Top Residential House Flipping Strategies
Investing

Top Residential House Flipping Strategies

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Navigating a Downturn Market: Top Residential House Flipping Strategies Introduction:

 

 

A downturn market can pose challenges for residential house flippers, but with the right strategies, opportunities for success still exist. In this article, we will explore the best residential house flipping strategies to thrive in a downturn market.

1. Target Distressed Properties: In a downturn market, distressed properties become more common. These are properties that are in poor condition, facing foreclosure, or owned by motivated sellers. Targeting distressed properties allows you to negotiate better deals and potentially increase your profit margin when the market recovers.

2. Focus on Cosmetic Renovations: Rather than investing in extensive structural renovations, focus on cosmetic upgrades that make a big impact at an affordable cost. This may include repainting, refinishing floors, or updating fixtures and hardware. By keeping your renovation costs low, you can still achieve a desirable upturn in value even in a downturn market.

3. Develop Strong Networks: Building a strong network of real estate agents, contractors, residential hard money lenders and other professionals is crucial in any market, but it becomes even more important in a downturn. Maintaining these connections can provide you with valuable information on potential distressed properties, cost-effective vendors, and market trends, giving you a competitive edge.

4. Embrace Alternative Financing Options: During a downturn, traditional financing may become more difficult to secure. Explore alternative financing options such as hard money rehab loans or private investors, who may be more willing to take risks in a downturn market. These options often provide faster access to capital and greater flexibility.

5. Implement Efficient Marketing Strategies: Creative marketing strategies become essential when you’re flipping houses during a downturn. Utilize social media platforms, online listings, and targeted advertising to reach potential buyers. Highlight the unique features and cost savings of the property to attract interested individuals in a competitive market.

6. Monitor Market Trends: Stay updated with market trends and economic indicators to identify potential opportunities. By keeping an eye on key factors like interest rates, local job growth, and population migration, you can choose the right properties in the right neighborhoods that are likely to bounce back once the market recovers.

7. Remain Flexible and Patient: Patience is crucial when flipping houses in a downturn market. Be prepared for longer holding times and lower profit margins. Flexibility is key, as you may need to adapt your strategies to changing market conditions. Staying adaptable and patient will help you weather the storm and position yourself for success in the long run.

Conclusion: While a downturn market presents unique challenges, employing the right strategies can help residential house flippers thrive. By targeting distressed properties, focusing on cosmetic renovations, developing strong networks, embracing alternative financing options, implementing efficient marketing strategies, monitoring market trends, and remaining patient and flexible, you can navigate the market downturn and increase your chances of success in the residential house flipping industry.

How to Find Fix and Flip Deals
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How to Find Fix and Flip Deals

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How to Find Fix and Flip Deals

Fix and flip investing has long been a popular strategy for real estate investors for good reason. Done well, a fix and flip project can result in a sizeable profit margin. Whilst the renovation itself can go a long way to making you a tidy profit, the success of your project starts before that. One of the most important keys to success when flipping a property is how good of a deal you secured when you first purchased the property. As it stands, finding the most promising fixer uppers can also be the most difficult part of the project.

So where are the best places to look? Here are our top eight tips for finding a house to fix and flip.

1. Get to know the MLS. The Multiple Listing Service is a database that lists all properties for sale within a geographic area. The MLS is an easy way to find a property, no matter where you are, however it is only available to licensed realtors and attracts a monthly access fee. A pro tip when searching the MLS is to take note on how long the property has been listed for. If a property has been listed for a long time, the seller might be more eager to get rid of it, and will therefore consider lower offers. You may also find an expired listing that could present a great deal.

2. Conduct some online sleuthing. You may not be aware that sellers are allowed to post their properties on sites such as Zillow and Trulia before listing on the MLS. Therefore, an online search of classified sites might lead you to an off-market listing.

3. Scour public records. You could also search through government websites, courthouse records and local newspapers which may contain information regarding pre-foreclosures as well as short sales.

4. Network far and wide. Networking can go a long way to helping you secure deals, and there are many different people you should be networking with. For starters, you should network with real estate agents and attorneys in the areas you want to invest. They may be aware of off-market properties in your area and can give you a heads up if something promising comes along. To get started, ask your existing connections or attend local real estate meetings. You should also form relationships with contractors and builders who may possess a lot of knowledge on current property listings. Whenever you start work with someone new, make sure they know your goals and give them your contact information so they can reach out if they come across a potential deal. Additionally, it may pay to speak to people in the neighborhood you intend to invest and let them know what you’re looking for – you never know who might be the best direct private money lender to help you How to Find Fix and Flip Deals.

5. Market yourself online. You could promote yourself online with something as simple as your own website. Motivated sellers may be able to find you through your website and get in touch to let you know what they have on offer. Creating your own website can be easily done through platforms like Wix, Squarespace and WordPress. You could also create social media profiles on Facebook, Twitter or Instagram.

6. Run a direct mail marketing campaign. Another way to market yourself is through direct mail. To do this effectively, you’ll need to do some research into your target audience and who you intend to contact. For example, you could get in touch with owners whose listings have expired but houses haven’t sold, or with the owners of unoccupied homes.

7. Attend county courthouse auctions. Foreclosed properties can be auctioned off at county courthouses, so you may be able to find a good deal by attending county courthouse auctions. Be sure to do your homework before you go.

