The home improvement shows that are so popular on the cable networks have prompted a lot of entrepreneurs to start thinking about starting their own businesses fixing and flipping properties. They know they can make a lot of money if they buy low and sell high. The biggest hurdle most of them face is finding the money to get started. Traditional lenders may not be interested in making the kind of fix and flip loans Seattle investors need. Thinking outside the box is often a necessity.
After you have found the house you want to buy, renovate, and resell, you have to figure out how to pay for it. There are basically four parts to the loan you need. The first is the purchase price. You will need twenty to forty percent down payment in cash.
Your loan will have to cover holding costs, like homeowners fees and insurance, during the time the property is being renovated. The building supplies and materials have to be covered, as well as the cost of labor. There will be closing costs and a commission paid to the Realtor.
You will probably need to put some creative thought into this financing because most traditional lenders will turn you down. If you are flipping for the first time, you ought to look to family members and close friends. You might offer to give them a percentage of your business in return for a loan to start your first project. If your family will lend you some cash, be sure to put everything down in writing. That includes the terms of the loan and the amount of time the family is giving you to repay the money. Normally, borrowers are given the time to renovate and sell before they're expected to start paying back the loan.
If you have the expertise, but are short on cash, you need to look for a money partner. In this kind of arrangement, one partner handles negotiating the real estate purchase, renovations, and resale. The other partner finances the project. This can work well if everyone does their part.
If you own your own home, you might consider a home equity line of credit. This requires approximately twenty percent equity. You can only borrow against a primary residence. With a line of credit, you take out money as it becomes necessary.
You don't pay interest on any of the money you do not use. Banks usually loan around 85% of the home valuation after subtracting the outstanding balance. This often is less than you need to complete the project. In this case, you are going to need some other money source to finance the rest.
Investors who have retirement savings accounts might consider borrowing from them. This is not recommended for flippers nearing retirement however. You may also consider a personal loan, if you don't need much money and are able to pay off the loan in a short period of time.
After you have found the house you want to buy, renovate, and resell, you have to figure out how to pay for it. There are basically four parts to the loan you need. The first is the purchase price. You will need twenty to forty percent down payment in cash.
Your loan will have to cover holding costs, like homeowners fees and insurance, during the time the property is being renovated. The building supplies and materials have to be covered, as well as the cost of labor. There will be closing costs and a commission paid to the Realtor.
You will probably need to put some creative thought into this financing because most traditional lenders will turn you down. If you are flipping for the first time, you ought to look to family members and close friends. You might offer to give them a percentage of your business in return for a loan to start your first project. If your family will lend you some cash, be sure to put everything down in writing. That includes the terms of the loan and the amount of time the family is giving you to repay the money. Normally, borrowers are given the time to renovate and sell before they're expected to start paying back the loan.
If you have the expertise, but are short on cash, you need to look for a money partner. In this kind of arrangement, one partner handles negotiating the real estate purchase, renovations, and resale. The other partner finances the project. This can work well if everyone does their part.
If you own your own home, you might consider a home equity line of credit. This requires approximately twenty percent equity. You can only borrow against a primary residence. With a line of credit, you take out money as it becomes necessary.
You don't pay interest on any of the money you do not use. Banks usually loan around 85% of the home valuation after subtracting the outstanding balance. This often is less than you need to complete the project. In this case, you are going to need some other money source to finance the rest.
Investors who have retirement savings accounts might consider borrowing from them. This is not recommended for flippers nearing retirement however. You may also consider a personal loan, if you don't need much money and are able to pay off the loan in a short period of time.
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Get a summary of the things to keep in mind when taking out fix and flip loans Seattle companies offer at http://www.privatecapitalnw.com/fix-and-flip-rehab-loans right now.
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