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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) 999-6183 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.

Unprofitable Flips Happen! But How Do You Come Back?

Fix and flip opportunities have become more popular, allowing individuals to spend less on real estate investments, fix the issues with the home and then sell it for a profit. However, flipping houses isn’t always as easy as it may seem, especially if you’re a fan of the house flipping reality shows. While it can be an excellent way to make money on real estate investments if you have the right experience, it’s also easy to lose money on the process, especially if the home ends up requiring more work than you initially calculated or it takes longer than expected. The good news is there are ways you can recover from an unprofitable flipping experience. The following tips will help you make better decisions the next time around.

Watch the Market

The real estate market is constantly changing, and it’s best to keep a close eye on these changes to ensure you make the wisest investments. Talking with local realtors about demand, pricing and other factors can help you better gauge the best options for your next flip. Also, pay attention to the time of year. Winter is a lower time for sales in general.

Avoid Overpaying

It’s easy to make a mistake and pay too much for a property, dooming your success from the start. For real estate investors who flip property, evaluate the after repair value of the home and work your way backwards. Deduct the amount you expect to pay on repairs and renovations to give you an idea of the highest amount you should pay for the home. Checking the MLS for comparable homes in your market area can help you get a clear picture of how much you can expect to sell the home for when you’re done fixing it up. Don’t hesitate to get multiple quotes.

Expect the Unexpected

It’s rare to complete a home renovation without a few unexpected surprises along the way. When you plan for these surprises, you will reduce those expenses that can make your flip unprofitable. In addition, only fix what’s necessary to turn a profit on the property. Repair anything that’s broken, update anything outdated and choose one or two elements to splurge on to make the property more attractive to buyers. Don’t focus on making the house perfect. Instead, do just enough to make the home appealing while turning a profit.

Work with a Reliable Contractor

One of the biggest problems house flippers experience is delays in the project due to the contractors they hire. Only work with reputable contractors who have a good track record for staying on schedule. Get referrals from trusted sources and others who work in the industry. If a contractor isn’t meeting your expectations, make a change early in the project, rather than giving multiple chances, only to find yourself scrambling to meet your deadlines.

Stage the Property

When you’re ready to sell, staging the property can be the best way to sell the home for a fair price as quickly as possible. While home buyers like to be able to visualize their own furniture in a space, that can be challenging if you’re showing off an empty property. The good news is you only need minimal furnishings to provide the desired effect. Even though staging isn’t necessarily a cheap option, it’s a necessary step to help potential buyers focus on what the home can provide them.

When you learn to accurately value a property and minimize your costs without sacrificing quality workmanship, you will soon find these real estate investments more profitable.

image of coins spilling out of jar

3 Reasons to Make Sure You Have Sufficient Funds For Your Real Estate Project!

At the time of this writing, flipping houses is on the rise throughout the United States of America. In fact, studies show that the first quarter of 2020 featured more flipped homes than at any point since 2006, a jump of at least 2 percentage points. With real estate flipping on the rise, it stands to reason that more than a few newcomers are finding their way to the industry.

While there are plenty of opportunities available for individuals to build capital through real estate, leaping into a renovation project should not happen until sufficient funds have been accrued. Like many other entrepreneurs in life, we understand the desire to leap first and look later however, today’s conversation will clarify why you should avoid this technique.

Three Reasons to Wait for Sufficient Funding in Real Estate Development

Right now the house flipping market is booming out west. From Texas to Arizona, savvy property investors are accumulating funding to purchase, rehab, and flip their housing investments for profit. With that being said, there is one issue that individuals are struggling to overcome: starting work with sufficient funding.

While you may feel driven to start a rehabilitation project without proper funding, there are a couple of reasons why you should hesitate to embark upon that path. Let’s take a look at three key reasons that you must have sufficient funding in place before breaking ground on your rehab project.

1. The Second Loan Is Harder Than The First Loan

Acquiring a financial loan to complete a house rehabilitation seems pretty simple. Just meet up with your bank, decide on how much you can afford to take out, and let the rest take care of itself… right?

