What exactly is house flipping? Simply put it is when a real estate investor buys houses, repairs them and sells them for a profit.
The definition of house flipping may be simple, but it is not as easy as it may sound. If it is done correctly, it can turn a handsome profit. There are two essentials when flipping: property and money.
To find the rehab property that matches what you’re looking for there are a few options:
1. Search MLS: The Multiple Listing Service (MLS) is a database put together by real estate brokers that lists property according to geographic region. Licensed real estate agents are the only ones that have access to MLS. You will need to connect with an agent to be privy to MLS.
2. Auctions: Auctions are a fantastic opportunity to find a property at a very low price. Most auctioneers will require you to put 10% of the purchase price at the time of winning the bid. After 30 days you will lose your down payment and property if you have not settled.
3. Wholesalers: Wholesaler’s business is finding rehab properties, getting them under contract and then finding a buyer who will flip it. Basically, you will be paying an extra fee for the wholesaler to find the property.
BEFORE APPLYING FOR A FIX AND FLIP LOAN IN ARIZONA
There are a few things that all potential flippers must understand before seeking the funding for their investment; understanding these things will speed up the process and make your lender believe you know what you’re doing, which will benefit you when it comes to approval time.
1. Create a Business Plan: This is a thorough analysis of your property that contains—the exact address of the property, comparable sale prices for nearby homes, your strategy, timeline and financial projections; this is called the ‘scope of work.’
2. Estimate Renovation Costs: Your entire project will fail if you don’t borrow enough from your lender. To get a realistic grasp on your renovation costs you will need the help of an appraiser and contractor.
Finding the right lender is the most important component of your Arizona Fix and Flip loan.
Hard money lenders have proven to be the best option for Arizona fix and flip financing. House flipping in Arizona in a short amount of time is the main reason Arizona hard money loans work most effectively for these projects.
Arizona hard money loans are short-term loans secured by real estate. They are also referred to as rehab loans. One attractive part of these loans is their lower qualifications for approval. Borrowers can receive approval and funding in as little as 2 weeks. Hard money lenders concern lies in the property and potential value than about the borrower’s credit and monthly income.
These loans do have higher interest rates; however, they can not only finance the property, but can also finance the renovations. Lender fees and closing costs are typically taken out of the loan. Borrowers can reduce their overall financing costs by paying back the loan early because these loans are not known to have a prepayment penalty.
Arizona hard money loans can work for a variety of people. When an investor requires a fast closing, an investor has poor credit or when more money is needed than a bank is willing to approval. Regardless of your situation a hard money lender will be able to finance you much quicker than a traditional lender.
Level 4 Funding LLC
Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
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 44 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 and 5 amazing grandchildren. Dennis has been an Arizona resident for the past 43 years.