8. Partner with an agent. Working with an agent can be a great way to find houses to flip faster. Agents know the best places to look and are kept in the loop on available properties. They can also offer real estate investment advice based on their knowledge of the market. For an even more efficient way to find rehab properties, choose a real estate agent that specializes in real estate owned properties. REO properties are held by lenders or guarantors after a defaulted loan. These homes most likely weren’t taken good care of, and therefore are perfect for renovating and can be snapped up at lower purchase prices. It is also worth making sure whichever realtor you partner with has access to the MLS.

Whatever you’re looking for, there are many different places and ways to find a property worth flipping. If you’re ready to start looking for the top fix and flip hard money lenders nationwide, choose the right financing with RehabLend. Get in touch now

Fix and Flip Trends 2023
fix and flip lenders

Fix and Flip Trends 2023

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Fix and Flip Trends 2023

2021 and 2022 were particularly great years for flipping houses but have the tables turned? We’re facing higher interest rates, inflation, and a possible recession, making things look a little bit grimmer in 2023. However, there are still plenty of opportunities for fix and flip investors in the year ahead. Here’s what the experts want you to know.

2023 may see tighter profit margins for fix and flip investors
Unfortunately, a number of factors could lead to smaller profit margins in 2023. This includes:

Increased cost of construction materials. Over the past few years, we saw a huge increase in the cost of construction materials. Though these have started to decline – particularly the costs of lumber – prices remain elevated, adding to the costs involved in renovation and rehab projects.
Lower inventory and higher prices. Increasing mortgage rates and higher house prices mean people are reluctant to sell, and therefore there are less opportunities to purchase fixer upper properties. It also means it is harder to find properties with the potential to net a decent profit.

Despite this not-so-sunny outlook, with careful planning, the right purchase and a cost-effective fix and flip loan, you can still see yourself making a profit from flipping property this year. Choosing the right loan and planning ahead can maximize your investment and ensure flipping property is worth your while.

Foreclosure levels will continue rise
According to ATTOM, foreclosure filings increased 64% by the end of 2022, with the States of Texas, California and Florida hit the hardest. With a recession on the horizon, unemployment will likely increase and therefore foreclosure rates will continue to rise. For fix and flippers, this could lead to more inventory to choose from. However, investing in foreclosed properties is complex and only recommended for seasoned investors with a strong understanding of the process.

Rental prices will continue to increase
With rising house prices and increasing mortgage rates, many prospective homebuyers are choosing to rent instead. This has resulted in increasing rental prices, which are predicted to carry on rising. This means 2023 could be a great time to employ the BRRRR method. BRRRR (Buy, Rehab, Rent, Refinance, Repeat) involves purchasing and rehabilitating a distressed property, then renting it out and refinancing to start the process again with another property. With increased rental prices, this method may see a huge influx of passive income and the ability to carry on investing without a huge outlay of capital.

Technology will continue to open doors for fix and flip investors.
There are many ways technology is making it easier for fix and flip investors to find opportunities for a successful investment. For example, technology means you can view and inspect properties online, allowing you to search for deals across the country without ever leaving your home. Technology also means the process is much faster with reduced paperwork and processing times, allowing you to snap up a deal quickly.

So how can you make the most of fix and flipping in 2023?

Do your research. Markets vary widely across the country, as do the costs involved in flipping a home. Make sure you do your research, shop around and have a solid understanding of the market you’re investing in – and the costs you’ll incur along the way.
Choose the right lender. Not all fix-and-flip lenders are the same and it’s important to partner with someone who understands your goals and can work with you to achieve them.

If you’re ready to make a move in the fix and flip investment market, get in touch with RehabLend today. We can help with a cost-effective rehab loan tailored to your strategy and designed to optimize your investment.
This article is intended as a general guide and should not be considered as advice.

Best Fix and Flip Lenders
fix and flip lenders

Best Fix and Flip Lenders

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How to Choose the Best Fix and Flip Lenders

If you’re looking for a short-term loan for flipping houses, whether it’s a multifamily rehab loan, an apartment rehab loan or a rehab loan for an investment property, choosing the best direct hard money lender is crucial. There’s no shortage of hard money lenders for fix and flip projects, however, you want to choose one that offers the best terms for your unique needs, while also genuinely caring about your project and its success.

So, what do you need to look for in a hard money fix and flip lender and what questions should you ask to ensure you’re securing the best fix and flip lenders terms?

RATES AND FEES

One of the most obvious things to look for when choosing a hard money lender for fix and flip investments is what their rates are. Generally, the rates of a hard money fix and flip loan will be higher than traditional mortgages from conventional financial institutions like banks, however, if you shop around you’ll be able to find attractive options.

Don’t forget to ask what fees you’ll incur. Most lenders charge fees at various stages of the loan and these need to be factored into your budgeting.

REPAYMENT TERMS

Another thing to consider when looking for the best fix and flip lenders are their repayment terms. For instance:

  • Do they offer interest and principal repayments, or interest-only?

  • Will the lender allow you to pay off the loan early without incurring a penalty?

  • What are your options if the rehab takes longer than expected?

Also, consider if the fix and flip hard money lender’s terms are constant. You have enough to worry about without dealing with a lender whose terms change with the economy.

