House Flipping

06 Mar Exactly what is a Private Hard Cash Loan, and why would I want one?

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A private / hard money loan is a short-term home loan generally used for investment properties. We can fund the purchase and/or remodeling of a home. Hard money loans can be acquired quicker than traditional home loans and the qualifications are more versatile, too. A hard money loan is a tool often utilized by both fix-and-flip financiers and financiers planning to construct a rental portfolio.

Who Needs Hard Money

Real estate investors, home flippers, amongst others, will use it to fund projects because you can frequently borrow much more than a bank will lend you on a per deal basis!  If you know you can purchase a home and turn it quickly at huge revenue, and you can’t get a traditional mortgage, it might be one way to go. Some financiers utilize hard money to get into the home, do some quick fixes to raise the properties worth, then get a new loan (based upon the home’s improved value) from a bank to pay off the hard money lender.

Hard / Private cash loans are quickly accessed and cut through the red tape. If you can establish a relationship with a good hard money lender, you can get funds within a week or two, with little money down, and many of your costs rolled into the loan.

Will I require an Appraisal?

Prior to a Hard Money lender provides you the funds for your job, the majority of will require an appraisal. An appraisal is a precise estimate of what a property is truly worth. It takes a licensed appraiser to assess a house and estimate the real value of a home and what repair work are had to the home. By having the home appraised, the lending institution will know precisely what the value of the home is and therefore will know exactly what they are willing to provide to you. Hard money lenders have to understand the specifics of the Home due to the fact that they wish to make a return on their cash too.

That is why they are lending you the money quickly for a home flip due to the fact that they know that you will earn a profit and in return they will make a profit by giving you the money you need in the form of a loan quicker than any other kind of loan.

What are the costs connected with a Hard Cash Loan?

Rate of interest for hard money loans typically vary from 12%– 14% and the points on the loan usually range from 2-4. But once again, all lenders are various. Some hard money lenders will add points after a particular quantity of time, and some hard money lenders will include a point at the origination of the loan. Hard Cash loans likewise generally have costs. Fees associated with underwriting, reward charges, inspection costs, and other costs.

Normally the terms for a hard money loan is between 6 – 12 months. If you exceed this term, there are typically renewal charges and points to pay. When rehabbing (repairing and repairing a residential or commercial property), you want to work quickly and pay the loan off as rapidly as possible. A lot of rehab tasks normally take about 3 months to 6 months to complete. This is typically adequate time to repay a hard money loan prior to it resetting costing you more money.  Typically, hard money loans are not utilized for long term loans.

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25 Aug Do’s and Don’ts When Flipping a House

Summit Capital is a local, family owned, MA and RI Hard Money Lender specializing in creative real estate funding for both the novice and seasoned investor.  We will work with you to ensure that you get the funding you need at the most aggressive terms possible for your real estate investment.

As a service to you, we offer this list of Do’s and Don’ts to help you move forward with your house flipping project.

The Top Do’s and Don’ts When flipping a house

We all know that flipping a house can have big rewards; but what about the risks involved? With this in mind, we have put together our list of do’s and don’ts when flipping a house. Wondering where to buy and how much to DIY?

When the housing market was on the upswing in the late nineties and early 2000s, it was easy to make money. People were making fast and big profits on their investments. Then the market crashed and everything changed.

Because of this it is important to use due diligence when making this kind of investment.

Do Hire a Trained Home-Stager

There are many real estate agents that are trained in the staging process.  Make sure you find someone who has the background to do this right. A home that is staged and furnished correctly will sell quickly, and this is what we want.

Don’t be afraid to “low ball”

If we don’t ask we will never know if the offer will be excepted.  The seller may be insulted, but maybe they won’t and you can save thousands, just by asking.  Just be careful because in a “hot market” low balling could cost you the deal.

Do know what you’re getting into

Make sure you find out what renovations the house needs before you buy. Sometimes the necessary improvements are so expensive that the deal just wouldn’t make financial sense. Bring a contractor with you when you tour possible flip properties to determine the extent and cost of needed repairs.

Don’t take on something you cannot handle

Know your experience level and don’t try to do a complete gut down to the studs on your first flip, Make sure you always consult with a professional before moving forward on homes with construction issues that you are not familiar with because things like; foundation, support beams, asbestos or mold issues could cost you dearly.

Do keep location in mind

We all know that location is key to selling a property, but how do we know when we are getting a good one? Try looking for dilapidated homes on nice or up and coming neighborhoods.  Flipping houses in these areas can only have an upside.  Also don’t over improve your house, unless you are 99.9% sure you can recoup the costs.

Don’t hold it too long

Keep in mind the golden rule of 180 days.  60-90 days for renovation and another 60-90 to sell.  You can’t make money by holding on to properties too long.  If you keep up a quick pace, you will be on the road to success, in no time.

Don’t get in over your head with DIY

Long hours spent on DIY remodeling projects — can lead to a bigger profit margin, but only if the work happens quickly and looks as good as a professional job.  If you are confident in your abilities then go for it, but make sure you know what you are doing before you get in too deep.

Do secure your financing ahead of time

Contact us today to get your financing secured before you find that ideal property.

If you have your money set up beforehand you can move quickly when you find the right property.  Winging it probably won’t yield the best results. There is nothing more frustrating than finding “the one” and not having the cash to move forward on it.

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