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!
Phoenix, Arizona is certainly a city in the U.S. that can identify with the variance in how different age groups are experiencing the world. The city is no longer just a place for retirees and college kids. Millennials are discovering that the state’s remarkable capital city has much to offer and is full of exciting opportunities. And when you combine the city’s low cost of living with its unceasing beauty and pleasant temperatures, it should come as no surprise that millennials are relocating to Phoenix.
One area of particular interest that has gained national spotlight is Valley of the Sun, which is the Phoenix’s booming metropolitan region. The area has witnessed phenomenal growth, with much of the growth attributed to the arrival of so many millennials.
Among millennials, Phoenix is now considered to be one of the top spots to live. Let’s take a glimpse at why so many millennials are packing up and heading west and discovering what a remarkable booming city Phoenix really is.
Cities that boast coastlines and huge millennial populations seem to gain the attention of the media. In reality, though, the majority of these cities are becoming extremely expensive for many millennials. Not only are millennials discovering they can pursue their dreams after college in Phoenix, but they can do so while still staying within their means.
Many millennials are hoping to find housing cost that is somewhat comparable to what they have adjusted to while attending college. When compared with other cities that offer comparable lifestyles, housing prices in Phoenix are considerably lower. Adding to this, when gas and food prices are compared to those living in coastal regions, prices are noticeably lower, making the prospect of owning a home more imaginable and the city even more appealing.
The city’s rapid economic growth stems from its support of entrepreneurs along with its commitment to embrace change. This is demonstrated in the city’s tax policies, which have become essential to rewarding achievement and work ethic. The friendly city embraces its people and openly welcomes strangers to network and plant roots. Phoenix is considered to be a hotbed for economic development; the city continues to offer new activities and embraces social diversity, which is reflected in its majority foreign population.
The Great Outdoors
Phoenix and the surrounding areas offer an abundance of opportunities for millennials to experience the great outdoors. Its captivating landscape offers nature lovers a chance to participate in activities, such as exploring nature trails and mountain biking. There are lakes and rivers nearby as well, which is of particular interest to those who love swimming, skiing, or high-speed water sports. Affordable living and an ideal climate that supports both healthy living and socializing, Phoenix is a place where millennials can afford to enjoy life at its finest.
Millennials are finding both success and a satisfying lifestyle in Phoenix, Arizona. The city’s sense of community, low cost of living, and welcoming environment make it one of the top spots in the U.S. for millennials to relocate.
If you’re the owner of a business, chances are that you already know that growth can be difficult. After all, it’s challenging enough to start a business in Arizona much less expand it. But the good news is that you can give yourself and your business a much needed boost by getting a commercial loan. If you’re hesitant, you’re not alone. However, it is important to consider the following when deciding whether or not a commercial loan in Arizona is for you.
A Commercial Loan Is a Long-Term Solution
Whereas other types of loans are meant to be repaid quickly, commercial loans in Arizona are meant for those who have long-term, multi-stage plans for their business. Many different kinds of long-term payment plans are therefore available, allowing you to move more steadily and carefully along with your plans. This in turn allows for better results.
A Small Loan Now Can Lead to Big Time Results
Commercial loans are intended for those who have a solid business plan and are looking to see considerable growth over a period of time. And because the overhead costs of securing the loan are relatively cheap, many business owners in Arizona who use a commercial loan to invest in their business end up seeing a lot more growth than first anticipated.
Large Amounts Can Be Loaned Out at a Time
There is no “standard” amount when in comes to commercial loans, and while many people choose to start off modestly, many others are able to foresee that they’re going to need a lot more help. Need a lot of money upfront to achieve your business dreams? Hey, the truth is that most business owners do. And with a commercial loan, you can get the money you need right from the start or work out a system where you’ll have access to it over time. Because these commercial loans are meant specifically for business ventures and, again, long-term plans, you are much more likely to be approved for a large sum of money than with other types of loans.
Commercial Loans Are Lower Risk
Overall, commercial loans in Arizona are considerably lower risk than many other types of loans often sought out by business owners or general entrepreneurs. This is largely due to the fact that many types of commercial lenders do not require any collateral upfront, though it also helps that these loans have flexible repayment plans and generally high approval rates.
