4 Best Financing Options For Fix and Flip Business!

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4 Best Financing Options For Fix and Flip Business!

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Category : Fix & Flip Loans , Hard Money Loans

House flipping is a type of real estate investment strategy in which an investor purchases properties with the goal of reselling them for a profit. A fix and flip is an excellent way to quickly make money from real estate, and with wise decisions, can be a long-term investment or retirement strategy. A lot of people dream of getting into the business of fixing and flipping houses, but funding is the number one obstacle. You need capital to purchase homes and cover the cost of renovations before you can flip them for a profit.

House Flipping is not just a matter of buying a house and selling it for a profit, but also there are so many costs involved. For examples:

  • The purchase price of the house.
  • Rehab costs.
  • Appraisals and inspections carried out on the property (for example for beetles, pests or foundation inspections).
  • Holding costs, realtor fees, and closing costs.
  • Loan interest and fees.
  • Down payments on loans.

If you’re thinking about flipping, you’re probably looking to acquire an investment property and then fix it up to sell at a higher price. If so, here are four top financing options to help you get started:

1. Get A Hard Money Loan: Hard money loans are the best financing option for novices or borrowers with a bad credit score. Hard money lenders can get you funds quickly to buy the house that you will flip as well as pay for any of the costs. Loan approval of a hard money loan is far easier than obtaining a more traditional loan. Hard money loans usually have terms of less than one year and interest rates of 12% to 18%, plus two to five points. Hard money lenders can finance up to 65% of the home’s ARV or after-repair value, which is what you think the house will be worth once the renovations are done.

2. Cash Out Refinance: Its best for the fix and flip investors who have significant equity in an existing investment property or primary residence, but not for those who are just getting started, or for those who still need a bit of extra funding on top of what comes from the cash out refinance.

3. Home Equity Line of Credit: A home equity line of credit is basically taking out a second mortgage as you will also be repaying it over a fixed term, often with a fixed rate of interest. It’s one the best financing option for those flippers who already own a home. Keep in mind, if you do choose this financing option, your home will act as collateral. You risk foreclosure and the loss of your house if you do fall behind in payment. However, if you are confident in your ability to flip a house, it could give you the capital you need to jump-start a new stream of revenue.

4. Conventional Bank Loan: Conventional bank loan is an another financing option that you may opt. Bank pays for the property and you pay the mortgage payments until the house is rehabbed and sold. Its best for experienced flippers who have a great credit score, capital on hand, and significant collateral. For a conventional bank loan, you will have to provide around a 20 to 30 percent down payment of the purchase price on the house you intend to flip. They will also need to know what you intend to use the money for. A traditional money lender may outright refuse to fund it if there are health and safety issues at play. While you intend to fix these issues to flip the home, a traditional money lender generally prefers to fund homes that are already fixed up and livable.

Find the Right Financing Option For You:
If you need capital to flip houses, these are 4 top financing options for flipping houses that you can use to acquire as many properties as you want. Out of these 4 fix and flip funding options, the best one for you depends on the type and condition of the property, your experience with real estate investment, and your personal financial situation. If you are beginner or borrower with bad credit score then hard money loans would be the easiest and fastest financing option you.

To get started on your fix and flip quickly, with most of the funding you need, contact Magna Capital Group, Inc. today to discuss your options. We provide hard money loans at very competitive rates with fast approval and funding. We have proven to be reliable fix and flip lenders and earned many satisfied repeat customers. For more information about loan programs, call us now at (310) 734 4044 or email at info@magnaloans.com.

Finance Your Fix and Flips Projects With Hard Money Loans!

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Category : Fix & Flip Loans , Hard Money Loans

Fix and flip is really a slang term to describe a type of real estate investment deal. The real estate investors purchase an undesirable single family home at below market value and do some repairs to the property in order to make it more appealing. The idea is to significantly increase the market value of the property with the minimal expense possible so that the home can be resold for profit.

While buying, fixing and quickly reselling properties can be lucrative, it takes much more money to flip a house than it does to simply buy a house that you want to live in. Not only do you need the cash to become the property’s owner, you also need renovation funds plus money to pay for property taxes, utilities, insurance and loan interest from the day the sale closes through the rehab work and until the day it sells.

Unfortunately, many people struggle to find financing to buy fix and flips. Hard money loans are the best financing source for them. Hard money lenders provide loans to experienced or inexperienced flippers who need money quickly. Hard money lenders do not require the same amount of time and paperwork as traditional banks. Instead, they evaluate the property itself (both before and after improvements) and your ability to successfully complete the project.

