Are we missing anything?

Financing, Hard Money Lenders, Private Money
1

We are newbie’s at this fixing\ flipping thing. We have a property under contract for $35K. It appraises for $75K as is before upgrades. Rehab costs around $10K. Looking to use an HML for financing. Once completed will put property back on the market. Sound like a fairly solid plan? Missing anything? Thanks.

2

Sounds like a good deal. A hard money lender will do the loan for you. The only hurdle might be the buyers paying far more than what you paid for it. So keep your receipts.

  1. Your credit score being 600+ will help the loan
  2. Make sure you know it will appraise, don’t be optimistic, be realistic on the apprased value. Or you will just waste your money on paying for an appraisal. Make sure the appraiser will give you an ARV estimate.
3

I understand the first part , but I do not understand the hurdle\buyers paying far more part. Please explain. Would I be better off just wholesaling the deal and being done with it? Much appreciated!

4

I have had deals fall through because the seller only owned it for a few months and they were selling it for far more than they paid for it.

Example:

I tried to buy a 4-plex for $90,000. The seller owned a lot of SFH properties but didn’t like the mulifamily rental. He had a loan for about $50,000 and a silent second. My lender wouldn’t let me do a no money down loan ONLY because we couldn’t give enough receipts to explain why the price he paid was so much less then what I was paying. Hopefully that makes sense to you. Let me know if it doesn’t.

If you are doing some rehabbing then make sure you keep every receipt you can get. If you are putting $10,000 into the property then you should be fine.

5

The key to rehabs is knowing a few things

  1. Know your After Repair Value
  2. Get multiple bids on the work (even if you intend to do it yourself). Dont’ just focus on price but also TIMELINE
  3. Also note the average DAYS ON MARKET for the area if you intend to sell retail.
  4. As a back-up plan, know the rental market.
  5. Get a mortgage broker lined up that can refinance based on the new appraised value as long as you show work being done, so you can get out of the hard money upon completion of the work.

And finally…

  1. Know how to get out, before you get in!!!