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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.

Phoenix Real Estate Growth in 2018

2017 was undoubtedly one of the best years to sell a home in metro Phoenix. An astonishing 93,500 houses in the Valley exchanged ownership last year, which was a six percent increase when compared to home sales in 2016. According to a senior housing analyst, Tina Tamboer, in comparison to the prior 15 years, only the years of 2004, 2005, and 2011 saw better home sales.

It was during those years that the housing market acted anything but normal. In fact, the housing boom during those years largely took place because of an excess in subprime mortgages, giving buyers incredible financing options for purchasing a home. This housing boom started in 2004 but didn’t last long, hitting its bottom in 2011. It was during that year, though, that investors quickly noticed they could snatch up foreclosure homes at bargain prices.

2017 was unquestionably a very healthy year for purchasing a home in the Valley. Tom Ruff, an expert real-estate analyst, predicted the year to be one of the best years for buying a home and says, “2005 went down in the history books as the year our housing bubble rapidly inflated. 2011 was the year housing prices bottomed out after the housing-market collapse.This leaves 2017 as the very best year for Valley resale homes in our history not influenced by some freakish market outlier.”

2017 Was Good, but It Still Wasn’t As Good as 2006

Even though 2017 was a strong year in regard to the appreciation of homes in the Valley, the peak levels occurred back in 2006. 2016 saw a seven percent increase in median sale prices for homes in the Valley and continued to climb another 6.5 percent in 2017. However, with a current median sale price of only $250,000, this still puts average selling prices $15,000 lower than they were in 2006.

Predictions for 2018

The housing market in 2018 is expected to perform just as well as it did in 2017, but there will be several factors working against the market, including:

  • Lack of affordable housing
  • Inflation
  • Interest rate hikes
  • New tax laws

Ruff goes on to say that “The challenge is to build more housing that people can afford. Valley prices can’t keep climbing at the current rate if people can’t find homes they can afford.” Tamboer predicts a softening in appreciation during 2018. She says home prices will continue to climb throughout the year, but they won’t do so at the same rate as they had during the past two years.

In order for Valley home prices to fully recover, they will need to increase by at least six percent.