Well, not exactly.

For first-time flippers, it is always better to take out more debt than you might need. If you take out a loan from a financial institution only to see it fall short of your needs, you’ll likely have trouble working with a second lender. Many private money and hard money lenders will not think twice about rejecting a second loan request. 

2. Chances of Failure Dramatically Increase

Whether we are remodeling our home or flipping an investment property, the true extent of hidden costs will not be known until we break ground on our project. Purchasing and flipping a home will require digging deep into the structure of the property, leading to potential costly issues at a later date.

Some common issues that real estate renovation professionals run into are electricity and code issuesimproper building techniquesdeep rot and pest damage, and finally hidden dangers such as asbestos. If you aren’t equipped with the funding necessary to overcome each and every one of these hurdles, you could be stuck with a dead project.

3. Complications Related to Title Insurance

Very few things are as frustrating or necessary as paperwork. Included in the paperwork we’ll have to navigate is our title insurance. Once your home has begun its renovation, it can be hard for a new lender to obtain title insurance due to the fact that construction is likely already underway.

To make life easy during your next renovation or house flipping project, consider working with one of the top hard money lenders in Arizona. Fast and convenient funding helps get your project going!

7 Basics of Serving and Selling An Arizona Real Estate Listing

There are a lot of different ways to sell a property, but there are some fundamentals everyone should follow. Whether you’re brand new to the world of real estate or you’re a longtime pro, it’s easy to get caught up in everything going on and miss out on some key details.

Today’s market is as competitive as ever, so make sure you’ve got the basics covered:

1. Price it Realistically

Even seasoned real estate veterans sometimes get over zealous with pricing, or worse, allow clients to get wildly unrealistic with the asking number. But local neighborhood values change every year, as does the market in general. It’s important to get the home appraised and look at actual selling history for the area. Go too cheap, and you’ll lose money. But go too high, and you’ll end up waiting a long time for a buyer to come around. 

2. Don’t Conceal Information

Appraisers will appreciate you be upfront about any potential issues or damage to the home, as well potential buyers. In fact, concealing such things could lead to a lawsuit down the line. Make what small fixes you can, and document the rest to have it on record. Doing so will also help build your reputation if you hope to continue in the Arizona real estate market.

3. Clean and Stage

When people visit the property, they should be able to easily envision what life could be like there. While you should never keep the place cluttered with furniture, it’s a good idea to have some accents here and there to help demonstrate the space for what it could be. Naturally, always clean the place thoroughly before any potential buyers see it. 

4. Don’t Neglect Exteriors

The inside of the property is crucial, but the outside is what potential buyers will see first. Especially in Arizona where so many homes have manicured front yards and stone gardens, an unkempt property sticks out like a sore thumb and won’t be appealing. You don’t have to go all out, but do make sure it is tidy with curb appeal. 

5. Take Photos Seriously

It’s astounding how many photos you can find on real estate websites that show left-out cleaning supplies or garbage, or are even snapped from awkward angles that don’t show off the space. Your listing will stand out and attract the most buyers with clean, clear photos. Arizona is known for its bright, sunny days, so there’s no excuse for snapping photos on a cloudy, dreary one that doesn’t put the property in the best light. Consider hiring a professional for the job.

6. Execute a Marketing Plan

Don’t just stick to one real estate website. Publish detailed listings (photos and all) on multiple high-traffic websites and consider spreading the word via social media. If you are a real estate agent, keep in mind that your marketing endeavors will not only help sell the property, but they will also keep the client happy with your efforts. 

7. Be Flexible

Sometimes potential buyers need to see the property after hours or have a lot of questions about it. Be open to flexibility, and schedule appointments based on the buyer’s interest and likelihood of purchasing, not your own personal schedule. Additionally, be at least somewhat flexible with pricing and know what your minimum acceptable offer is. 