APPLICATION PROCESS

Unlike traditional financial institutions like banks, hard money lenders generally have easier and faster application processes that require a lot less paperwork. Many even allow you to complete your application process online. Ask your potential hard money lender for flipping houses how their application process works and see how it compares to other lenders.

Also, consider what is required to apply and qualify before you settle on a lender. Most fix and flip lenders focus on the property you intend to use as collateral or the deal you’re proposing, however, others may want to see your credit score, tax returns, and other assets.

CLOSING TIMES

Generally, the major drawcard for hard money rehab loans is how fast they can be closed. Be sure to ask a prospective hard money fix and flip lender how quickly they close their loans.

Some commercial rehab lenders offer extremely short closing times – some in as little as days. However, you need to be aware that this is dependent on you getting your documents in quickly and responding quickly if any additional information is required.

Additionally, not all lenders with short closing times offer this in their fix and flip loans for beginners, so don’t get swayed by short closing times before checking the fine print.

DOWN PAYMENT

Some fix and flip hard money lenders require a down payment of up to 20%, however, others offer hard money rehab loans with a 0% down payment. Again, this can depend on your experience and circumstances, so be sure to check what applies to you.

WHAT THE LOAN ACTUALLY COVERS

Some hard money lenders for flipping houses offer financing for the purchase price as well as the renovation or rehab costs. If financing the rehab of your investment is something you require, be sure to check that this is covered.

EXPERIENCE

Choosing a lender with vast experience can make all the difference. Additionally, if you’re working with a lender who has been around a long time, chances are they’ve weathered several recessions and will be able to help you through tough times in the future too.

Questions you could ask to determine just how experienced the fix and flip hard money lender is could include:

  • How many hard money rehab loans have you issued?

  • Do you have experience fixing and flipping properties yourselves, or do you deal with finance only?

  • How do you underwrite your loans?

VERSATILITY

If you’re planning on flipping projects in the long-term, consider partnering with a fix and flip lender who offers the versatility to work across multiple projects. This includes the ability to fund varying sums of money, as well as the ability to fund the purchase and renovation of various property types such as multifamily, mixed-use and commercial properties. Additionally, not all fix and flip lenders can offer investment property rehab loans in every State. If you’re planning to invest in a different state to the location of a hard money rehab lender, or intend to invest in multiple states, it’s worth asking what areas the lender in question can serve. Working with one lender on multiple projects, as opposed to sourcing different lenders in different regions, is a good way to build a long-term relationship that will ensure better rates, terms, and availability of financing.

The last thing to consider is what your priorities are. Is it a fast-closing commercial rehab loan or the cheapest possible rates? Are you looking to build a long-term relationship with a lender, or just want someone who can help you with a one-off investment opportunity?

Whatever you’re looking for, Rehablend is one of the best fix and flip lenders in the country. We genuinely care about the success of your project and offer flexible bridge loans that can be tailored to your needs to ensure optimum ROI. To find out more or to see if our short-term loans for flipping houses are right for you, get in touch today.

Fix and Flip Rehab Bridge Loans
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Fix and Flip Rehab Bridge Loans

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Commercial & Residential Bridge Loan Options for Property Types

When it comes to investing and rehabilitating real estate, what are your best options? It seems there are endless types of residential and commercial property to choose from, and knowing where is to start or where to look next can be overwhelming. Unfortunately, there is no one size fits all answer. Some of the best rehab fix and flip investors prefer residential single-family homes, others prefer Multifamily apartments or large-scale commercial buildings. You’ve probably heard that the best strategy when it comes to investing in property is to diversify your portfolio, but often the best strategy is to invest in markets you feel most comfortable with and understand the best. Working with a top private fix and flip hard money lender can ensure you are headed in the right direction. Also applying the best rehab fix and flip loan to fit the investment property is key! Short term bridge loans, commercial rehab loans, residential investment property private financing options are just a few.

Here we take a look at different property types and the various rehab loan options available to each of these property types. Including cash out refinance and Fix and Flip Rehab Bridge Loans

Single-Family Properties

Why invest: There are a number of reasons single-family homes are an appealing option for real estate investors, particularly people looking for a first-time fix and flip loan. Single-family properties are usually in constant demand, offering lower vacancy rates, immediate returns, positive cash flow, and long-term appreciation potential. They are also easier to manage since you’ll only need to worry about a single tenant and turnover occurs less frequently.

Fix and Flip Rehab Bridge Loans option for single-family homes: Generally, banks and traditional financial institutions will offer long-term financing for single-family properties, based on certain circumstances. These loans usually offer enticing rates; however, they can take a long time to close and they require strict conditions to be met. You’ll be required to put down a large down payment, and your credit history, income, and personal situation will be taken into account and weighed heavily. If you’re restricted by a deal that needs to close quickly or by a credit history that banks won’t approve of, an alternative option is working with a hard money lender. A hard money lender can offer a variety of financing solutions, such as a single-family bridge loan which will enable you to quickly purchase a single-family home while you raise a down payment or wait for more permanent long-term financing. Another option you could consider is using hard money to flip houses. A fix and flip hard money loan will enable you to purchase and renovate a single-family home, then sell for profit, or refinance with long-term financing and rent out to high-quality tenants.

2-4 Unit Multifamily Properties

Why invest: Investing in the right 2-4 unit property is a surefire way to boost your investment portfolio with lucrative returns. While they come at a higher cost than single-family homes, they are more affordable and require less management than larger multifamily dwellings. They also offer steady rental income and appreciation in value.

