How to Flip a House
Today’s real estate market offers numerous opportunities for home flippers. Flipping houses has become a desirable property investment opportunity for many. Acquiring a run-down house at a low purchase price, renovating it, and selling the rehabbed property for a profit has proven to be a lucrative property investment move for a variety of real estate investors. The average gross profit on a house flip falls around $30,000, and there’s a world of opportunity for both new and seasoned real estate investors.
Finding the Right Rehab Property
Knowing what to look for in a potential house flip is integral to success. It’s important to search out a home in a desirable neighborhood that offers employment growth, great schools, and is in your general vicinity. When looking at a run-down house, it’s important to thoroughly examine its condition. Look for structurally sound buildings, and understand the costs associated with various home repairs the property may require. Always be sure that the price of the home is below its value in the local housing market, or you’ll stand no chance of gaining a profit from renovation efforts.
Investors can find some great bargains in the real estate market. There is a bevy of foreclosed homes for sale in the United States, and these can serve a lucrative investments for investors willing to put forth the time and money needed to flip a home.
Why Long-Term Financing Doesn’t Work
It is very difficult to secure long-term financing for house flipping ventures. Banks and traditional lending institutions prefer to finance properties that will be held over a long period of time; short-term loans prevent these lenders from making money from the interest paid on these loans.
Most fix and flip properties are rehabbed and sold less than a year after their purchase date. This makes short-term financing a better choice, but it is generally harder to find and comes at a higher interest rate. However, the convenience afforded by hard money rehab loans can provide borrowers the flexibility they need to begin real estate flipping immediately. Hard money lenders like SD Equity Partners provide house flippers with the quick capital they need to begin acquiring real estate.
Financing a House Flip with Hard Money
Rehab loans tend to be short-term loans that allow investors to immediately secure the finances they need, and require higher interest rates. Real estate flipping comes along with a bevy of upfront costs, and investors will need to secure this capital long before they can begin a project.
A new house flipper will generally find it difficult to procure a traditional loan. Banks and other traditional lenders have tightened the reins on loan qualifications, and those without excellent credit or proven success in the real estate flipping sector have minimal chances of receiving a traditional loan. Hard money financing can help borrowers procure the finances they need within weeks. Typically, private money lenders will provide anywhere from 65 percent to 80 percent of the home’s After Repair Value.
SD Equity Partners has worked with investors working on their first flip and seasoned home flippers that have numerous successes under their belt.
Looking to invest in fix and flips in San Diego? SD Equity Partners can help you secure the financing you need to break into the real estate flipping industry. Whether you’re in pursuit of bridge loans or need fix and flip loans, our team of professionals will work closely with you every step of the way to ensure your house flipping endeavor is a success.