Never Lose Ownership of Your Business
Going along with the above, lot of other types of lenders require collateral like the property deed or even ownership of the business for the duration of the loan period. It’s important to realize here that even though the lender may not be acting on their ownership, they can take it over in the end should even a small error occur on your part.
Considering the Bottom Line
It’s true that not all businesses need a commercial loan to get ahead, but they are often few and far between. If anything, those that do take advantage of commercial loans in Arizona are making an important and well calculated investment in their business and their future.
Are you ready to invest in real estate? If so, Arizona is a great place to make this investment. But, do you know which cities are best when it comes to real estate investments? If not, then you definitely need the information found here.
If you want to invest in the best markets for real estate in Arizona, you definitely are not alone. When it comes to real estate activity, Arizona’s a hot bed; however, the following seven cities are considered the best when it comes to making a real estate investment.
Each of the cities in this list have made top spots in real estate guides and are considered great locations by experts in the industry. Also, due to the fact that the areas are growing, the investment you make will only appreciate in value.
Considered one of the strongest real estate investment locations, this city has a vacancy rate that’s under one percent. When you add that to the fact that the neighborhood has a rental return rate that is, on average, 11 percent, it’s pretty clear why Laveen is such a great place to look for investment real estate.
While Scottsdale may be considered part of the valley, it’s also a pretty unique suburb that is attractive to individuals from all walks of life. Featuring a wide array of exciting nightlife, a unique western flair, amazing hotels and highly rated restaurants, it’s not surprising that so many visitors have decided to call Scottsdale home. As an extremely desirable area in the valley, there’s also a huge supply of investing opportunities found here.
3. Queen Creek
One of the factors that has made this location grow in popularity is how close it is to Mesa Airport. Another factor is the real estate prices. Vacancy rates are low and the returns on rental properties are almost as high as what’s seen in Laveen.
4. El Mirage
Affordability is the driving factor when it comes to growth in El Mirage. Right now, the median home value in this city is $110,000. This location is home to more than thirty bars, coffee shops and restaurants. If you want a great opportunity, then you should check out El Mirage.
5. South Phoenix
Another city that boasts lower than average vacancy rates and great returns on rentals is South Phoenix. It’s also close to many popular attractions, such as Tempe Town Lake, the Botanical gardens and the zoo.
6. Maricopa City
With a vacancy rate under one percent, this area has seen an increase in residents. There’s also a 10 percent return on real estate investments here, which makes this is a great place to make investments.
Tucson is to the south of Phoenix and home to three natural forests. It also boasts a mild climate and great culture, making it a growing market. This city attracts both renters and buyers from the entire country.
Real Estate Investment Loans
Finding the right location and property is the first step when investing in real estate in Arizona. The next step is to get financing. You can opt for non-traditional lenders, which offer the money you need faster than a traditional bank. Hard money lenders also don’t require mountains of red tape like a traditional lender does. This makes it much easier to get the financing needed.
If you have made the decision to get in the investment property game, that’s a great move. Regardless of if you are planning to flip a few single-family homes or become a landlord by investing in a multi-family property, the first step is to determine how you will finance your project. After all, if you don’t have a clear idea of where your funding is coming from, you aren’t going to be prepared to make any offers on the property to begin with.
What you need to understand is that making real estate investments usually follows a different path that buying a primary home. Most investors use private money lenders. That’s because this allows them more flexibility and they will have the chance to build a business relationship that only becomes more beneficial for both people involved over time.
The challenge is finding the right lender. If you want your deals to move quickly and easily, then you need to do your research to find the right lender.
Three things you need to look for in a quality private money lender can be found here.
One of the biggest benefits offered by working with private money lenders over a traditional finance company or bank is that deals are usually closed much more quickly. In fact, it can be done in just days, instead of weeks or longer. This is why the lender you choose needs to be responsive. If you have found the ideal property, you don’t want to put it in jeopardy by working with lenders that take much to long to respond.