Start Real Estate Investing in Arizona with These 5 Tips

With all the rage over cryptocurrency and investing in stocks, many young adults are still using real estate investing as their portfolio’s strength. According to a recent survey, 36% of millennials prefer real estate investing as their main strategy to accumulate wealth. But young adults aren’t the only ones using this method – most Americans are, too. In fact, 31% from all backgrounds are harnessing the wealth building power of real estate investment.

When it comes to investing, real estate is a smart way to diversify your portfolio. However, there are many investors who think this is off-limits to them due to their lack of knowledge. It’s time to change that. Read on to learn how you can start investing in Arizona real estate.

1. What is Your Situation?

Where do you see yourself? Where do you want to go? Who do you want to become? What are your goals? Your career path? The answers to these questions will help you develop an investing strategy for the future, along with the best type of loan for your real estate investment.

2. Gain Leverage

In general, most people believe the only way to purchase real estate is with a 30 year fixed mortgage from a traditional lender. However, depending on your lifestyle, there are other loans available. Taking the time to educate yourself about the different options available to finance a home or other real estate property will shift your entire belief system and you’ll see that you have access to funds through channels you never knew existed, such as adjustable rate mortgages and interest-only mortgages.

3. Compare Mortgage Loans

The loan you choose is a well-planned product, and the product you want to select is the one with the lowest interest rate and the highest stability. Use a mortgage calculator to help you do the math and compare different mortgage loan products.

4. Gather a Strong Team

You can’t and shouldn’t go this alone. And you should be careful about who you decide to place on your team. Having a financial advisor is the first support system you’ll need. Next is an experienced real estate agent. Both professionals will ask the right questions and guide you along the right path to success. Tip: Keep an ongoing relationship with your mortage loan officer as he or she will be able to give you information regarding the market and when it might be a good time to refinance.

5. You Need to Plan for the Future

When thinking about the future, consider that rental properties provide both investment appreciation and cashflow, but they may not provide them at the same time. For this reason, it’s important to determine why you’re investing in the property. Do you want cash flow now and in the future, or are you looking to make a profit once the property’s value goes up and you sell? These are important details to know before investing in a property in Arizona and will determine what property you choose to purchase.

 

5 Tips to Get Your First Real Estate Deal Done

You’ve heard the stories – people making fortunes off real estate deals. Perhaps you can see yourself as one of them, but you don’t know where to start. Having some apprehension when beginning a new business venture is to be expected. The leap from the beginning to the end goal can feel like a huge chasm to jump across. You’re bound to make mistakes, which is probably what you’re most afraid of happening; however, if you follow this simple guide to effectively getting your first real estate deal done and done well, you’ll see the momentum pick up. Read on to learn more:

1. You’ll Need the Right Representation

The real estate agent you decide to work with can determine the outcome of your success. That’s why it’s so important to pick one that has extensive experience and skills in communicating, negotiating, and asking the right questions. Your real estate representative should know the area well, understand the comparables, and have sealed deals involving apartment buildings, duplexes, and the like.

2. Find the Right Property

If it’s too good to be true, it probably isn’t. Keep this in mind when seeking out your first real estate deal. Without doing your due diligence, you could end up thinking you came across the real estate deal of a lifetime only to find out later that the zoning requirements don’t add up or there is a lien on the property you purchased. Proper investigation into a property by you and your real estate agent is paramount to your financial success.

3. Schedule Several Property Inspections

After finding a property, ask for a longer than usual inspection period and have the property go through multiple inspections. It’s important to ensure there is no structural damage to the property, as well as mold, issues with plumbing or electricity, or various other issues that could end up costing you serious money down the line.

4. What’s the Curb Appeal?

If you are eyeing a property without any curb appeal or hardly any pictures posted online, chances are the seller isn’t feeling confident and will give you the property at a lower bid. You just have to offer one. After you secure the property, fix up the curb appeal and you’ve already increased your profit.