Options for finance: As with single-family homes, traditional financing is an option, however, it is more difficult to secure a long-term traditional loan for a 2-4 unit property due to the higher cost and higher risk. Again, a private rehab lender can help you secure fix and flip financing to flip a 2-4 unit property. From here, you have multiple options including renting out each individual unit, selling each individual unit, or selling the property as a whole. A 2-4 unit property bridge loan is another option enabling you to move quickly on a deal, while you wait for long-term financing.

Larger Multifamily Properties

Why invest: Multifamily properties have long been popular for investors for a number of reasons. For instance, homes within multifamily properties are generally in high demand thanks to their affordability, and occupancy rates tend to remain high and stable even during difficult times, such as the height of the COVID-19 pandemic. Additionally, real estate property investors are often attracted to the convenience of having multiple investment properties located within one place, making it easier and more efficient to deal with things like maintenance, repairs, and management. Multifamily bridge loans can apply to purchase, cash out refinance and rehabilitation. As a direct nationwide fix and flip private lender we can assist you in finding the best options to fir your specific scenarios criteria.

Options for purchase, cash out and multifamily rehab financing : As multifamily properties are larger again – generally between five and thirty homes – traditional long-term financing is even more difficult to secure. Banks will tend not to lend to people with no investment history or with bad credit, particularly if the property is in bad condition and therefore deemed a risky investment. Fortunately, you can find a hard money lender who will offer multifamily rehab fix and flip loans to people with bad credit, as well as fix and flip loans for beginners. Rehab financing will enable you to purchase and renovate a multifamily property in need of work, then complete this work before selling or renting out each unit. This strategy can see significant profit or high rental income potential. Alternatively, you could work with a hard money rehab lender to secure a bridge loan, giving you time to secure long-term financing or finalize your strategy to flip a multifamily property.

Townhomes

Why invest: Townhouses are multi-dwelling properties made up of several attached homes. They are an enticing option for real estate investors due to their low maintenance, increasing demand, and high likelihood of capital growth.

Options for finance: Purchasing a townhome property can be achieved with long-term financing. However, if you are looking to purchase a townhome in need of significant repairs, traditional lenders may deem them too risky and refuse to provide finance. Opting instead for a townhome bridge loan or a fix and flip mortgage will enable you to complete the necessary works before securing a long-term non-owner-occupied loan and leasing out each townhome, or selling. Once your rehab is complete, you could sell each one individually to owners or investors, or sell the whole block to another investor.

Investing and rehabilitating loans for Condos

Why invest: As with purchasing a multifamily property, purchasing and rehabilitating a condo property is a huge undertaking that can reap significant rewards. Condos are often in high demand due to their affordability, meaning that you’ll be likely to receive a steady stream of rental income. Other benefits of investing in an apartment building include tax benefits, excellent appreciation in value, consolidated property management, and a fast-tracked investment portfolio.

Options for finance: Purchasing a condo unit is a large-scale project that comes with high risk. Accordingly, you may find it near impossible to secure long-term financing for a condo property with a traditional lender, especially if you are a beginner investor. Working with a top rehab lender, however, will give you options, regardless of your experience and credit history. A hard money lender will be more concerned with the potential of the property you are looking to invest in, and therefore you may be able to secure a condo bridge loan to get the purchase over the line, or condo fix and flip financing to rehabilitate the property and maximize your investment.

If you’re ready to take the next step, Rehab Lend is a top nationwide direct private money rehab lender for Fix and Flip Rehab Bridge Loans. We have extensive experience lending to investors in the fix and flip commercial rehabilitation market. We can help you with fix and flip loans tailored to suit your needs and the property type you are looking to invest in. Contact us now and speak to one of our senior loan experts today.

The BRRRR Method
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The BRRRR Method

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How to Achieve Financial Success with the BRRRR Method

If you’re in the property investment game or looking to get in, you’ve more than likely heard the acronym BRRRR. Short for “Buy, Rehab, Rent, Refinance, Repeat” this is a real estate investment strategy that, when done correctly, can have extremely lucrative results. So what exactly is this strategy, what are the pros and cons and how can a hard money investor help you achieve BRRRR success?

What Is the BRRRR Investment Strategy?

Essentially, BRRRR is a strategy that involves buying a distressed property with the intention of fixing it up, refinancing and using the equity to purchase another distressed property and starting the process again. It’s made up of five key steps:

  1. Buy

  2. Rehab

  3. Rent

  4. Refinance

  5. Repeat

It is absolutely crucial to do each of the steps in order to achieve success.

Whilst this process is more demanding than purchasing a property that is ready to rent out immediately, it is a much more rewarding process. As long as you are willing to put in the hard work, have an eye for the market and don’t mind the stress and cost involved in a rehab project, this method is an excellent way to build your passive income portfolio. With the help of a private fix and flip lender, you’ll grow your wealth with very little capital required upfront.

The BRRRR Steps Explained

To take a closer look at the five steps of the BRRRR method, these are:

B – Buy a Property

The very first step of the BRRRR method is to purchase a property. The goal here is to purchase a distressed property at a price well below market value. It’s important to choose a property that you can add value to through renovations and repair work.

