You’ve heard all seen it all over television—buy a distressed house and turn it into a valuable piece of property. All the while turning quite the handsome profit. But, what exactly is house flipping and how can you become a house flipper?
HGTV makes it look so simple. You simply find a distressed house—which is relatively inexpensive, get a loan, put the work in and tah dah— you turn a huge profit— and become a house flipper In reality, becoming a house flipper—a successful one— isn’t quite that simple. As with any huge potential, it comes with risk. But, if you truly understand the steps, enjoy the process and put the time in you will be a success.
Last year, while I was at a convention, I met Steven. Steven had been selling real estate for about 15 years. He had done well, but hadn’t reached the financial goals he had set for himself. However, while working as a realtor, he had learned about home renovation. At that time he was working with investors that were flipping houses. He figured he would give it a shot. He found a perfect property and went straight to the bank. The problem was he had shaky credit. The bank turned him down. But, he was on a mission—and he refused to let the bank crush his brilliant idea.
THE BEST LENDERS FOR BAD CREDIT
After some research, he found that a hard money lender would work best in his situation. Although, he had never worked a deal that included a hard money lender, he gave it a go.
Hard money lenders offer loans for flippers on different terms than banks. These loans are specifically designed for people who don’t have great credit but need money to renovate a property. They are short-term loans that typically need to be repaid with one to three years and is secured by real estate. Some lenders will require a down payment, but there are lenders that will fund 100% of the property cost. Generally, at the end of the loan terms a borrower can refinance with a traditional loan if necessary.
So, Steven did his research. He spoke to agents and brokers in his profession. He found a hard money lender that would give him an 7.99% interest rate upon approval. Before speaking with the lender, he created a clear financial plan for his project. When he went to his meeting, he brought along the last 3 years of his tax returns, his 1099’s and his bank statements. Steven asked questions and the lender reassured while explaining the loan terms. He was approved in less than 24 hours and his funds were available the next week.
Hard money loans will benefit a house flipper
Generally, these loans have lower qualifications for approval. House flippers will typically be in competition with all cash buyers and they will need approval and funding quickly. Depending on the lender and the borrower available financing can be up to 100%, but more typically it is up to 90% of loan-to-value; and loan terms are shorter—usually between 1-3 years. It may not be as simple as HGTV’s Desert Flippers, but with the right lender it will be a very smooth process.
Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com
Dennis Dahlberg Broker/RI/CEO
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.
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