Many private investors in the housing market today are looking to get into the fix it and flip it game. There’s a lot of money to be made in that arena. No doubt about it. But if you are new to this type of real estate practice, you want to make sure that you have your financing in place in such a was as to be a benefit to you and not a liability.
If you are purchasing a property to flip, the chances are it is going to need a good bit of renovating. Sometimes the more renovation required the more profit you can expect in the end. Renovation financing comes in many different forms and can sometimes be a little tricky to navigate. Hard money loans for real estate investors can be exactly what you need when it comes to flipping homes.
Hard money loans are asset-based loans where you receive the funds to do the renovations you need to do while the lender, usually a private investor, has the loan secured by real property. Usually, the property has between 30% to 50% equity so the lender is well protected. Renovation financing with hard money loans can have a higher interest rate. The rates can be anywhere between 15% to 18% depending on the property itself.
The key to everything, of course, is in the timing. When you set out to flip a home, you want to turn it around as quickly as possible. This is why hard money rehab loans are optimal when it comes to this type of real estate practice. Renovation financing can be gotten quickly via a number of different sources in anywhere from seven to fourteen days. The key is to find a home that you can rehab quickly and that will be appealing to the buying public when you’re finished. Real estate investment lenders will come onboard when the investment is right.
When evaluating a property to flip, make sure you go over the place thoroughly. Don’t let your fantasies of what you think the property will look like come crashing down around you when the construction team can’t turn your molehill into your dream castle on a mountain. At the same time, think big. If you know the potential of a home, what it once was and what it could be again, by all means, go for it. Renovation financing was created for reasons like this.
Hard money loans might seem to be something scary at first, but remember, you aren’t getting one for the usual 15-30 years that you would for your own home. You are getting a hard money loan to renovate a property and flip it over. When the sale of the newly renovated home closes, you’ll have your loan paid off and some hard earned money in your pocket.
Hard money mortgage lenders can make your real estate investment dreams a reality. Find one that is right for you and make it happen.