This is the best board on this subject I have yet found, great advice on here. I have been researching flipping very aggressively and I am bout ready to take the dive. My questions are a few, that only people with experience may answer. So, I hope I find on here very helpful tips. Also, I live in nyc, and have a credit score of 712, and I have a decent job, I added that as some background info on me. Here are my questions:
- Which loans are better, or more advantageous, Hard money, or traditional? And why?
- Also, would it be to my advantage to form an LLC, as far as loans go? Would it be easier to aquire them? What are downfalls of LLC’s?
- I plan to borrow from the bank the rehab money, or from a lender, and plan on using professional contractors to finish the job, with the home on the market at 250,000, and comps around the area selling at around 385k-423k, do you think it’s a good way to handle it with contractors.
- For now, I ahe ran out of questions…olol…but any other advice wold be GREATLY appreciated.
- Which loans are better, or more advantageous, Hard money, or traditional? And why?
They are both great for different reasons. Hard money if you think you can flip it real quick like. Traditional if you think it will take a while and dont want to pay the hard money rate’s. On the other hand as far as traditional goes look at your Pre pay make sure it is a soft pre pay and or no pre pay at all. The other thing to keep in mind is if you get a traditional loan is it does not look good on your credit if you pay it back real quick! It can hurt you in the future if you have a ton of mortgages that are paid off within say a month or two.
- Also, would it be to my advantage to form an LLC, as far as loans go? Would it be easier to acquire them? What are downfalls of LLC’s?
It is always a great Idea to form a LLC/LLP/SCORP to acquire a loan and for asset protection. On the other hand a lot of lenders will not lend to you under that until your corp. has been in business for at least two years and if they do the rate might be higher because of the risk involved.
- I plan to borrow from the bank the rehab money, or from a lender, and plan on using professional contractors to finish the job, with the home on the market at 250,000, and comps around the area selling at around 385k-423k, do you think it’s a good way to handle it with contractors.
As far as this goes your best bet might be one of two things Use the Hard money lender if they will lend you the rehab money as well. I know of very few traditional lenders that will do this the other thing to really check into is HELOC’s (home equity lines of credit) call your local credit unions and banks and see what the rate is on them. And also ask to see how long you need for title seasoning some banks might require 3 months while others require none. I have a credit union I use with a two year intro rate of 2.9%. As far as contractors they are nothing like us investors FOR SOME REALLY ODD REASON THEY WANT TO GET PAID WHEN THE JOB IS DONE!! Narrow minded contractors! what are they thinking! LOL
***Also Remember this is just my thoughts on this matter and you might want to ask your c.p.a and or attorney as well.
REO, or anyone who knows, what is meant when you say “soft pre-pay”? Thanks in advance, Tony
Thanks for the great info, and insight. Now I have a few more questions, as I want tobe directed in the most accurate direction as possible.
- Before you close on a house, whom is the 1st person you get to inspect the house? What should you want them to closely inspect?
- Do I need a building permit when I begin repairs? In nyc where do I go apply for one? How do I get a build inspector to come inspect the house to see if it’s up to code?
- Also, besides this board, what other reading materials can anyone recommend?
Again, thanks for all your help….hopefully I will report back here soon after I have all or almost all my corners covered and report a success story.
Suppose you apply for the loan as an individual, then afterwards replace your name with the LLC on the deed?
Beemnseven yes that is the way I do it!
Tony a hard pre payment penalty is where you have to pay if you refi or sell a soft pre pay you only pay if you refi! If you sell you are ok.
metalslug
- Before you close on a house, whom is the 1st person you get to inspect the house? What should you want them to closely inspect?
I always get a appraiser and a inspector to over look the whole house
- Do I need a building permit when I begin repairs? In nyc where do I go apply for one? How do I get a build inspector to come inspect the house to see if it’s up to code?
Yes you will need permits depending on what work you are getting done the contractor should get those for you!
- Also, besides this board, what other reading materials can anyone recommend?
There are great e-books on this web site! I also say to go to your local libary!
Hope this helps!