5. Negotiate Interest Rates

Chances are you probably didn’t know you could negotiate interest rates with a bank. You can – if you have a sound real estate purchasing plan. In fact, you can shop around both big and small banks, credit unions, and even private lenders to find the best rate. The better your credit and amount of collateral, the better negotiating power you have. If you can, stay away from brokers as they will take a percentage for being the middle man between you and the bank.

To make your first real estate deal a success, you need guidance from a reputable real estate agent, and you need to do your due diligence. Take the extra time to do the research that counts, even if that means someone else might come along and sweep up the property. But don’t worry, another one will come along shortly and if you stick to this method, you’re sure to make your first real estate deal an amazing success.

 

Top 10 Tips to Sell Faster in Phoenix

It’s only natural to want to sell a property as quickly as possible. Whether you’re flipping a house or are selling the place you’ve lived in for years, finding and securing a buyer quickly allows you to move on faster and not have to wait for a big payoff.

Visit any bookstore or do a quick Google search, and there’s tons of literature on the art of selling property. However, a lot of it is full of vague information and tedious steps that don’t help you sell quickly. While you don’t want to cut out necessary steps, there are measures you can take to sell quickly and smoothly.

Follow these top 10 tips to selling faster in Phoenix, and you’ll be signing over your property in no time!

1. Make Sure All Maintenance & Improvements Are Complete

A lot of people make the grave mistake of listing the property prior to all renovations, maintenance projects and landscaping being completed. While it can seem like a time saver to list the property when it’s almost completed, doing so often boils down to some wishful thinking and a misunderstanding of how long these projects can actually take. Showing the property before it’s finished (and this also means being thoroughly cleaned inside and out) can also lead to lower bids being offered.

2. Take Quality Photos

Having great photos of your property is among one of the most important things when it comes to selling, because these are what actually draw potential buyers to the property. While you don’t necessarily need to hire a professional for this, all of the photos should be high resolution and well lit. Make sure there are no mop buckets or cleaning products left around, and if there is furniture, it should be clean and well staged.

3. Make Sure the Price is Right

It’s a good idea to discuss what the price should be with an experienced real estate agent, or if you’re selling on your own (not necessarily the fastest way to sell, but still doable), do your research on what similar properties in the area have sold for. You don’t want to be overpriced, but you don’t want to undersell either. Buyers will be quickly attracted to a property that is reasonably priced and fits what they expect to pay in the area.

4. List on MLS

Your local Multiple Listing Service or MLS is your best bet to sell the property quickly. This will give the property more exposure, and it can easily be done through a broker or real estate agent who works in the area.

5. Read the Market

Once your property listing is up and running, it is important to pay attention to how it performs early on. If you’re not getting as much interest as you’d like, it could be because of something you can easily fix (like getting better photos or supplying more information). Talk to your agent about how things are going on the buying side of things, and see if there are any comments coming through that you can use to your advantage.

6. Be Smart About Lowering the Price

Going along with the above, sometimes one of the adjustments you’ll have to make is lowering the price. However, a dramatic drop in price can look bad, and too many price reductions can also turn buyers away. If you’re going to lower the price, it should only be done to meet market standards and should be done as sparingly as possible. You can discuss what the best strategy is here with your real estate agent.

7. Only Accept Offers with Lender Approval

When you do start getting offers, you should only look at ones that come with an approval letter from the buyer’s lender. The last thing you want to do is accept a bid quickly only to find that the buyer doesn’t actually have the funds to back it up, as this can end up costing you time and money.

8. Go with the Best Offer

Contrary to popular belief, the best offer is not necessarily the one that offers the most money. Instead, it is the one with a responsible buyer who will close on time and is financially qualified. They already have lender approval, and they are prepared with all the documentation they need. Oftentimes, the first offer you receive is the best one, but it is still important to review these qualities in each offer you are considering.

9. Be Prepared for the Inspection

Most buyers won’t close without an inspection being completed, and in many cases they will have specific details they want looked at (like the foundation, water heater, electric outlets, etc.) to make sure the property is up to code and safe as well as valuable. Be prepared for this ahead of time so you aren’t caught off guard.

