Do You Need a Rehab Loan?

The first question that you have to answer is whether or not you need a rehab loan. Many investors have already prepared for the possibility of needing money that they do not have in order to perform a restoration. After all, if you get an amazing deal on several properties that you want to flip quickly, you may not be able to spend that much cash money in order to purchase and rennovate. But real estate investors often have various types of financing available to them. Rehab loans for investors are just one of those options.

One of the most common ways that people finance house flipping and real estate investing is with a line of credit; a real estate line of credit allows you to charge up a certain amount for your renovation project, and then pay it off when you actually sell the property. This doesn’t have a huge amount of interest, although it does have some, and it gives you the freedom of always having that cushion there in order to do your renovation without having to go into the bank to apply for a new loan or relying on things like credit cards.

But with rehab loans for investors, there is a specific type of loan that is known as a hard rehab loan. This is a loan that is specifically intended to renovate a single property or multiple properties that are all being renovated pretty much at the same time. You have to talk to your banker and find out the details on both of these in order to see which one works best for you.

Terms & Conditions of a Hard Rehab Loan

There are certain factors that are pretty consistent with hard rehab loans that you want to be aware of before you start to do your own research. If you already know what a line of credit is going to cost you, then comparing these average hard rehab loan rates and terms will give you a much better idea of which type of financial product for Serbia best.

The first thing to be aware of is the interest rate on hard rehab loans this type of loan generally rent you anywhere between 7.5% and 12% interest. These are definitely higher rates than a conventional mortgage, but the reason that they are higher is that the bank or finance company is taking an additional risk when the money is intended for real estate investing. After all, you may never be able to sell the property. You may encounter some major issue when renovating that makes the property worthless. For these reasons, finance companies tend to set the interest rate a little bit higher than for an established home in a homeowner that wants to live in the home.

The loan term typically runs anywhere from 12 to 36 months. You may be able to complete your renovation faster than that, but there is additional time on the loan if you need. When it comes to points for your closing costs, generally they are equal to anywhere from 1 to 10 points or from 1% to 10% of the loan amount.

Hard rehab loans combine the funds that are needed for purchasing the property and then renovating it afterwards, so, you don’t have separate loan products. If you are already getting financing for purchasing property that you plan on flipping or rehabbing, and you find yourself running short on cash renovation, then you definitely want to consider the hard rehab loan as an option. Since you are getting the financing, and it is a short-term loan, then you might as

well take advantage of it for your investment. You may actually end up paying less in interest with a hard rehab loan than you would with a conventional mortgage on a property that you bought to renovate.

Qualifying for a Hard Rehab Loan

Not everyone is able to qualify for a hard rehab loan. There are some qualifications that are pretty much standard no matter where you go for one. Of course, you can always shop around and try to find someone that will approve you even if you get denied at one bank, but knowing what these qualifications might be in advance will give you an advantage when it comes to applying.

Of course, there are the obvious things like a good credit score, but you are also probably going to need at least 25% of the ARV to put down. The ARV is the After Repair Value of the home. You also have to show your income through bank statements as well as a least a couple of completed projects or a background in construction. Lenders also want to see risk statements that show exactly how risky a property is when you purchase it, and they will want to determine that you have the income to make the loan payment even if the property is not able to be flipped and sold.

The bottom line is that hard rehab loan is not for everyone, but rehab loans for investors can be one of the ways to make it easier to purchase and renovate properties for resale or rental. You just have to do some research and determine whether this unique financial product is right for you.