During any transaction, you want to make sure you know what’s happening each step of the way. Reputable lenders are going to ensure you remain informed, and they will also adhere to the guidelines and the regulations that have been set by the local or state government regarding the loan origination process.
3. Competitive Points and Rates
When you are shopping for a lender, regardless of if it is for more traditional lending or from a private lender, one of the most crucial things that you need to consider is the points and interest rates associated with the loan terms. With that in mind, you also need to know what you are looking at. The points and interest rates for any type of single-family home mortgage from a typical lender are usually going to be significantly lower than the rates provided by private mortgage lenders.
This is because a traditional mortgage is given with the thought that it is a long-term investment. Lenders know they are dealing with fix-and-flip properties and investments. You can’t try to compare the rates of a private money lender to what a large bank offers. That’s like trying to compare oranges and apples.
You also need to think about the type of funding you are going to have to have. Certain fees and down payments are considered standard in the industry, but you should not be “fooled” by a company that wants you to put down a huge “engagement fee” as well as the typical fees.
1. Many real estate investors in Arizona understand money is made when they purchase a house, not when they sell it. A lot of people are mistaken when it comes to flipping houses. They think they will buy the house, make any necessary repairs, give the home a little uplift, and then turn around and sell it for a major profit. What they fail to realize is there are numerous fees tied to flipping a house, like title company fees as well as potential buyer contribution fees, both of which can eat away the profit. And unfortunately, these fees are large enough that they eat away the entire profit and cause the flipper to lose money.
This is why the purchase price of a home is far more important than the intended selling price. Amateurs in the real estate business in Phoenix and Scottsdale often fail to understand the complexities involved in flipping a home. Take for example the vacant property insurance that has to be paid while the home is sitting on the market unsold. When you combine this expense with the cost of renovations and other taxes, it makes it fairly difficult to make a profit.
2. There is also the aspect of getting an Arizona home inspection performed that real estate investors need to be aware of. And even though this inspection tends to cost several hundred dollars, in the long run, it tends to be worth the investment. Having this inspection conducted will reveal any hidden major aspects of the home that need to be repaired that were not initially seen during the first walk-through of the home. Things like an improperly installed HVAC system or rotting wood under carpeted floors are both major repairs that a home inspection can uncover. It’s also important to have an inspection performed because it’s during this period of time that the house is still under contract, and if preferred, the buyer can cancel the contract and choose not to purchase the home.
3. Many investors who purchase a Phoenix home think they can perform all of the remodeling themselves, thus allowing them to save money and walk away with a higher profit once they flip the home. What they don’t realize is there are numerous remodeling jobs that need to be performed by professional contractors, especially anything relating to plumbing and electrical. Also, when investors perform all of the remodeling themselves, this extends the total amount of time it takes to remodel the home, thus increasing the amount of time the home sits on the market. The longer it sits, the lower the profit. This is why most successful home flippers agree that it is best to have professional contractors perform most of the remodeling to ensure it is completed correctly the first time and in a reasonable amount of time.
4. If you have the intention of flipping a home in Arizona, your goal should be to remodel it as quickly as possible and sell it even quicker. This is a major reason why numerous seasoned investors will price a piece of property several percentage points lower than what the competition will. In doing this, it allows them to resell the property according to a much faster timeline and decrease the amount of money they spend on holding and financial expenses. Time and time again we see that selling a home faster at a lower price will turn into a higher profit than pricing it higher and having to wait for months on end for it to sell.
5. You should hire an experienced agent. You may think that purchasing a home, remodeling it, and listing as for sale by owner is the best route to take, but it most definitely is not. And even though you may be turned off by the fact that most Arizona realtors have a six percent commission they keep for themselves when listing a property, the advantages a realtor can bring to the table are typically well worth the commission they earn. If you take the route of listing the home through sites like Craigslist, Zillow, or ForSaleByOwner, you are probably going to have to wait for an extended amount of time before you find a potential buyer. And once you do find a potential buyer, you may discover the buyer has a realtor working for them. If this is the case, you may have to be out a three percent buyer’s realtor fee anyway. When you have a realtor in your corner, you are going to receive much better exposure, meaning the home is likely to sell much more quickly than if you try to sell it yourself, and even better, since you are likely to sell it much more quickly, you can list it at a higher price.
