is hard money a major player here? regular banks?
to people who are flipping many properties in a given year, how are you financing it (assuming you are not just paying cash out of your pocket for the entire thing)?
Because this is in the wholesaling forum I assume by flipping you mean wholesaling.
You don’t need any financing for wholesaling.
Many of my investors use a line of credit on a primary residence as their primary funding source. If that is available to you, that would be my advice. It is cheap to set up and reusable.
I guess I’m out…I pay cash…the good thing is that there’s no pesky “you can’t buy this house because the roof is bad” crap…DUH, it’s a REHAB!!
Keith
nope unfortunately i’m 23 and don’t have a house. in early '07 when i begin this, i will have / already have:
2 signers (fiance and I) with ficos over 750
25K$
two jobs, with tenure >3 years, making ~55K combined
i thought flipping was buying houses cheap and selling them at retail, for profit. am i using the wrong terminology? this forum is for bird dogs, wholesaling, and flipping. if my op was misleading or using incorrect terminology plz lemme know so i can stop looking dumb
No jd, you are correct and this is the appropriate forum for your question…
Keith
JD- Maybe I misunderstood what you where talking about. To me, it’s never made sense to actualy buy a house and then resell it without rehabbing at a retail price. I would assign the contract to the new buyer with a simultaneous closing. But thats just me so I apologize for the misunderstanding.
assigning the contract to the buyer seems to be a great approach to me, if i were able to get market, or close to what i would’ve gotten had i just listed it with a realtor. i would imagine that in practice, the limited exposure that way woudl mean i’d need to sell at a discount, meaning to keep profits at a certain level, i’d need to move more houses, which means find more deals. i dunno, i’m just concerned with profit/deal, and seems to me (huge chance i could be misunderstanding your approach) that i’d get more by actually taking title, doign a little rehab / tlc if the situation would allow it profitably, and then selling retail.
any thoughts dan?
From what I have learned is that hardmoney lenders want a portfolio to give you good rates, I found a couple of deals which I am trying to put together. From what I have been told, do assigments first to build up your portfolio, plus you wont have to do the rehab, just assign the contract and move onto finding your next deal. I do not have a portfolio so my hardmoney lenders are charging 18% plus 3 points which is a kick in the croch, with no remorse :help:
thanks for the suggestion (to just wholesale my contracts) but i already know what i want to do and it isn’t wholesaling.
jd- There are reasons it’s never made sense to me to purchase a house then resell it to a retail buyer. I see your point about the profit per deal but you may be forgetting a few things.
- Points on a loan
- Mortgage payments until sold
- Taxes, Insurance
- Minimal utilities
- Agent’s commission (yours and/or the buyers)
- Hassle of dealing with lenders which should account for a significant dollar amount
All of this combined with the fact that it is very hard to find a house in retail condition that is substantially below market value. However, if you can find a property in great condition that is significantly under market value then more power to you.
From finding that property to closing on the sale may take a few months. Wholesaling a contract to another investor may take a week provided you have investors lined up ahead of time. Your yield (both in time and money) will be much greater wholesaling to investors.
Just my .02
can you be more specific? are you saying it can be 3 months from the date you sign a p&s to the date you close on that house? how long can the bank delay things? i’ve never bought anything, curious what takes up that time…
3 months is probably on the shorter side assuming you use conventional financing.
1 month for your lender to process your loan
1 month to find a qualified retail buyer
1 month for the buyer’s lender to process the loan
Good loan officers can hurry the process along but lenders still like to take their sweet @$$ time. If your in a slower market like most of the US it might take longer to find your buyer as well.
oh thank god… i thought you meant 3 months til when I can close on the house, not my buyer. wow that’s relieving
I am anxious to see how others get their funding also…besides just paying cash. My area is filled with properties that are priced 30-40K under retail value and most literally just need cosmetic work(cleaned, carpet, paint). But, I would still love to hear how some of you obtain 3 or 4 houses in a months time…then sell them…IS it hard money lenders and cash only?