Learn To Be A Fix & Flip Investor

Wednesday, September 11, 2019

Fix and Flip Vs Buy and Hold

When you come across a property to use as an investment you’ll have to decide whether to fix and flip or buy and hold. Here are some reasons why fixing and flipping using an Arizona hard money lender might be the way to go.

Investors have a decision to make once they’ve rehabbed a property. The main difference is whether you’re going to make income up front or whether you want an income stream to come in long term.

Below you’ll find an explanation of why one may work better for you than the other.

Buy and Hold

A buy and hold property is one that you’ll rehab and use as a rental. You’ll have property management costs if you choose to use a company to manage the property and maintenance costs. The goal of a buy and hold is to keep your costs to a minimum, so you have positive cash flow coming in each month. In this case you can stil use a Arizona hard money lender to finance the purchase and rehab until you can secure long term financing.

Fix and Flip

Unlike a buy and hold, a fix and flip will be sold as soon as the renovations are completed, giving you instant cash flow to put towards your next investment. This can provide less stress with upkeep and monthly costs associated with a buy and hold.

So how do you decide whether to work with a Arizona hard money lender for a fix and flip loan or to focus on a buy and hold property? Here’s where having market knowledge will be helpful because some properties due to their specifications or location won’t bring in a high rental income. That should be a huge determining factor.

Also, if you aren’t able to buy the company with cash or obtain a loan that will give you low monthly costs that can be covered, and then some, by the rental income.

If you’re interested in making income from real estate you’ll want to research your options, get to know your market, and work with a knowledgeable team who can help you complete your renovation and then either sell the property or rent it out for top dollar.

To get more information on Level 4 Funding, a Arizona hard money lender, give us a call to set up an appointment to discuss getting your investment funded today!

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com
Dennis Dahlberg Broker/RI/CEO

NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.
© 2019 Level 4 Funding LLC. All Rights Reserved.

Use Your Arizona hard money loan for a Property That Will Sell

Your investment is only a success if you’re able to sell your property quickly and for top dollar. Using your hard money loan for a property that will be appealing to buyers is key.

If you speak to an experienced investor, they’ll tell you that they haven’t always had successful fix and flips. One pitfall that first-time investors can make is not choosing a house that even after renovation will be one that will attract buyers. Before securing your hard money loan you’ll want to research the property and make sure it will check the boxes for buyers.

Location, location, location!

Most buyers will have a desired area in which they will search for their home. If you’re renovating a home in an area that isn’t attracting buyers, you’re going to have a hard time selling it once your flip is completed. Consulting with a real estate agent will help you focus on areas where homes sell quickly and for top dollar.

Know Your Market

In some cities smaller condominiums will be highly desirable where in other locations a 3-bedroom, 2 bathroom is the most sought after property size. This is also an opportune time to consult with a real estate agent who knows what’s selling easiest in the current market.

Cater to Your Audience

While it may be tempting to use finishes that will “wow” potential buyers, you want to keep the palette neutral. A brightly colored home may catch a lot of attention, but you’re drastically limiting who will actually want to buy your property. Use colors that are universal rather than going for what’s trendy right now. Chances are that the buyer may make changes to match taste so spending extra money on expensive hardware and landscaping won’t be a good return on investment.

Your Arizona hard money loan will help you buy your property, but your property choice is what will help you sell. To discuss your investment idea, give Level 4 Funding a call today!

How to Maximize Your Arizona hard money loan ROI

Here are some tips to ensure you’re getting the maximum ROI on your fix and flip using a Arizona hard money loan.

Who doesn’t want to make top dollar on their fix and flip? You’ve invested time and money, blood sweat and tears, and now it’s time to list your property so you can pay off your Arizona hard money loan. Below you’ll find some tips to make sure you’re getting the most money in your pocket once from the sale of your investment property.

Stage the Home

This isn’t always necessary, but a great way to present your property in the best light. Some homes won’t require staging and others won’t show well without it. If you’re in a higher price point you’ll definitely want to invest in staging, enabling potential buyers to really imagine the house as their home. Staging companies will provide the furniture for a fee and bring and remove the items for you.

Use a Professional Photographer

No matter the home or the price point, pictures are worth a thousand words when it comes to listing your investment home. With the technology available today you can have virtually staged photos, drone photos, and high definition videos taken for a reasonable price. Nothing turns off potential buyers like low quality photos.

Hire a Great Agent

Last, but definitely not least, you want to work with an agent who knows the market, the area in which you’re selling, and has a track record of quick, top dollar sales. You want to interview agents to learn their history and also understand their marketing strategy for their listings. You want your home to receive maximum exposure which can come from social media and open houses. They can also be an asset when it comes to choosing new fix and flip properties, helping you analyze the area and potential ARV.

Not only do you want to be able to pay off your hard money loan, you want to put money in your pocket to invest in your next project. Give us a call today to schedule a time to present your investment ideas.

Fix and Flip Loans: Time is of the Essence!

If you’re funding a project with a Arizona fix and flip loan you want to be able to complete your renovation in a timely manner. Here are some tips to help you stay on track.

The longer it takes you to complete a fix and flip the more money it is going to cost you. Property taxes, HOA fees, utilities, and loan interest can eat away at your bottom line. There are some ways to help you complete your renovation on time and pay off your Arizona fix and flip loan quickly!

Put Together a Team

Investors will tell you that you’re only as good as your project team. Your project relies on the ability of your contractors to complete their portion of the renovation on time. Beyond your go-to renovation specialists you’ll want to have an attorney and a real estate agent on deck.

