You are still working your regular job, but the ultimate goal by this time next year is a major career change. Through discussions with investment mortgage lenders you are making a plan to start buying and flipping houses. Talk about hard money rehab loans, secured short term loans, and other types of renovation financing with investment mortgage lenders can help many think about entering a field that is increasingly popular.
The television shows that focus on home remodeling and the buying and selling of residential properties can plant many ideas. With the shows making the renovation process both entertaining and manageable, it may be easy for even a novice property investor to think that there is easy money to be made by buying and flipping homes. The reality of the process, however, is that it simply is not as easy as the shows make it look. And while the demolition and construction processes have a huge impact on the entire process, the process cannot even begin without discussions and meetings with investment mortgage lenders. Having immediate access to the necessary money, in fact, is key to getting a hold of the properties with the most potential.
The Success of Buying and Flipping Houses Depends on Access to the Most Appropriate Kinds of Financing
Real estate adventures like buying and flipping houses are not for the weak of heart. The whole process involves serious negotiations, including getting the best price on the property in the first place, negotiating with contractors, and accurately pricing the property once it has been renovated. All of these steps, obviously, involve the finances provided by investment mortgage lenders.
One type of loan that many property investors use is financing available through hard money mortgage lenders. Hard money loans, by definition, offer higher interest rates and lower loan to value ratios. In some cases, the hard money interest rates can start at 15%, 18% or even higher. As far as collateral, most hard money loans are secured by a property that already has a 30% to 50% equity. As a result, the investor is well protected. The risk, of course, falls on the property investor. Ideally, in the most successful property buying and flipping investor will achieve the goal in a very short amount of time. For instance, hard money deals are often used for quick turnaround, usually within seven to 14 days to process. In fact, the ultimate goal would be to complete the renovations and sell the property before having to make many loan payments.
When property renovations incur delays or unexpected expenses, however, the plan for a fast buy and flip suffers. It is for this reason, though, that lending institutions are willing to offer the money. They always have the needed collateral for the loan, but also collect a fairly high interest every month that payments are made. And while the constraints of the loan may seem a little intense, the appeal of the buy and flip investment opportunity encourages many to use this kind of financing.
Real Estate Investment Options Appeal to Many
Many homeowners have successfully renovated their own properties. As these individuals move from one successful project to another, they are sometimes tempted to invest in other properties. The more safe property investment may initially seem to be buying property and renting it out to tenants. For others, however, the chance to more quickly show a greater profit from a property seems like the best decision.
During the year 2014, America saw 327,069 home repossessions. Some of these properties are located in neighborhoods that have lost many residents. When you consider that in the year 2011 the population growth in urban areas began to outpace the suburbs in the U.S. for the first time in over 100 years, it is understandable that many of those older urban properties may have been prime targets for investors. Older, larger homes in the urban area, in fact, provide some real opportunity for investors who want to take advantage of properties that are on treed lots in established neighborhoods. When these urban settings are renovated, they can quickly be sold to people who are looking to move from the suburbs to locations closer to downtown.