If you would like our help to find the right hard money lending for you, fill out the short application below and we will forward your information to a lender that is suitable for your needs.
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To add insult to injury, every single month you wait for local residential home pricing ‘to start
appreciating normally,’ you’re on the hook for all your loan payments. No wonder most flippers
want a quick rehab loan source. They want to complete their projects as rapidly as possible
so they can sell their flipped property when the market is still hot.
Key #3: Traditional financing sources may ask for all sorts of documentation for your
residential rehab hard money loan
Given the risk profile of most flippers, it is not a surprise that typical or traditional lenders
make residential rehab loan applicants go through a lot of hoops. Please understand that if
you are applying for this type of loan, you are really applying for a business loan. You are in
the business of buying and rehabilitating homes so don’t be all that surprised if you are asked
questions regarding your business.
Since a lot of flippers are not exactly established and many have uneven records of success,
don’t expect your loan application to be a shoo-in. It definitely doesn't make sense for you to
expect that your residential rehab hard money loan application process would be a formality.
Expect to answer lots of questions regarding your flipping business.
The process can be especially hard on people who look at flipping as just a ‘sideline’ to their 9
to 5 job.
On top of all the hassle described above, even if you were to comply with all the paperwork
requirements, there’s no guarantee the bank will take a risk on you. This really is the bottom
line-they are being asked to take a risk on a flipping project. Many loan officers at typical
banks and other financial institutions don’t exactly have their ear to the ground when it comes
to local real estate sales trend. In many cases, they will process your loan based on their
understanding of past sales trends. This may or may not work to your favor.
The bottom line? You are rolling the dice when trying to take out a rehab loan with a traditional
financing institution. If they do decide to give you a loan, it will be at a higher interest rate and
it may take so long that you might find yourself stuck. How come? The process might take so
long or you might have to find other loans and after you finish this process, your completion
date happens at precisely the time when the market heads south.
It’s not unusual for flipper to get caught in a bind. Despite the otherwise lucrative potential of
their project, they end up settling for cents on the dollar and sell their flipped properties when
they get low ball offers. At best, they are selling for a fraction of the full potential profit they
could have had. At worst, they actually lose money since they can’t wait for the market to
‘reverse course.’ They lose money on both loan payments as well as the final sales price of
their flipping project.
Key #4: If you are fixing up and flipping properties, you might want to consider firms who
specialize in the kind of loans you are looking for
Residential rehab hard money loan providers know the flipping game inside and out. They
know how hard it is for flippers to get loans from traditional financing sources. They also know
how devastating any delay can be for flippers looking to sell and lock in on profits.

These providers offer a streamlined process. Most are actually brokers or ‘fund aggregators’
for private individuals looking to lock into a specific interest range for their investment.
When you contact a residential rehab loan provider, they will cut straight to the chase. First,
they will ask for a minimum commitment from you regarding the total rehab costs of your
project. Sometimes this involves up to 30% borrower cash.
Next, they spell out industry-specific loan to value thresholds for rehab loans in your area.
Depending on your region’s market dynamics, this can be as high as 60% or even less.
You will also be expected to have enough cash reserves should there be a sudden rise in
construction costs. This figure is factored into the total loan amount you’ll get.
Finally, firms specializing in hard money residential rehab loans calculate costs in a particular
way. Don’t be surprised if they factor in the following: cost of your project’s land, soft costs like
permits and engineer’s/architect’s fees, the actual hard costs of construction (with your 10%
cash reserve taken out), and several months’ worth of pre-paid interest.
Key #5: You might want to participate in a flipping joint venture before taking out an individual
loan
Many, although not all, companies specializing in this type of loan automatically refuse first
time flippers. This is very understandable since a large percentage of entrepreneurs buying
and fixing homes to resell don’t exactly realize the profits they hoped for. Some even lose
money since local real estate markets can quickly turn cold. Some are forced by mounting
loan payments to unload as quickly as possible-profit or no profit.
This standard industry policy leaves you in a classic ‘chicken or egg’ dilemma. For you to get
a loan, you need rehab and resale experience but to get such experience, you need a loan.
What’s the quick fix for this tight bind? Joint ventures.
When you team up with a person or team of investors who have successfully applied for
residential rehab loans before, you leverage their experience with lenders. This increases
your chances of getting the loan you need to cover your construction costs.
Once you have successfully flipped at least one previous project, you can then start thinking
of taking out a rehab loan in your own individual name or the name of your corporation.
Keep the key points above in mind. The key takeaway here is if you want to maximize the
speed you buy, rehab, and sell residential projects, you need to approach firms that specialize
in that kind of loan. They are specially qualified to process your loan quickly so you can
improve your chances of unloading your project at a hefty profit.

If you are in need of help to find a good lender for a rehab loan, you can apply below and we will help you find a suitable lender for your project.
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Best of luck with your project!

The post 5 Key Things Borrowers Need to Know about Residential Rehab Hard Money Loans appeared first on Local House Flip Funding.

Chances are, if you’ve stumbled on this post; you’re contemplating your first Bridge Loan.
Financial decisions are always a bit overwhelming, especially if it’s new territory. Legal
speak, rules and regulations, and fine print can quickly lead to stressed out situations if
you’re not careful. In hopes of cutting some of your research time down, I wanted to offer
up my findings, and what ultimately lead me to my first (and following) successful Bridge
Loans.

Bridge Loans, so we’re on the same page, are sometimes referred to as Swing loans, or
even Caveat Loans. Typically spanning a few weeks to a year or so, and often used in
purchasing homes; Bridge Loans help you ‘Bridge’ the gap between selling your previous
home, and purchasing your new home. Bridge Loans are also great for individuals renting
buildings (homes, office space, or otherwise), allowing you to renovate key pieces that will
immediately convert into higher rental prices, or even allowing you to purchase at discount
in bulk, and a short time later, selling for additional profits.

