Fix and Flip Mistakes to Avoid!

Fix and flips are a major real-estate investment strategy. You can take on these projects and make a living out of it or use them to raise money for buy and hold deals. This article is about some issues that can throw off your project and how to avoid them.

Taking too long to do the job.

Most fix and flips projects are funded by borrowed money, like a hard money. When you borrow money you’re responsible for paying it back, and most hard money loan borrowers use the money from the sale of the property to repay the loan. The problem here, though, is that you can’t sell the property you’re renovating if you’re still working on it. No one expects a project to get done in a blink of the eye, but creating a realistic timeline and sticking to it the best that you can helps tremendously with time management.

Not creating a budget.

Remember to create a realistic and (minimally) flexible budget before starting your project. This might sound pretty obvious, but it’s more so about sticking with the budget. Things do come up, which is why your budget should be just flexible enough to account for any potential issues or changes.

Not taking any possible problems into consideration.

One of the most efficient ways to minimize and potentially eliminate any possible problems is by inspecting the property as thoroughly as you possibly can before purchasing it. Even if the inspections show you a few minor issues that might not prevent you from purchasing the property, you might be able to negotiate a lower price from the seller. This can be helpful because the money you saved purchasing the property can go towards fixing the problem spots.

Another thing you can do is add a “just in case” section to your budget. If you’re going to do this, the amount of money in this section is typically 10% of the total budget, but do whatever feels comfortable to you.

Fix and flip projects can bring in a great profit if done correctly. If you’re looking to fund your next project, contact us and get some more information on our hard money loans.

Private Mortgage Lenders – Why Fast Funding Is Important When Flipping Homes

Private Mortgage Lenders – Why Fast Funding Is Important When Flipping Homes

 

If you’re thinking about purchasing a property that needs some work, either to fix and flip or to rent out to tenants, then you have probably already thought about what kind of home you want to buy and what repairs you need to make to the property. But, have you thought about how to pay for it all? Obtaining fast funding from a private money lender could very well be your best option. Here are just a few reasons why.

 

Traditional funding is difficult to obtain.

Typically, traditional lenders will want you to have collateral just in case you default on the loan. Even though you definitely don’t have any intentions of doing so, your lender will still want something that can easily be sold to make up for any money loss in the event of a default. However, rehab properties typically aren’t in good enough shape to satisfy traditional lenders, like banks. If you do get qualified for a loan, you might have a difficult time getting the money to repair the property in addition to the the cost of purchasing it.  Private money lenders that specialise in real estate, though, are another story. They understand fix and flip projects and will loan you the amount you need to purchase the property as well as fix it up.

 

Rehab properties sell quickly.

People look for fixer-upper properties for many reasons. Some do so that they can make repairs and then sell it for a profit. Landlords will specifically look for older properties that need some work, then turn them into rentals. People are also looking to purchase a home to live in, don’t want to spend too much money, and don’t mind having to put in the extra work. Having all of these different kinds of people looking for rehab properties means that if a good deal comes along, it might not last for very long. If you’re struggling to find funding, or trying to go through a bank loan process, you might miss out on the opportunity to purchase the property. Hard money lenders work much faster and have easier application processes than traditional lenders, getting you your loan in enough time to close your deal.

 

Repairing the property might be more costly than you think.

Repairs can be more expensive than you expect them to be. Doing the bulk of the repairs yourself can definitely save money, but if you run into an electrical problem (and if you’re not an electrician) you’re going to have to hire a professional. Like I said above, when you borrow from private lenders that have experience in real estate lending, your loan will include the amount you determine you need for repairs. It’s important to account for any possible problems that might come up to avoid having to pay out of pocket.

 

Fix and Flips | Hard Money Pittsburgh

Fix and Flips – Hard Money Pittsburgh

 

Fix and flips are a major real-estate investment strategy. You can take on these projects and make a living out of it or use them to raise money for buy and hold deals. This article is about some issues that can throw off your project and how to avoid them.

 

  1. Taking too long to do the job.

Most fix and flips projects are funded by borrowed money, like a hard money. When you borrow money you’re responsible for paying it back, and most hard money loan borrowers use the money from the sale of the property to repay the loan. The problem here, though, is that you can’t sell the property you’re renovating if you’re still working on it. No one expects a project to get done in a blink of the eye, but creating a realistic timeline and sticking to it the best that you can helps tremendously with time management.

