When you purchase a property to renovate and quickly turn over, time is of the essence. Your main goal is to sell for a profit, in a rising market this is achievable, but sometimes it can be difficult to get your hands on a loan.
How to get a Hard Money Loan
Specialty lending can mean that you will get the loan you want and be able to progress your renovation fast. You may have purchased the property at auction, it may be a foreclosure. Once you purchase the property, the clock is ticking and you are anxious to progress the work, as there is not much advantage in selling as is.
Specialty lending for fix and flip can only be used for residential real estate opportunities, as it is typically offered as a short-term loan, set for 12 months with a fee.
Finding a Property
* Many purchasers scout around for a nearly deceased estate, snap it up before it goes to auction, and then undertake minor renovations, and can have it back on the market within 6-10 months.
* Alternately they may find a small house on a big block, and add value to it, increasing the market price often doubling it at auction.
* Another option is the outdated family home, and totally renovate it with a new kitchen and bathrooms, changing floors, full paint. In fact, they sometimes put in all the new appliances and landscape the grounds, making this a very attractive package for the purchaser. For those with the vision and expertise to scout out the deals and have the work completed in a timely manner, there is money to be made.
The end goal is to make the house desirable without spending too much money in doing so. The timing is also of great importance as it has to be done fast and be back on the market before the loan expires. People who are serial flippers understand that there is always a good deal coming along, it is important to be ready to snap; it up. Often you will need to make quite a few offers to get the property under contract. People who undertake this work usually have access to a good team of tradesmen.
Why Choose a Fix and Flip Loan
You don’t pay cash when you use hard money loans, so it makes sense to fix and flip. All you need is a 20% purchase price, and the loan provides the other 80%, making leverage the main reason to purchase in this way. Check out
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Learn about Short Term Bridge Loans here