Bridge Loans are great in their unique setup. Having a quicker lifespan than a standard
loan means the lender doesn’t anticipate collecting as much profit from you, and that
results in elevated interest fees. On the other hand, you’re usually entering into a Bridge
Loan with knowledge that you’ll soon have the ability to pay it back quickly, resulting in
less time to accrue those interest fees anyway. As with anything in life, there are Pros and
Cons with all decisions – each decision specific to the person or situation. The original
Pros and Cons list I gathered for my first loan is below:

Pros:
● Breathing room! With a Bridge loan, you have some wiggle room to get you
through your next move
● Quickly get you into a new home without having to sell your previous
● Gives you a cushion for closing fees (selling a home)
● Allocates additional cash in unexpected times (IE: a higher than anticipated
construction cost; or a snag in renovating)
● Bridge Loans are Non-recourse loans. The lender will only be able to recoup
repayment through the value of the property (even if the value of the property has
depreciated)

Cons:
● Being ‘High Risk’ for the lender, it’s a bit harder to get accepted for a Bridge Loan
over other available loan types.
● Piggy-backing off the above con, if you’re using a BL to purchase an additional
home, you’ll have to first qualify to own more than one home.
● As with any loans, bridge loans are subject to interest fees

● To qualify, you have to already have a good line of credit
Final thoughts? The benefits vs risks depend directly on you and your situation. Bridge
loans may not be the go-to for everything, but if you find yourself in crunch time between
transitioning to a new home, getting additional renters into your property, or even
purchasing bulk for a quick turn around on profit, a bridge loan could be the shining star
you need.

If you want us to help you find a lender to supply you with a bridge loan, you can apply in 30 sec below.
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Houston is one its own an extremely lucrative real estate market. The median home value in Houston is $185,600, with home values rising 7.2% last year. For the coming year home values are expected to rise an additional 3.4%. Montrose remains as the most expensive neighbourhood, with the median home value staying around $600,000. Some of the most popular areas to purchase a home right now is Kingwood Area, Clear Lake & Memorial, all boasting large population numbers and a thriving market.

In 2017 the market took a big hit from Hurricane Harvey, but instead of discouraging buyers, the market kept growing. Although Harvey caused major damage, the city came together as one and is exiting recovery mode in 2019. More and more people are moving from New York, LA and San Fransisco as housing prices have got out of control and are now looking to make moves in Houston.

In order to get funding fast, hard money loan takers should prepare necessary documents in advance before seeking a loan. These usually involve things like contracted purchase price, entity name, primary borrower name, ARV and subject property address. If a loan taker comes prepared with all the necessary documents in advance, funding can be given in weeks or even days, instead of months as lenders will be able to provide terms for the loan in a short time span.

Below is a link to a site that lists lenders offering hard money loans in Houston in order to help you find a local lender.

If you want to get in touch with a lender recommended by us, with low rates, fast and personal support and high LTV click on the Apply button below to take a 30 second application.
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If you wish to contact us through other means, please use our contact form.

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If you want to get a fix and flip loan with bad credit, that’s usually where hard money lenders come into play. Hard money lenders are able to provide funding within weeks, not months. The downside to taking a hard money loan is that you have to find a reliable lender that you can trust to stick with you through the process. Furthermore, hard money loans usually imply a much higher interest rate and points around 2-6% depending on the lender. Bad credit may increase the risk profile for lenders and thus increase the interest rate further.

Therefore, if you decide to go with the hard money lending there’s a couple of things you may want to prepare in advance to look presentable to lenders. Having information collected such as rehab budget, ARV and proposed closing date may alleviate the perceived risk profile and help you secure a good deal. Additionally, it will help you get funds much faster as the lender will quickly have all the info at hand and be able to give you terms for the loan you are seeking.

For the unexperienced flipper, we’ve provided a small introduction to Fix and Flip Loans below.
Fix and Flip Loans

We’ve also compiled basic info of how a Fix & Flip Line of Credit works.
Fix and Flip Line of Credit

If you have a FICO that is at least 600, we will try and help find a lender for you. Use the apply button below to take a 30 second application.
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Best of Luck with your Fix & Flip project!

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For people in Fix & Flip markets, its certainly been extremely profitable. The average home price stands around 259,000$ while over 5% of market sales have been for homes worth 500,000$ or more.