The buy phase requires extensive deal analysis. You’ll need to calculate the costs of the renovations, estimate monthly expenses and rental potential and ensure there is a large enough profit margin once all outgoings are covered. Generally, it’s recommended that you follow the 70% rule. Namely, don’t invest more than 70% of the after-repair value (ARV) of the property.

Tip: Be prepared to walk away if the final asking price is too high. Paying too much can reduce your potential profit and will also mean you’ll have to wait longer to utilize your cash-out refinancing to make your next purchase.

R – Rehab the Property

This step involves repairing, upgrading or renovating the property to make structural, safety and cosmetic improvements that bring the property up to code and increase both its value and its appeal to potential renters.

Rehabbing your distressed property will be a balancing act of increasing value to attract a higher rental income and greater equity without overspending on repairs and renovations. Therefore it’s important to focus on making improvements that will truly increase the value of your property and its rental potential. Don’t get sucked in by fancy add-ons and upgrades that are unlikely to increase your rental income. Ultimately, you should ask yourself two key questions:

  1. What needs to be done to make the house livable?

  2. What rehab, repairs or renovations will add more value than they cost?

Upgrades and renovations that can add a lot of value and therefore offer a high ROI include:

  • Roof and drywall repair work. Appraisers often take repair work into account, such as fixing or replacing the roof and fixing damage such as drywall damage. Roof and drywall damage also decreases the value of a property, which means you’ll be able to buy the property cheaply.

  • Updated kitchens. Purchasing a house with a kitchen that has been demoed or is unusable, means a much cheaper sale price, since it will not be eligible for traditional financing. Updating a kitchen can often be done affordably and will greatly increase your property’s appeal to renters.

  • Updated bathrooms. A brand-new bathroom will also make your property highly competitive on the rental market.

  • Adding bedrooms. If the house you are purchasing has enough floor space to add additional bedrooms without needing to extend, this will allow you to add significant value for very little cost.

  • Landscaping. Even just simple landscaping can greatly increase the appeal of a property and therefore offers a high ROI.

Tip: Be realistic with your timeframe and budget, and be prepared to conduct a detailed and in-depth cost-benefit analysis, not just when you begin but throughout the project as well.

R – Rent Out the Property

As soon as the rehab work is complete and the property is in good enough condition, rent it out. This step must be achieved before refinancing as often lenders won’t refinance an investment property until it has tenants.

Determine your rental rate by comparing it to other properties in the area and keep in mind a price that is both fair to tenants and accommodating of the property’s outgoings.

Tip: to choose a good tenant, look for someone with a good rental history and a record of making rental repayments on time, a steady job, good credit history, no criminal history or a history of eviction and good references.

R – Refinance

Once you have tenants in place, the next step is to refinance the property. You want to choose a loan with a cash-out facility in order to turn your equity into cash to fund your next purchase. Bear in mind that not all lenders offer a cash-out facility so be sure to check this before deciding on your lender.

Tip: Some lenders also require you to own the property for a certain length of time before allowing for cash-out, so this is something else to check when signing up for your loan.

R – Repeat

Using the cash from your cash-out refinance, you can purchase another property and start the process again. Take the experience and knowledge you’ve gained along the way, learning from your past mistakes to achieve even greater success. The more you do this, the easier it will become. You’ll start having systems in place and contacts that make everything easier, more streamlined and even more cost-effective.

Tip: Be sure to complete each step in the right order, no matter how many repeats you’re up to.

The Pros of the BRRRR Investment Strategy

When pulled off successfully, the BRRRR method can offer a multitude of benefits. For instance:

  • Building up equity which will result in the ability to purchase rental properties on a revolving basis. You’ll end up with a huge property portfolio with minimal capital outlay. Generally, you’ll only need enough money for a down payment and potential closing costs

  • Recovery of your initial capital outlay. Because you’ll be refinancing based on the after-repair value means you may also be able to recoup your initial investment once you’ve refinanced.

  • Ongoing passive income. Owning a large portfolio of long-term investment properties means you’ll receive additional income without ongoing involvement

  • Attracting high-quality tenants. A property that has been renovated to meet higher standards is more likely to attract good tenants. These tenants will be happy to pay higher rent and will take care of the property, positively impacting your cash flow

The Cons of the BRRRR Investment Strategy

Of course there are also downsides and risks to be aware of. Some things to consider include:

  • The cost and work involved in rehabbing a property can be high. Many investors underestimate things such as repair costs, which can affect the outcome of a project. Additionally, managing contractors and subcontractors and dealing with problems that arise can be extremely time-consuming and stressful

  • The process can take a long time, which means it requires a lot of patience and forward-planning. Rehabbing the property can take several months and can often run overtime. Likewise, it may also take longer than expected to be able to access the cash out function of your loan.

  • It can also sometimes take a while to find good tenants, especially if you’ve purchased in a competitive area. Accordingly, you need to make sure you’re able to cover mortgage repayments when the property is unoccupied

  • Financing can be expensive. Hard money flip funding can incur high rates and fees, and often BRRRR investors find themselves overleveraged, especially during the rehab phase

  • The risk of overestimating your ARV or underestimating the costs of the project can have a significant impact on the equity in the property. If you misjudge these things, you may have to wait until the home’s value increases before you can access cash-out refinancing

How A Hard Money Rehab Lender Can Help You Achieve Success with the BRRRR Investment Strategy

The roadblock to investing in the BRRRR method for many investors is funding. Because you’re borrowing money to flip a house, it can be difficult to get a traditional mortgage. This is typically due to the fact that traditional lenders such as banks require an appraisal of the property but it’s difficult to determine the value of a distressed property. Additionally, a distressed property is unlikely to meet the specific guidelines needed to secure a traditional mortgage.