There are several reasons that real estate investors are choosing hard money loans. The primary reason is the ability the lender has to fund a loan quickly. In the majority of situations, hard money loans can be funded in a week or less. If you compare that to the 30 to 45 days that it can take to have a bank loan funded, it’s pretty speedy. Additionally, the application process for a hard money loan usually only takes a day or two, and in some situations, your application can be approved during the same day. You will never hear from a traditional lender about approval within the same week.
The ability that you have to obtain funding faster than a bank loan is a huge advantage for the average real estate investor. This is especially true when an investor is working to acquire a property with quite a few competing bids. Having a fast closing with a hard money loan can help to get a seller’s attention and ensure that the offer is set apart from the remainder of buyers who are using conventional financing methods.
Another reason that a real estate investor may opt for a hard money loan is if they have already applied with banks but have been rejected. Unfortunately, life isn’t always perfect, and it doesn’t always go as planned. Credit issues, foreclosures and short sales all happen. Another crucial thing that banks need access to is a person’s income history. If the borrower has recently begun a new job, then the bank may decide to deny their request for a loan because of an insufficient income history. This is the case even if a borrower has a pretty good income.
A hard money lender can look past all these issues. They will make a decision based on whether or not the loan will actually be repaid and whether or not the borrower has plenty of equity invested in the property in question.
Points and Interest Rates Paid for a Hard Money Loan
The points and interest rates charged by a hard money lender are going to vary from one to another. They can also vary from one region to another.
Because these lenders are taking on more risk compared to traditional financing methods, the interest rates are typically higher. Additionally, the points usually range from two to four percent of the total amount of the loan. Be sure to keep this in mind when considering this type of loan for your real estate investment.
Loan to Value Ratios
The loan amount that the hard money lender lends is usually determined by the value of the property divided into the loan amount. In most cases, a borrower will be able to access 65 to 75 percent of the property’s current value. While this is a riskier loan, it’s still beneficial to anyone who is borrowing the money in order to have access to faster funds.
When it comes to taking out a hard money loan for a real estate investment, there are many things you have to keep in mind. It’s best to be informed to get the best possible results. To find out more, contact Barrett Financial Group today at 480-999-6183.
Trust – It is the foundation of the private money world. Private money lenders are trying to find ways to reduce their risk and trust goes a long way when trying to reduce the perceived risk present. While you can create contracts, deeds and notes, all these documents are no good if you aren’t honest and trustworthy.
The question you have to answer is how to build trust with lenders. The good news is, there are several ways you can do this. Learn some of the methods here.
This is simple, but extremely effective. Just do what you say you are going to do and live up to your commitments. Show up to appointments on time, pay your bill and follow through on promises. All this is going to affect the way other people view you, and your trustworthiness. Private lenders are likely going to ask about your character, so make sure you are trustworthy.
Document Your Trustworthiness
If you’re trustworthy you can prove it with documentation. Create a “Banker’s Book” showing your trustworthiness. Also, acquire a copy of your credit report and show how other real estate projects you have taken on were successful. Include a list of references in your book.
Explain Things with Simple and Clear Language
Don’t try to spout all types of real estate and technical terms. Most people won’t understand and may become confused or turned off from the deal. It’s better to keep things simple and explain what you are doing in clear terms. In most cases, lenders only want to know how and when they will get repaid.
Listen to Find Out What Your Lender Wants
Much of what makes a successful real estate investor is listening. Stop to listen to what your potential private lenders have to say. Don’t just focus on your needs. Find out what their goals and needs are to ensure they get something out of the deal, too.
If you want to work with private lenders, be sure to be trustworthy and find out what your lender wants. In the long run, this will help you be more successful.
Mortgage Loan Originator
NMLS ID: 1115218
AZ MLO License: 0925472
7621 E. Gray Road, Suite B2
Scottsdale, AZ 85260
NMLS ID: 1115218
AZ MB License: BK – 0925472
2 N Central Ave #1800
Phoenix, AZ 85004
NMLS ID: 1115218
AZ MB License: BK – 0925472