Don’t Bite Off More Than You Can Chew

It’s important to choose your fix and flips wisely, not jumping feet first into a renovation that’s going to require vast structural updates. Cosmetic rehabs are the way to go, especially when you’re starting out. Unexpected issues are sure to arise, but if you can avoid large anticipated construction costs you’ll be far better off.

List Prior to Completion

Another way to ensure you’re not sitting on a property too long, eating up your funds, is to list the home prior to your project completion. Focus on big areas like the kitchen and living room and complete other rooms or the landscaping as it’s on the market. Finishing touches can be completed prior to close.

Last, but certainly not least, the most important part of a renovation timeline is getting your project funded quickly. That’s where a hard money lender that provides Arizona fix and flip loans comes in. Level 4 Funding can fund a loan in as little as week if the investor provides the proper documentation up front.

We are more than happy to schedule a time to speak with you about your upcoming renovation and provide you with the Arizona fix and flip loan to make it happen!

Tuesday, September 10, 2019

If the old ways of getting a loan for your building project are standing in your way, do what A. J. Ellis did when her ideas keep hitting closed doors—look at other solutions like a new construction loan funded via Arizona hard money i.e. private lending. Read further to find out the steps she took.

A. J. wanted more than anything to build her own houses from the ground up, designed to stand out, not be cardboard cutouts of each other. A degree in architectural design and years of work experience in a construction firm made her certain she could do it if she had the funding.

But it seemed that A. J. was the only one who held that opinion—every reason for being turned down seemed to appear as she went from banker to mortgage company to credit union. Her credit score was middling, her credit background was non-existent, a co-signer was required, etc. She began to wonder if the idea really wasn’t that good.

“File 13,” her assistant told her after lunch one day, handing her a brochure. “We don’t do business with these folks.”

She glanced at the brochure—it was an advertisement for a private lender who set up new construction loans in Arizona for individuals who couldn’t go through the traditional routes. She slipped it in her briefcase and that night began researching these types of lenders. They were respectable people, it seemed, with projects built by their money scattered all over the state with no problems arising after completion for whatever the builder had in mind.

The advantages of such funding—basically a short term loan that financed construction of real estate investment property—were attractive.

Private lenders could fund quickly, sometimes within a week, something that traditional lenders could not. This included application time, another hitch with the conventional funding.

A new Arizona construction loan backed with Arizona hard money could be designed to fit the borrower whereas regular lenders tended to go with one structured approach.

Background was not so important here as was the ability to pay back the loan and how much equity there was in a property. Lack of certain documents or a past negative blimp in credit didn’t seem to matter so much with the private lenders.

The disadvantages of this type funding were not attractive, however—they made one think, but they were understandable.

Collateral generally meant a borrower’s house—if default occurred, the lender took and sold the home. Interest rates and fees were much higher than conventional loans—she could end up paying the principal and almost a fourth of the total in interest with some arrangements. These, along with the collateral, kept the lender’s risk percentage down.

The repayment periods were short causing the monthly payments to be higher. Restructuring the budget would be necessary.

Ellis is now the builder for a subdivision of well-thought-out houses with individually attractive features. She took time to understand what she was taking on, found a lender she could work with and turned her ideas into reality with a new construction loan designed just for her. With that plan in mind, your own project could become more than words on paper.

Being just of college, degree in hand and experience working in your father’s real estate firm since you were a child didn’t mean anything to the big banks and the established mortgage firms. You need an investment property loan to simply get started in the business–do you want to deal with the firm across town that sets up through Arizona hard money?

A bit of research pointed out that these loans are good for investors who have some money, but are not comfortable putting up everything to purchase a piece of property. You fit that description—you do not want to ask your father for money since he just spent a bundle on your college work and tapping into your trust fund is not a good idea – it needs some growth anyway.

Further reading advised when considering loans in this area, pay attention to all the details, fine print and adjunct clauses in order to know exactly what you are taking on, both pro and con.

An investment property loan via Arizona hard money does have its positive side, the first one being timing. Conventional lenders can take as much as six months to close a regular loan—private lenders, on the other hand, generally can get approval and closure within a few weeks at most. You may be young, but you know the value of time, especially when it comes to an attractive property that’s on the market.

Collateral normally is attached to the property, but this isn’t always true. The borrower can use personal assets ranging from residential property to a retirement fund.

Terms can be designed just for you—you can have a custom-made loan, in other words. With a bit of diplomatic negotiation, you may be able to have the repayment period adjusted in order to lower payments or even have certain fees that are normally attached removed or at least end up paying a lesser amount.

This sounds pretty good, you thought to yourself, and being a bit of a cynic, looked for the downside, knowing there had to be some drawbacks.

Investment property loans made through private firms, it seemed, all came with higher-than normal fees and interest rates/points. This, according to one of your father’s salespeople, was protection money. “They are taking a big risk on some of their clients,” he pointed out. “With the higher rates, plus collateral, the lender is guaranteeing that they don’t lose everything they have dispersed in case a borrower can’t repay a loan, no matter the reason.”

Repayment periods are on the average about 12 months in length, with the borrower paying mostly interest every month and the principal due at the end of the term. Keep the timing in mind, one article said, because if you cannot pay the balance at the end of the repayment period, either your loan will be re-financed or your collateral will be seized. Both of these options are costly.

A private lender may be just the thing for your investment property loan, but be certain you have researched the area carefully before making the decision to take on one of these loans. Keep on top of the situation for the entire time and work with your lender—you may need them in the future for yet another project.