 

  1. Not creating a budget.

Remember to create a realistic and (minimally) flexible budget before starting your project. This might sound pretty obvious, but it’s more so about sticking with the budget. Things do come up, which is why your budget should be just flexible enough to account for any potential issues or changes.

 

  1. Not taking any possible problems into consideration.

One of the most efficient ways to minimize and potentially eliminate any possible problems is by inspecting the property as thoroughly as you possibly can before purchasing it. Even if the inspections show you a few minor issues that might not prevent you from purchasing the property, you might be able to negotiate a lower price from the seller. This can be helpful because the money you saved purchasing the property can go towards fixing the problem spots.

Another thing you can do is add a “just incase” section to your budget. If you’re going to do this, the amount of money in this section is typically 10% of the total budget, but do whatever feels comfortable to you.

 

Fix and flip projects can bring in a great profit if done correctly. If you’re looking to fund your next project, contact us and get some more information on our hard money loans.

 

Hard Money Real Estate Loans and Why You Need One

Hard Money Real Estate Loans and Why You Need One

When funding a real estate project, traditional lenders are concerned with your ability to perform on the loan. They take into account your credit rating, employment history, ratios, and more. A hard money lender will focus mostly on the wholesale value of the property in question. Because these loans can be pretty risky, they usually come with a higher interest rate. Some people are initially turned off by the rates, but they’re worth it. If you’re looking to do a fix and flip project, and the place you found is a total wreck, there’s basically no chance a traditional lender will give you the money. You can’t pay for it out of pocket, but you’ve done your homework and found out that the property could be worth almost three times what it’s selling for now in great condition. This is where a hard money lender comes in.

These lenders will provide you a loan for the purchase price of the property, but also for the cost of repairs. When you go to the closing to buy the property, you not only walk away with the keys, you also walk away with a check to fix the place up. You won’t have to make any payments for the first six to twelve months (depending on your lender’s policies). Once the property is all finished and repaired you can either sell it at the enhanced market value and pay off your lender (keeping a nice profit) or you can refinance your property with a conventional loan now that it qualifies for traditional financing (and then pay off your hard money lender with the new loan).

Why use a hard money lender? Because:

● Your credit isn’t high enough to qualify for traditional funding
● The property you want to purchase has definitely seen better days and your bank won’t lend on it
● You can obtain a traditional loan but don’t have the cash to make repairs/improvements
● You need to close on a deal soon, and hard money lenders can get you approval relatively fast

If you think that a hard money loan could benefit you, check out HardMoney GMA for more information.

Hard Money Lending Terms You Should Know

Hard Money Lending Terms You Should Know

If you’ve applied for any type of lending before, you might have looked at the fine print on your contract and thought it was written in a different language. However, understanding this terms and conditions are extremely important. You should know and understand the following terms before agreeing to any financing:

Origination fee: Some lenders will charge an origination fee, or application fee, to defer some of the costs that go into evaluating your lending requests. This fee could either be expressed as a dollar amount or as a percentage of the loan you’ll receive. Some lenders might negotiate the fee with you, and you most likely won’t have to pay it until your deal is approved.

This type of fee varies among lenders. Some lenders don’t even charge the fee. Others charge upwards of 4%. However, don’t assume that the lender charging the lowest origination fee will be giving you the best deal overall. You should always ask your lenders for a clear break-down on the percentage rate of your loan and if that rate factors in all applicable fees.

Fixed rate: A fixed interest rate means that the rate you pay on a loan doesn’t fluctuate during your repayment period. When interest rates are low, it’s typically better to take out a fixed-rate loan rather than one with a variable rate.

Variable rate: This is a different type of interest rate and is the opposite of fixed interest rate. The interest your lender is charging you can rise and fall when the market fluctuates.

Default interest rate: This type of interest rate is much higher, and can be charged if you don’t make timely payments to your lender. While this is more commonly found with lines of credit, some lenders do use this tactic to make sure they’re being paid on time.

Contract duration: You should be aware whether or not your choice of financing comes with a contract duration. This is most common with invoice factoring, however you might find that other types of financing do as well on different terms. This technique that lenders use requires you to factor your invoices with them for a specific amount of time, generally 6 to 12 months. If you break this contract, you will likely be charged a hefty termination fee.