Here are some important reasons that house flippers use a hard money loan instead of a bank loan. Compared to a bank, hard money lenders typically:

  • Can give you a quicker loan quote
  • Can fund a loan much faster
  • Don’t always require third party appraisals
  • Make loans on distressed homes that need rehab. Many banks won’t touch this type of property
  • Rely heavily on the value of the property. Banks typically rely heavily on the borrower’s credit
  • Have much shorter approval process, less red tape, and less paperwork
  • Don’t have maximum exposure limits to one borrower

The Bottom Line:

Hard money lenders play a vital role in the financing of all kinds of real estate investments and especially for flipping houses. A hard money loan is good for the experienced and inexperienced fix and flippers. The use of hard money in your house flipping business can be a tremendous benefit, increase your margins, help you grow your business, and allow you to diversify your risk. However, you just need to do your homework, ask questions and minimize the risks that come along with the use of outside capital.

If you are an investor who is ready to make an offer on a property and you need financing or just want to get pre-approved loans, then you have come to the right place! Magna Capital Group, Inc is one of the most trusted hard money lenders that can help you achieve your house-flipping dreams. We provide fix and flip loans across California. Our interest rates start as low as 7% and monthly payments are interest-only. Further, pre-qualification takes few minutes and funding happen in 10-15 days.

For more information about our fix and flip loans program, please feel free to call us today at (310) 734 4044 or email at info@magnaloans.com.

 

Fix and Flip Loans: The Best Financing Option For Flipping Houses!

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Category : Fix & Flip Loans

Fixing and flipping houses is only one way to make money investing in real estate. A lot of people dream of getting into this business, but funding is the number one obstacle. It costs a lot of money to fix and flip houses. You need capital to purchase homes, cover the cost of renovations, contractor fees, listing and broker fees, holding costs until you flip the home for a profit.

A fix and flip loan is a great way to get financing if you’re just starting out in the housing industry. If it’s your first time, you may not have the seed money that you will need to get started. Fix and flip loans can boost you to get into this industry.

Here are some things to know before getting a fix and flip loan:

The Best Financing Option:
Obtain financing is one of the basics of fixing and flipping homes. Keep in mind that the turnaround in most of these cases is less than a year. That makes getting a flip and fix loan from a traditional bank almost impossible. Banks make their money from the interest accrued from long-term financing agreements. They don’t like having the borrowed amount paid off within a year. So if you need to get this type of quick funding, you’ll have to look for a hard money lender who will agree to a short-term deal.

Find The Right Property:
Finding the right property is the first step of flipping houses business. You must know what a house will sell for once you fix it up and how much repairs and upgrades will cost. You’ll want to find something that you can get a really good deal on, and it should also be in need of renovation. Keep an eye out for foreclosures or those homes that have been damaged by fire or water. Once you’ve found the right place, one that you think you can make a profit on, it’s time to secure a fix and flip loan.

Keep Your Documents In Order:
Make sure you have paperwork in order before meeting with someone to secure financing. Don’t forget to check your credit score to make sure that the lender won’t think that you are a risky borrower. Make sure you have all of your documents in order to show how much reserve capital you have. You should also be able to verify your income by having pay stubs, a W-2, and tax returns on hand.

Understand Financial Calculations:
Financial calculations are different in fix and flip loans as it’s not a traditional mortgage. Lenders will calculate the amount they’re willing to front you by looking at your money reserves, your credit, your expertise, and the purchase price of the unit you’re going to rehabilitate. They also take into consideration the estimated costs of renovating and repairing the property and the estimated value of the finished project.

Know The Loan Term:
You are recommended to keep in mind that the term for fix and flip loan is usually between 6 to 18 months. While some companies will sometimes allow for three-month extensions. Creating a budget and a schedule can make rehabbing easier, so you should have a realistic plan in place for completing the rehabilitation and selling the property before your time is up. If you don’t give yourself enough time, you could be in trouble.

The Bottom Line:
Fixing and flipping houses is definitely a great way to earn money. To succeed in this business, however, you have to be patient and dedicated to your job. If you want to get into the home flipping business but don’t have the cash on hand, a fix and flip loan may be what you need. However, your chances of securing the financing will be improved if you follow the tips above.

Manga Capital Group, Inc is a leading residential and commercial lending company in California with 30+ years of experience in the real estate industry. We provide unmatched expertise in customizing a fix and flip loan structure to meet your requirements with minimal documentation. If you are considering for a fix and flip loan, call us today at (310) 734 4044 or email info@magnaloans.com or visit www.magnaloans.com

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