Fortunately, there are other viable options, including hard money lenders for flipping houses. A private hard money lender can finance a distressed property with tailored fix and flip loans. Whilst hard money financing usually involves high-interest rates, these loans are generally short-term allowing you to fund the purchase and renovation and then later refinance with a more cost-effective loan.

Additionally, a hard money lender can lend you up to 90% of the purchase price and 100% of your construction costs, meaning even less upfront capital outlay.

Other Tips for Getting Started

  • Before you begin, it’s a good idea to reduce your personal debt and make sure your personal finances are in shape. This can help ensure you have the capital you need for your first purchase and the costs involved in rehabbing the property

  • Be sure to develop a really good understanding of the markets, so that you know the best places to invest and market values so that you’ll recognize a good opportunity when you see one

If you are ready to begin building your passive income portfolio, Rehablend can help you with cost-effective commercial rehab loans tailored to suit your needs. Contact us today and one of our senior loan officers will be in touch to answer your questions and get you started.

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Rehab Construction Loan
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Everything You Need to Know About a Rehab Construction Loan

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Whether you are a beginner real estate investor looking for a first-time fix and flip loan or are a fixer-upper veteran, a rehab construction loan is an ideal option for funding the renovations of any investment project. Here’s what you need to know.

What Can You Use a Rehab Construction Loan For?

A renovation construction loan is a mortgage that can be used to rehabilitate a property in need of serious work. Conveniently, a purchase and renovation loan is also an option, which allows you to fund the purchase and renovation with one loan rather than two or more.

In terms of the property types you can use this type of loan for, an investment property rehab loan is most commonly used for single-family homes, however can be used for a range of projects. For instance, you could use a rehab loan to renovate condominiums, townhouses or a multifamily complex. Additionally, commercial rehab loans can fund commercial rehab projects.

What Are the Terms of a Rehab Construction Loan?

One of the most enticing things about a rehab construction loan is the fact that it offers flexible terms. For instance, your rehab loan lender might allow you to pay only interest during the course or the loan or not make any repayments during the loan period at all. Of course, this means that you are most likely going to be paying higher interest, however, this flexibility can save you costs over the long run.

The term lengths are usually kept short – between 12 and 24 months, allowing enough time for you to renovate the property and then sell it or secure more permanent financing based on its new value.

In terms of a deposit, most lenders will require a down payment of 10-30% of the property’s value depending on their terms and the specifics of the project.

How Are Rehab Construction Loans Calculated?

Generally, an investment property rehab loan will be based on the property’s estimated value after works have been completed. This allows you to borrow more than you would be able to borrow with a traditional home equity loan.

What Are the Benefits of a Rehab Construction Loan?

In addition to flexible terms, the ease of getting a rehab loan is one of its biggest drawcards. This includes:

  • A fast and easy application process with minimal documentation required. Applying for a hard money rehab loan is a lot less stressful and time-consumingthan applying for a traditional home equity loan or mortgage. The application process is much more straightforward and doesn’t require you to submit lengthy documentation such as tax returns and proof of employment. Generally, a private money lender will just want to know that you have enough cash to close the property.
  • Extremely fast closing times. A hard money rehab loan can also be secured quickly with funding provided in even just a matter of days. If you are purchasing a distressed property, you’ll be able to make a move before it gets snapped up by another real estate investor, or if you want to renovate a property you already own, you’ll be able to get underway quickly.
  • Availability for a range of investors. Because hard money lenders face fewerrestrictions than traditional lenders, approval requirements aren’t as strict. For instance, a fix and flip hard money lender might be able to offer hard money rehab loans to investors with no experience, people with bad credit and for unconventional property types that financial institutions wouldn’t fund.

Ready to apply for a rehab construction loan?

If you’re ready to take the next steps towards your property goals, look no further than Rehablend. We are one of the country’s best fix and flip lenders with experience funding rehab projects all across the country. Our rehab loans for investors offer competitive rates and terms and are designed to help you make the most out of any investment. Find out more about us or get in touch to apply for a hard money rehab loan today.

The Best Fix and Flip Loans for Investors
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Fix and Flip Loans for Investors How to Choose the Best

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The Best Fix and Flip Loans for Investors

 

A fix and flip loan is an ideal option for investors looking for a short-term mortgage to buy a property with the intention of repairing, upgrading or renovating it and then selling it to make a profit. Choosing the right hard money fix and flip loan can often make a huge difference to your bottom line and ensure the experience is as stress-free as possible. This comes down to choosing both the right loan and the right lender. A seasoned rehab loan lender will have the skills, expertise and insight to provide the most effective loan based on your needs and specific project. In looking at the timeline to invest vs how long to hold a private loan is crucial. Often in construction rehabilitation there are project delay unforeseen such are labor problems, weather issues or currently supply chain problems. If rehab supplies are held up you are left still paying the high interest rehab bridge loan or apartment renovation funding. To offset the chance of getting  burned waiting for a renovation problem to fix, talk to your private lender first to establish what penalties ( if any) would exist in a longer term loan.

