Are you interested in flipping homes? A ton of money can be made from flipping houses, but doing your research and investing intelligently will be the difference between a successful flipper and an unsuccessful one; a lot of work goes into maximizing profits.
If you are looking into fix and flip loans for beginners, hard money loans are the way to go. Traditional banks or mortgage lenders are unlikely to fund flipping projects for beginners.
So what are fix and flip loans, and how do they work?
Fix and flip loans are for investors who want to buy, renovate and resell their property within a short period of time – 12-48 months. The minimum and maximum loan amounts can vary and are based on the value of your property rather than your credit score, as the property would be considered collateral if you are not able to repay the loan.
In a competitive real estate market, it’s crucial to remember that cash is king. What many investors and flippers have learned along the way, though, is that cash is not always completely necessary. Yep, you read that correctly.
Hard money loans provide investors who do not have all of the cash required to fund a flipping project with the ability to compete with cash buyers while using only a portion of the cash out of pocket.
If you are a first-time flipper, you might be quick to borrow from the first lender you talk to, but it’s essential to do your research and borrow from a reputable but flexible lender with hard money loan experience, like HouseMax. Using HouseMax will allow you to do up to 5 times as many deals compared to cash. The lender will base the loan on a percentage of the projected after-repair value (ARV) rather than the residential or commercial property purchase. Lenders will reimburse you for the repairs that you have completed, which helps keep the cash flowing.
Quick Tips on fix and flip loans for beginners
Research everything, and we mean EVERYTHING – from local prices to prices online for materials. Talk to people in the neighborhood about challenges they have faced over the years that only a resident would know, like extreme weather (hail, wind, flooding, etc.) This will help you consider the amount of money you want to borrow based on special situations that may occur in your area.
Make sure that you use a Hard Money Loan calculator to help you consider all costs that your project might have. Even the most seasoned flippers have overlooked costs and had to find funds elsewhere because they didn’t borrow enough. Including contingency funds will help you maximize profit and avoid unexpected costs and should also be calculated.
Why HouseMax ?
HouseMax Funding is one of the top fix and flip lenders in the industry, perfect for both first-time fix and flip borrowers as well as experienced fix and flip professionals and custom builders.
Find out more by requesting a quote below.