Are you an experienced or a new property flipper? The topic of fix and flip with hard money loans could interest you no matter who you are. This article will help you understand this topic better and decide whether you want to get Virginia Beach, VA money loans, now or in the future. A fix and flip property is the type you can renovate and sell for a profit. Without ready funds to help finance the purchase and the renovation process, you can use a hard money loan. This type of loan runs for a short period. There are so many things you should know about fix and flip loans, including why you should use them, how to obtain them, and how they are different from other loan options. This article will feature:
Table of Contents
• Why hard money loans are perfect for property flipping
• What you need to get a fix and flip hard money lending
• The process followed when lending hard money for a fix and flip project
Why are hard money loans perfect for property flipping?
The main reason you should use hard money loans when flipping properties is to avoid spending a lot of your money. Remember that besides the cost of buying and renovating a house, there are emergency costs to incur. Your savings can help solve your emergencies. With a hard money loan, you can close a sale faster no matter the property’s condition. So there is a more significant potential to make a profit if you have a meticulously done property renovation plan.
What you need to consider before you get financing for a fix and flip property?
There are two things to keep in mind before getting a loan to finance your short-term property flip project. First, consider the time it would take to close a loan. With a typical house loan from a bank, you have to wait longer. Sometimes the shortest time you can wait to receive a mortgage is one month, and the longest time is six months. This time range is not in favor of short-term home flipping projects. The best type of loan is the hard money loan because the approval time is so short compared to the time banks require to close a loan. In three to five business days, you can have your money. If you apply on Monday, you can get approved by Wednesday, Thursday, or Friday.
The next thing to consider is the cost that a house loan covers. As you search for the best fix and flip hard money lenders in the Virginia Beach area, consider the cost their loan covers. Generally, the best lender offers a loan covering the total property purchase price if the borrower is 70 to 75 percent of the ARV (after repair value) less the cost of repairs. There is usually additional money to cover the cost of renovations. Note that ARV refers to the potential value of the property in the future.
The process followed when lending hard money for a fix and flip project
The process of hard money lending involves just two steps.
• Step one – Pre-approval
Just like the traditional process of applying for a mortgage loan, the challenging money loan process begins with a pre-approval step. It is a quick underwriting process involving a form-filling task on the website of the hard money lender. Some documents to help do background checks are necessary.
• Step two: Approval of your property
After getting to know the borrower, the hard money lender then wants to know their property better. So they will request an appraisal on the property. As you search for the best Virginia Beach, VA money loans, consider someone who can offer an estimate for free or a small fee. Ideally, they will ask their appraisal expert to carry out the process on your behalf. If you don’t mind, you can pay an expert of your choice.
Can you flip properties with a hard money loan? Yes, but this will depend on the service provider you choose to work with. A lender who wants you to succeed no matter your current financial or employment status is the best. You don’t need to search further after meeting BridgeWell Capital. They are the best lending company because they have no middlemen; they do the work themselves.