Comparisons to other major real estate markets such as California can be drawn, as the trend and overall opinion in California is bearish over a possible recession or falling housing prices. Numerous indicators are pointing towards Texas as the housing market to be in during 2019 as other states are dealing with issues unknown to Texas.

Getting a hard money loan in San Antonio may seem like a difficult task. Sure, Texas is arguably the largest hard money lending market in the US right now, but with a lot of options come a lot of questions and difficult decisions.

Do I want a local or nationwide lender? Which interest rates have I budgeted for? Where can I get the best terms of my project?

We’ve decided to simplify this process to for your convenience.

Below we’ve linked a site that compiles local lenders in San Antonio for you to look at.

Should you wish to get in contact with a reliable hard money lender with low rates, fast & personal support and access to the capital you need, you can click the Apply button below to be sent straight to a 30 second form on our site. We will then find the perfect lender for your project.
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Investors should be aware of the fact that some analysts, as well Zillow who works with lead generation in real estate, are predicting the housing market to cool off in the next five years. This process could be accelerated further if the Federal Reserve keeps raising interest rates too quickly. This is not something that should worry serious and well informed investors though, as there’s always profit to be made if you know your numbers and are aware of the potential risk structure going into markets such as Fix & Flip.

With that said, loan takers have the upper hand when looking for a lender to partner with in California. Down below we’ve prepared a checklist of things you should take into consideration when choosing between hard money loans in California.

• Loan Rates
• Lender fees (also known as points)
• LTV & Terms
• What is your current credit score and will the lender accept it?
• How long is the turnaround time?
• Past Lender Reviews
• Does your gut tell you that this lender feels right for a long term cooperation?

Below we’ve linked a website which could help you with finding an appropriate hard money lender in California.

Alternatively, if you click the Apply link below, you’d be sent straight to a 30 second form on our website, where we help you find a nationwide lender with low rates, fast turnaround, as well as personal and quick support.
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Denver emerged as a profitable housing market after the recession in 2008. Coming out of the huge crisis, investors started placing their money into real estate again and with Denver being one of the markets lagging behind during the recession, it suddenly became very profitable for people in the fix & flip business, as well as general real estate investors. The market is still doing quite well and if you have the right skillset, there’s plenty of money to be made.

Now, if you looking for a hard money loan and trying to figure out how to find the perfect lender, there’s a couple of things you should ask yourself;

• What interest rate can I afford?
• How fast do I need the loan (aka turnaround time)
• Have I made sure to get all the proper documents to get funded faster?
• Do I have a clear strategy to fix and flip?
• Does this lender feel genuine? Does he respond in due time?

Loan takers should also take into consideration that while hard money loans are funded much faster than bank loans, they come with higher interest rates that need to be budgeted for.

With all this in mind, we’ve linked a site that lists a number of local lenders in Denver along with some information about each lender.

Should you wish to get into contact with a lender recommend by us, with low rates, fast & personal support, as well as fast turnaround, click the apply button below and fill out a 30 second form.
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In 2019, the average home value in Arizona stands around 250,000$ and with home values increasing 7.5% in the last year, a lot of lenders are ready to serve your needs when it comes to Fix and Flip, Bridge Loans, Business Lines of Credit and more. With this much potential and signs of a growing market, loan takers can have their pick.

What loan takers need to have in mind is that while a hard money lenders are often ready to provide you with fast funding (some as soon as 1-2 weeks) that comes with certain disadvantages in contrast to standard bank loans. While the funding is extremely quick and painless, you still need to keep in mind that the interest rates are above average for loans and that you have to provide certain documents to be eligible for funding. As long as you have that in mind and know your numbers, how much you can purchase something for, the renovation cost and what you can sell it for, you should be just find. Just in case you need a few tips though, we compiled a small checklist down below.

When looking for a Fix and Flip loan in Arizona, here’s a useful checklist of what to look for:

•  Comfort -Make sure that the person you’re working with is reliable, responds within a reasonable timeframe and has your best interest in mind.
• Experience -How long has the company you’re working with been in business? What’re their reviews like? Have they made any similar loans to yours lately?
• Rates- How do their loan rates and turnaround time match up to competitors?
• Gut Feeling– The most important part is to find a lender you can trust. If it doesn’t feel right, move on to another option that you feel safe and good about.

Below we’ve provided a list of 50 possible local lenders in Arizona for your convenience.

Alternatively, you can Apply below in 30 seconds and we will help you get in contact with a hard money lender with low rates, fast turnaround and high LTV.
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Best of luck with your Fix and Flip Project!

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