An incredible buy on a fix and flip property in a nice area of the city suddenly turns up — seems so good that it is hard to believe. You've probably heard that veteran house flippers, such as the husband and wife on HGTV's Flip or Flop, turn a remarkable average return of around $40,000 – $50,000. And yes, they are aided in a big way via their professional experience, auction skills and knowledge of hard money loans. Nonetheless, your rehab and renovation skills aren't bad either — aside from that, you have already identified an ideal building contractor to take on this home.
But how do real estate investors obtain funds? When you opt for a regular loan via a bank, you will have to wait approximately 1-2 months up until the loan is authorized and your funds are ready to go. With all the home owners seeking a fast closing, that doesn't appear like a great idea to you at all.
With banks adding more challenging loan requirements in the recent past, it's become more challenging for a self-employed person to get a home loan, especially when his credit rating is not flawless. So do you have to admit defeat and abandon your dream to get into fix and flips? Certainly not, because you always have the hard money loan alternative.
A hard money home loan in can provide what's viewed as crucial to most real estate transactions — a very fast closing of just a couple of weeks and more often than not less. In addition, the LTV value can reach up to 70% of the property value, as determined by a certified appraiser. On the surface, hard money real estate loans, with starting interest rates of 10%, could be seen as higher in price than bank lending options. But the lengths of these loans tend to be fairly short, making the interest rate far less important. When it comes to short-term loans of several years or less, you should consider them much like you would other expenses for your project. Once you've sold the property or home and have made a good financial gain, you're able to recoup this expense from the house — just like recouping the money necessary for the brand-new home appliances that you put in.
Apart from this, hard money mortgages are easy qualifying, even when you have less-than-perfect credit. The person's credit score isn't the sole deciding factor for hard money lenders — additionally, they look at the property, what is it valued at, where it is located, and its capacity to bring back their investment if everything does not work out as planned. Other factors that influence an applicant's approval for a hard money real estate loan include how much money he is in a position to put into a down payment, his previous experience being a real estate investor, and price range of comparable, fairly recently sold properties in the neighborhood.
Searching for a hard money lender in to help with expenses for your fix and flip endeavor is not very hard, as long as the opportunity that lies ahead of you is promising and boasts a good potential for returns. Fill out the contact form on this page or call us to discuss your property or properties.