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Flipping Homes Formulas - Using Hard Money Lender
Buying, fixing, and reselling homes for can be extremely profitable.  When cash is tight, and your only source of financing is expensive private lenders, or Hard Money rates, there are some general rules of thumb that most investors can use.
 Using Hard Money Lender  (points for borrowing 6 point, and interest rates around 15%)
 ARV stands for After Repair Value, or what the home will be worth upon completion of repairs.
 Maximum Offer = (0.63 X ARV) - Repairs
Or
Maximum Offer = (63% X ARV) - Repairs
 Example:
A house has an ARV of $100,000, but needs $35,000 in order to achieve that value.
 Your highest offer should be:
($100,000 X 0.63) - $35,000 = $28,000
 Purchasing a home for $28,000 that could later sell for $100,000 may sound like a daunting task.  I realize that homes are bought and sold daily throughout the United States for much less than the formula offers.
 Truth be told, for a $35,000 renovation, I would probably want to offer using 58-60% for my formula.  The simple reason, I would want to make a little more profit for a slightly higher than normal renovation.  Along the same lines, if the home only needs $3,000 ... more

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