Prepayment penalty: Check to see if your loan’s terms mention a prepayment penalty. This penalty is charged when you pay off the balance before the loan period is over. While doing this can save you money by not having to pay additional interest, if your lender charges this fee it could end up costing you more. You definitely don’t want any financing with a prepayment penalty if you want to keep the option open to refinance it later with a lower cost loan.

All of these terms and conditions might seem like a jumbled mess at first glance, but it’s important to read over them thoroughly and to be able to understand what you’re reading. Once you’ve gotten a basic understanding of what these words mean for you, you can then assess your different lending options and choose what works best for you. If you’re interested in exploring your lending options further, check out http://www.hardmoneygma.com and see what fits your needs!

What is a Hard Money Lender?

What is a hard money lender?

A hard money lender (HML) is an individual or company that offers a foreordained sort of surety bolstered credit. Regularly advancing transient capital credits, these credits offer financing and/or money considering the estimation of the surety. The security for the development can be anything – autos, water crafts, planes, property, canvases, hard assets, etc. Hard money lenders give watchful thought to the estimation of the thing than to the borrower’s ability to repay. This practice is not the same as standard propelling foundations which require a FICA score, commitment to wage equality, and distinctive parameters.

Rates and Fees

HMLs have a combination of unmistakable rates, costs, and terms that you should get settled with. They are more unreasonable than traditional advances in light of the way that they are not based upon standard credit rules, which screen examiners and banks from high default rates. Accordingly, rates and charges are conventionally much higher than obvious home advances, normally running some place around 8 and 15 percent, dependent upon the improvement entirety and term. Moreover, there is regularly a charge to set up the development, running some place around 3 and 10 percent, which is known as paying “core interests.” Actual rates may change from state to state considering your state’s usury laws.

Government Guidelines

In spite of the way that you don’t have to encounter the method of all the average examination material that keeps running with a general home advance, government law requires all HMLs to affirm the borrower’s “ability to repay” per the Dodd-Frank Act of 2010 on all private property advances. This documentation may not be as stringent as the conventional records required, and the lender may look at the examination material in an unforeseen way, however borrowers will regardless need to give a cost frame and bank decrees.

Time allotment of the Loan

As far as possible is approximately 6 to 24 months.

Why Use a HML?

The exclusive organizations and individuals who make these transitory supports regularly do thusly to store area deals. Generally called “Private Money Loans,” these rewards can be a critical wellspring of financing for area buyers requiring capital on a transient reason. Something to consider is the way by which quickly funds can be made open. As often as possible, when you find a nice theory property, you’ll need to move rapidly. Your ability to get to capital quickly can have all the impact in a course of action. Fragile money or standard advances take 30 days or more, and now and again that is too long. Hard money is marvelous for beginning budgetary pros who won’t not have the capital or for the individuals who have a frightful FICO score. This assertion is moreover a creative way to deal with buy property and make an advantage. You buy the property, set it up, and offer it at business part quality expense.

Where Do You Start Your Investment Journey?

Investment Property Loans – Where Do You Start?

Have you ever wondered what it is that makes someone buy that old, worn down property, in the not so nice part of town?

The city is changing. That area of town that you use to drive through on the way to wherever you were going had fallen apart, boards on the windows, trash in the streets. Then something happened, a shift occurred. People, much like you (rehab specialists, real estate agents, property investors, builders, entrepreneurs) saw beyond the dilapidation and imagined what could be. Properties that no one was interested in for years started being bought, remodeled and sold. Homes that had been abandoned and condemned were restored to their former beauty, and old schools and warehouses were refurbished into Multi-family residential apartments. Investors with a vision of what could be were ready to put some skin in the game, contact a lender and restore life to a community that was decaying.

This has happened in most major cities around the country, and it has not stopped!
GMA Funding knows that with the right property, and the vision of the industrious investor, we can help you fund the change you want to be a part of!

GMA Funding offers competitive rates, years of lending experience and fast closing so that you can get to work on your remodel, fix-and-flip or investment property as soon as possible.

Don’t wait for that neighborhood that has houses for sale for $20-$30,000 that can be turned and sold for $180K (or typically higher) pass you by, or empty parking lots that can become commercial outlets become someone else’s investment. Call GMA Funding today with your idea and we will get you funded!

We specialize Commercial and Residential Hard Money Private Lending. All decisions are made in house. GMA Funding would love more information regarding potential deals. Please contact us today!

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