home, in turn selling it for profit.

Tips for Investing in Hard Money Loans in Arizona

Borrowing money from a private lender rather than a lending institution can be a lucrative experience, but it’s important to understand the process before you get started. Even though many find hard money lending to be less strict than obtaining a loan through a traditional method, you will need to work harder to make sure you don’t enter into an agreement that damages your chances of a successful investment. The following tips will help you learn how to make the most of hard money lending.

Choose an Experienced Lender

You don’t want to trust just anyone in this type of agreement. Instead, it’s important to seek out an experienced hard money lender who has already established positive relationships with other investors. A good private money lender will be focused on developing long-term relationships with investors that are mutually beneficial.

Do Your Research

It’s important to put some time and effort into researching before you enter into a funding agreement with anyone. Before you agree to purchase a property with the help of a hard money lender, perform your own appraisal and view the prospective property for yourself. You need to feel confident you will be able to make money on the property before you enter the deal. It can also be useful to compare the property with similar properties in the area so you can get an idea of how well others have done in a comparable situation.

Get Outside Advice

There’s nothing wrong with hiring an attorney to look out for your best interests. A qualified real estate investment attorney will be able to go over all of the paperwork and let you know whether you should request other terms. They will also be able to tell you if the investment has the opportunity to produce the results you’re looking for.

Request a Guarantee

While there’s no way to guarantee a specific return on your investment, you need to be sure the lender will give you the appropriate amount out of the sale or rental of the property. To ensure this happens, request a guarantee from the lender. This personal guarantee will protect you and ensure you can recover any investment you make in the event the property is foreclosed upon.

Diversify

It can be tempting to invest in only one type of property so you become more familiar with one area of real estate investments. However, just like any other type of investment, it’s important to diversify to protect your investments. This will increase the chances you can make money in one area if another is slow or failing.

Hard money lending can be a great way to make the most of your investments without dealing with the hassle of traditional lending. With the help of these tips, you will increase your chances of a successful outcome.