 

Looking at variables like non recourse bridge loans, commercial loans that preclude bank financing should all be evaluated for your specific needs. Talking to an experienced loan officer will expedite these issues as any experienced loan officer has encountered these concerns many times before. Another thing investors should look at is the potential volatility in a specific investing location. Is the area prone to foreclosures, rent defaults, hazardous new weather conditions? Typically the best investors will have a long term knowledge of his/her investment region. Many first time investors might not look at the ” what is the worst that could happen scenarios” buy, ” stuff happens”. Now more than ever investors must look at potential markets with a laser lens in order to make a short term high interest loan pay off,

Here’s what to focus on when looking for the best fix and flip loan for your next project.

1. The details of fix and flip loans for investors. It’s no surprise that it’s crucial to consider the details of the loan and how these compare amongst various competitors. Assess factors such as the upfront costs, any restrictions of the loan, whether any extra services are included with the loan and, of course, its rates and terms. Keep in mind that flip property loans usually attract interest rates that are much higher than traditional loans. However, fix and flip loans for Investors also offer much shorter term lengths than traditional loans, allowing you to borrow money only for a short period of time without any exit penalties. Additionally, hard money rehab loans can be finalized very quickly, which means you can move quickly on a fix and flip opportunity before it’s too late.

2. How much you can borrow. Not all fix and flip loans for Investors l will offer the same amount and when it comes to applying for real estate rehabing loans, the criteria is not necessarily the same. Hard money lenders for flipping houses consider the after-repair value of the property when determining how much you can borrow, and therefore choosing a lender who understands the market and potential of your project will increase your borrowing power. In the underwriting of the contract the LTV will look at the the true appraisal value of any real estate property to determine the loan structure. Typically the loan must lean in favor of the payoff of the loan with interest. Most short term bridge loans, fix and flip or renovation finance loans are a fixed percentage of LTV prescribed by the lender.

3. The application process. Look at what is involved and how arduous the application process is.You will obviously need the loan officer to go over the minutia of all the loan options.   Also consider how long it takes to receive your financing. Generally, the best fix and flip loans for Investors  offer the fastest, easiest and most efficient application processes.

4. The lender’s expertise. You want to be sure you are choosing a lender who is not just knowledgeable about fix and flip real estate loans, but also has first-hand insight and experience of the real estate market in the area you are looking to buy. Finding the best loan officer that understands the structure of your deal out of the gate is key. Obviously you will have many questions, the experienced loan agent will have funded many deals and probably has come across your scenario before.

5. Reputation. Also consider the reputation of the rehab loan lender. Do your research by talking to previous or existing customers if you can, asking people who work in the industry and reading through online reviews.

6. Flexibility. As no two fix and flip projects are the same, it pays to choose a lender who can adapt their loans to meet your needs. This will help to maximize the potential of your project.

As  RehabLend, we pride ourselves on delivering the best fix and flip loans for Investors across the country, Nationwide. Our loan officers are experts in our fields and have firsthand knowledge, insight and expertise when it comes to fix and flip loans in almost every part of the country. To find out how we can help you with our premium quality fix and flip loans, get in touch today.

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How to Renovate an Investment Property with an Investment Property Rehab Loan

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It’s commonly known that a renovation loan is an option for homeowners, however, it is also possible to secure a rehab loan as an investor. An investment property rehab loan allows you to borrow money to not only purchase an investment property in need of repair or upgrades but also to do the necessary renovations. Non-owner-occupied rehab loans are typically used for short-term investments, such as a property you intend to fix and flip, however they’re also often used to renovate a rental property before securing more permanent financing. Rehab investors will often find that traditional mortgages aren’t suitable for investment property rehab projects, usually due to long closing times and restrictive requirements. This is where investment property rehab loans come in.

If you’re planning to buy or refinance an existing property for the purpose of renovating to sell quickly or rent out, here’s how to do it with an investment property rehab loan.

Step 1: Start with your research
There is a lot to learn about investment property rehab loans and there are many lenders on the market. Since no two loans and no two lenders are the same, it pays to do your research upfront so you know what to look for and what to be aware of.

Some key things to note about rehab loans for investment properties:

  • You can use an investment property rehab loan for single-family residences as well as multifamily dwellings from duplexes to condominium complexes
  • Compared with traditional loans, real estate rehab loans have higher interest rates. This is due to the risks involved in rehab projects as well as the short loan terms
  • Hard money rehab loans have shorter repayment terms compared with traditional loans, which means they are only suited for short-term fix and flip projects
  • There are many reputable companies offering hard money rehab loans, including small local rehab lenders and national online rehab lenders
  • Hard money lenders for fix and flip projects will lend you an amount based on the after-repair value of the property. You may be able to secure up to 80% of this value
  • Hard money rehab loans are usually secured by the investment property
  • There is no minimum renovation required. You can use your investment property rehab loan to cover the cost of any renovations, repairs and upgrades to the property, so long as they add value to the property. This may be major structural works, such as extending the property or converting single dwellings into multiple units. It may also include less major works such as remodeling kitchens and bathrooms, upgrading systems including septic systems, heating systems and air conditioning, replacing appliances, flooring and roofing, major landscaping works, and property improvements such as disability access and energy efficiency

Step 2: Seek approval
Once you’ve chosen your rehab lender, it’s time to get approval. A private hard money rehab lender will focus more on the profitability of the investment property you are looking to purchase or refinance, and less so on your own credit-worthiness. Accordingly, it’s usually easier to qualify for an asset based real estate loan, compared with other kinds of rehab financing, regardless of your income and credit score.

