There are several reasons to want to engage in rehabbing houses. Some are able to handle several properties at a time and make this their business. Others deal with one property at a time. Fix and flip loans are one way for an investor to get involved in the real estate market.
An important thing to remember is that the old adage is true: it takes money to make money. It is not possible to get a loan for the full purchase price of a building. In today’s market it pays to be savvy about how to fund a successful project. The truth is that banks will only lend to established house flippers. For first-timers, hard money or private fix and flip loans are the way to go.
A hard money loan is easier to obtain than a bank loan because much less red tape is involved. Investors who are willing to put their money where their mouth is and make a real financial commitment will have an easier time procuring all types of loans.
It is reasonable to expect a loan to cover between 60 to 65 percent of the total funds for the purchase and remodeling, meaning that it is important to always be mindful of the expected cost of buying the home and completing the updates. For example, if a home can be purchased for $150,000 and repairs will cost $25,000 it is reasonable to expect up to 65 percent of the total to be covered by loans. Interest can also be minimized if property is renovated and sold quickly. Property can be resold in one year.
Positive Outcomes of Updating Homes
Improving the quality of a home is a very rewarding experience. A residence can be made truly great. Rehabbing the home will make it inviting to new buyers and allow them to use the space to its full potential. Possible fixes include adding newer fixtures or plumbing, or creating a more physically accessible space for disabled residents. All the while, a profit can be earned that helps enable future endeavors while making someone else’s dreams come true.
A Risk Worth Taking
When engaging in the housing market, fix and flip loans are a reasonable investment, especially with the right amount of funds set aside to cover part of the initial costs and ensure a positive borrowing experience. If the improvements can be completed quickly, interest on the investment is minimal and the rewards are significant.