10. Complete the Appraisal

The final step is letting your property be appraised. This process can go faster if you have gotten a previous appraisal report that you can provide a copy of, as it will help the current appraiser do their job more efficiently (and better understand your pricing).

Top 10 Tips to Selling Faster in Phoenix

It’s only natural to want to sell a property as quickly as possible. Whether you’re flipping a house or are selling the place you’ve lived in for years, finding and securing a buyer quickly allows you to move on faster and not have to wait for a big payoff.

Visit any bookstore or do a quick Google search, and there’s tons of literature on the art of selling property. However, a lot of it is full of vague information and tedious steps that don’t help you sell quickly. While you don’t want to cut out necessary steps, there are measures you can take to sell quickly and smoothly.

Follow these top 10 tips to selling faster in Phoenix, and you’ll be signing over your property in no time!

1. Make Sure All Maintenance & Improvements Are Complete

A lot of people make the grave mistake of listing the property prior to all renovations, maintenance projects and landscaping being completed. While it can seem like a time saver to list the property when it’s almost completed, doing so often boils down to some wishful thinking and a misunderstanding of how long these projects can actually take. Showing the property before it’s finished (and this also means being thoroughly cleaned inside and out) can also lead to lower bids being offered.

2. Take Quality Photos

Having great photos of your property is among one of the most important things when it comes to selling, because these are what actually draw potential buyers to the property. While you don’t necessarily need to hire a professional for this, all of the photos should be high resolution and well lit. Make sure there are no mop buckets or cleaning products left around, and if there is furniture, it should be clean and well staged.

3. Make Sure the Price is Right

It’s a good idea to discuss what the price should be with an experienced real estate agent, or if you’re selling on your own (not necessarily the fastest way to sell, but still doable), do your research on what similar properties in the area have sold for. You don’t want to be overpriced, but you don’t want to undersell either. Buyers will be quickly attracted to a property that is reasonably priced and fits what they expect to pay in the area.

4. List on MLS

Your local Multiple Listing Service or MLS is your best bet to sell the property quickly. This will give the property more exposure, and it can easily be done through a broker or real estate agent who works in the area.

5. Read the Market

Once your property listing is up and running, it is important to pay attention to how it performs early on. If you’re not getting as much interest as you’d like, it could be because of something you can easily fix (like getting better photos or supplying more information). Talk to your agent about how things are going on the buying side of things, and see if there are any comments coming through that you can use to your advantage.

6. Be Smart About Lowering the Price

Going along with the above, sometimes one of the adjustments you’ll have to make is lowering the price. However, a dramatic drop in price can look bad, and too many price reductions can also turn buyers away. If you’re going to lower the price, it should only be done to meet market standards and should be done as sparingly as possible. You can discuss what the best strategy is here with your real estate agent.

7. Only Accept Offers with Lender Approval

When you do start getting offers, you should only look at ones that come with an approval letter from the buyer’s lender. The last thing you want to do is accept a bid quickly only to find that the buyer doesn’t actually have the funds to back it up, as this can end up costing you time and money.

8. Go with the Best Offer

Contrary to popular belief, the best offer is not necessarily the one that offers the most money. Instead, it is the one with a responsible buyer who will close on time and is financially qualified. They already have lender approval, and they are prepared with all the documentation they need. Oftentimes, the first offer you receive is the best one, but it is still important to review these qualities in each offer you are considering.

9. Be Prepared for the Inspection

Most buyers won’t close without an inspection being completed, and in many cases they will have specific details they want looked at (like the foundation, water heater, electric outlets, etc.) to make sure the property is up to code and safe as well as valuable. Be prepared for this ahead of time so you aren’t caught off guard.

10. Complete the Appraisal

The final step is letting your property be appraised. This process can go faster if you have gotten a previous appraisal report that you can provide a copy of, as it will help the current appraiser do their job more efficiently (and better understand your pricing).