It’s important to seek preapproval before you’ve made a move on a property, then secure final approval once you’re ready to purchase a property. Every lender will have a different approvals process, but hard money lenders keep this process as quick and straightforward as possible. Generally, you’ll be required to show your lender:

The purchase contract. This must include the agreed sale prices as well as its terms. Generally, the agreement will be signed by you, the buyer, as well as the seller of the property and will contain a clause specifying that the purchase is contingent on final loan approval.

A renovation budget. The asset-based lender may also want to see how much you expect to spend fixing the property.

Appraisals. Rehab lenders usually require appraisals of the property. This includes both an “as-is” appraisal as well as an after-repair value appraisal. You will most likely be required to pay for these appraisals upfront yourself.

Proof of rehab experience. If you are planning to complete the rehab works yourself, a lender may want proof that you’ve done it before. Alternatively, you can work with a licensed contractor. In that instance, you’ll have to provide the contractor’s information to your lender, including their business details, license number, scope of the works, estimated costs and proposed timeline for completion of the works.

Step 3: Receive your financing, then purchase and renovate
Once approvals are all sorted, you’ll receive the funding to purchase and renovate your investment property. Working with a rehab loan lender means your application can be processed quickly with money arriving to purchase the property even in a matter of days.

For the renovation stage, your fix and flip hard money lender will most likely distribute funds gradually as work is completed. Your lender should let you know before you begin how they’ll distribute funds throughout the renovation, and you’ll need to keep contractors informed of how and when they’ll be paid based on how your lender operates.

Step 4: Exit the property
Once you’ve finished renovating, upgrading or repairing your investment property, it’s time to exit the property. For short-term investors, this is usually achieved by selling the property, and for long-term investors it is done by refinancing with a permanent loan. When planning your schedule and budget, take into account that it can take time to sell a property or find a renter.

If you want to know more about using an investment property rehab loan for your fix and flip project, get in touch with RehabLend today. We offer flexible rehab loans for investors designed to be tailored to your project to maximize your returns.

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Multifamily Rehab Loans 101

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If you’ve invested in a multifamily property that needs some TLC, a multifamily rehab loan is an excellent way to fund the deal. Whether you’re looking to renovate a duplex or a multifamily site with hundreds or even thousands of apartments, a multifamily hard money rehab loan can help cover the costs in the best way possible.

What Is a Multifamily Rehab Loan?

A multifamily rehab loan is a short-term loan specifically for the rehab, renovation or remodel of a multifamily property. This includes duplexes, apartment buildings, condominium complexes, student housing and mixed-use development sites. Essentially, a multifamily rehab loan works as a bridge loan, allowing you to renovate a property without using your own money before selling or refinancing with a longer-term option.

The Ins and Outs of Multifamily Rehab Loans

Here’s what you need to know about securing a hard money rehab loan for a multifamily property:

● Multifamily rehab loans are easy to secure. Because multifamily investments are considered less risky than other property purchases, getting a rehab loan for a multifamily property can be surprisingly easy. Generally, financing for multifamily properties is based on the property, as opposed to your own financial situation. This means that you’ll be able to invest in a multifamily renovation property even if you have a less-than-perfect credit score.

● There are many different options available. Since multifamily properties are so varied in terms of their size and scope, there are many different multifamily rehab loans on offer. Accordingly, you’ll need to really do your research and shop around to ensure that you’re choosing a hard money renovation loan that delivers the best rates and terms. This will pay off in the long term. For instance, if you’re choosing a loan that delivers the lowest rates or requires minimal or no down payment, you’ll have extra funds to invest in things that are going to add value to your property. By spending more on the fit out of each premise in a way that will really appeal to the tastes and lifestyles of prospective renters or purchasers, you’ll be increasing the potential of your rental income or sale price.

● You might only need to repay interest. Often, multifamily rehab loans only require you to make interest payments while the project is underway. You’ll then need to repay or refinance the full amount once you’ve finished renovating your multifamily property.

● Interest rates are likely to be high. Due to the risky nature of the investment, you’ll probably find that interest rates for your multifamily rehab loan are high. Since the loan will only be short-term to cover the duration of the rehab, you’ll be able to refinance with a longer-term option that offers lower rates once the project is complete.

● You will probably only need a minimal down payment. Another factor that makes a multifamily rehab loan an affordable option – despite the high interest rates – is the down payment requirement. Many investment property rehab loans require minimal down payments and some don’t require any at all. This means you can cover 100% of the project with financing.

● Lending criteria is varied. The requirements of a multifamily hard money rehab loan vary greatly between lenders, however most private multifamily rehab lenders will consider similar factors when making their decisions such as:

o How many units are in the multifamily property
o The occupancy rate of the property
o Your experience with multifamily property investment

If you’re ready to start talking about your options or want to apply for a multifamily hard money rehab loan, RehabLend is ready to help. We offer multifamily rehab loans with great terms, rates and conditions across a range of situations. Contact us at any time and one of our friendly agents will be in touch as soon as possible.

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