How Making a Plan Can Save You Money on Your House Flip
A very important aspect of your house flip is planning. The planning is the most important part of the process because it will keep you from spending more money than you need to. Hire an inspector to look at the home and they will tell you how much you will need to spend in order to fix it up. Don’t underestimate the costs. It’s better to expect to pay more than the inspector tells you. It’s better to have money left over than to not have enough.
The planning is the least interesting and the longest part of the process but it is the most important. The actual financing, purchasing, rehabbing, and selling shouldn’t take more than a year and the more planning you do, the more money you’ll save and the less time you’ll spend.
The next part of planning is financing. Hard money loans are very popular among house-flippers. This is the kind of loan that you will not get from a bank. If you have a structured investment plan and correctly calculate the amount of money you’ll need, you should be able to pay back the note without a hitch and make a lot of money in the process.
Traditional financing can be difficult to obtain because of strict regulations and crowd funding can take too long to put in place. If you are flipping property, hard money is your best option.
According to Rehab Financial, “Typically, most rehab lenders will lend between 65 and 70% of ARV (after repaired value). There is a very good reason for that. A house flipper is generally borrowing money on an investment property, with the expectation of making money from the project. If the cost of the property plus rehab exceed 65 or 70% of the ARV, it is possible that there will not be enough equity in the deal for the investor to make money in the end.”
Finding an alternative lender to handle these investments doesn’t have to be difficult. Find out more about HML Investments here.