So, you are ready to invest in real estate, and couldn’t be more excited to buy an investment property, fix it up and sell it for the big bucks. Well, congratulations! This can be a great way to make money, but it is also a huge undertaking and one that comes with a lot of risk and a lot of potential setbacks. If you are looking to flip a property, you need to make sure that you are aware of some of the biggest mistakes that people make and some of the big things that can cause those flipped properties to become a major flop.

While there is no way to completely predict how one of these projects is going to turn out, these tips can help anyone interested in fixing and flipping to try to avoid the most common setbacks.

1. Asbestos- Asbestos was a common material used in homes built before the 1990s. It can be harmful if bothered, but is generally safe if left unbothered. If you find asbestos when you start digging into a wall or floor, you will need to get it removed, which can be costly. Keep this in mind if you are buying an older home.
2. Mold- If you smell mold, see mold or see moisture in a home before you buy it, just plan on there being mold in there. Mold has to be professionally remediated and is expensive. So avoid buying a house with mold or account for the extra costs into your budget.
3. Termite Damage- A termite test is only about $50 and can be done during your inspection. It is smart to do it. If you do happen to find termites when you start your repairs, you can end up spending thousands.
4. Load Bearing Walls- Open concept is super popular, but don’t assume all of the walls in the home are easy to take down. Many walls are actually load bearing and you will need an expensive beam to be put in the wall in order to safely remove that wall. These are thousands of dollars, sometimes more. So, proceed with caution, or have a backup plan.
5. Old Electrical- If you see knob and tube wiring in a house or what looks like outdated electrical, it can end up costing you a lot of money to get this electrical work up to code so you can safely resell the home. Electrical work is one of the biggest unexpected expenses that can ruin a budget.

The best thing you can do when fixing and flipping properties is to make sure that you over budget for repairs and renovations, and keep your potential profit margins as big and as open as possible. The more room for leeway you have the better, and the less likely your new flip purchase will end up being a major flop.

There is no denying that home flipping shows have made a huge impact on the reality TV market. And while it is important to remember that these shows aren’t necessarily a guidebook to fixing and flipping homes in the real world—they can provide you with some great inspiration if your are planning on investing in and flipping a property. If you are looking for an excuse to do some binge watching and want some TV shows that will get you in the mood to start flipping, here are some great ones to get you started.

1. Flip or Flop- This is the original flipping show and one that has created several other spin offs. Tarek and Christina are a dynamic duo that renovate disastrous homes in California and sell them for top dollar.
2. Flip or Flop Atlanta- The original Flip or Flop created several new spin-offs, but Flip or Flop Atlanta is one of the front-runners, with the booming Atlanta market at its center, this is one interesting area to flip homes in and a city that proves that location really is everything.
3. Brother Vs. Brother- While it isn’t your typical fix and flip show, like Flip or Flop, Brother Vs. Brother is a fun program for home renovators to tune into. This show stars the infamous Property Brothers fixing up and flipping old homes.
4. Texas Flip N’ Move- This HGTV staple has been on the station since 2014 and features tiny houses that are sure fun to watch being flipped.
5. Fixer Upper- Perhaps the most popular home flipping show out there is Fixer Upper. While Chip and Joanna buy homes to flip for one buyer, they still have some great renovation ideas and are sure fun to watch. Unfortunately, the program ended this year, but there are still plenty of reruns to browse!
6. First Time Flippers- As the name suggests, this show on the DIY Network is all about amateurs trying to break into the flipping business. It is both informational and very entertaining to see these newbies take their hand at renovations.
7. Good Bones- We love this HGTV show because instead of featuring the normal husband and wife duo, it actually has a mom and daughter fixing and flipping their very own hometown.

Give these shows a try next time you are looking for a little flipping inspiration. They can be a great way to get your creative juices flowing and take a first step towards your next fix and flip investment.

So, you want to start flipping homes. It can be a great investment, but it is can require some serious money, meaning it can be a serious risk. There are so many people who want to flip homes but they just don’t know where to start when it comes to breaking into this competitive industry. If you think you have what it takes, here are a few steps you need to take to get your dream of fixing and flipping homes off the ground.

1. Make a Business Plan- If you want to fix and flip homes and actually make money, you need to treat the process like the business that it is. Make a plan, and be realistic about your goals, your profit expectations and your exit strategies. You also nee to detail the geographic areas you will be focusing on, the type of properties you plan on buying and your expected return on investment.
2. Hire the Right Flipping Professionals- You need a team on your side to really excel at flipping. This means a great accountant, real estate attorney, realtor and contractor. You will hire them per project, but you need to have experts you really feel like you can trust.
3. Give Your House Flipping Business an Entity- You need to set yourself up as a LLC, S Corporation, DBA or sole proprietor. This is all for tax purposes. You can talk with your accountant about your best option. You also want to give your company a name to establish credibility and make sure that you register your flipping business.
4. Figure Out Financing- You will want to open a business bank account and a business credit card for your home flipping business, but if you really want to get in this industry you will need lots of cash too. Look into private money or hard money loans to get a better understanding of the loan options that are out there for you. It takes a lot to buy a home and pay for renovations, and traditional mortgages aren’t always the best bet for fix and flips.
5. Do Your Research on Neighborhoods- You need to have the right location to fix in so make sure that you do your homework. Essentially, you want to find the worst house in the best neighborhood and look for a home that you can buy low, spend minimal on in terms of renovations and ultimately sell high. Make sure that the ideal sell price is reasonable for the neighborhood and that you are familiar with the comps before you ever make an offer.

These steps are essential to helping get your fix and flip venture off the ground. If you are willing to do the work, make the financial commitment and take the risk, this can be a very exciting new adventure!

With so many reality shows capitalizing on the fun and drama that come with home flips and fixer-upper properties, there are now more people than ever looking into fix and flip projects. However, just wanting to do a fix and flip is only half the battle—you also need to know how to pay for that type of investment. While the payback is significant for many people who flip homes, it doesn’t mean that getting the initial backing you need for this investment is quite so easy.

The good news is, since fix and flips are typically fairly short-term, there is more flexibility for investors as it doesn’t mean you are locked into a loan for 15-30 years. If you are considering investing in a fix and flip, here are some different loan options you may want to consider. We have detailed each of these loan options along with what type of situation they are typically best for.

1. Hard Money Loans- This loan is ideal for experienced investors who have completed a flip or two before, or novice investors who are planning on working with a contractor. This is one of the most common type of financing solutions.
2. Cash Out Refinance Loan- Investors who already have an existing property with between 30-40% equity in it, can take cash out and refinance for their fix and flip investment.
3. Bridge Loan- This is a loan for people who want to purchase a property fast without having to sell another property first.
4. Investment Property Line of Credit- This lending solution is great for investors who have equity in their rental properties and who want to get cash out. Typically, this cash is used to rehabilitate a current property they already own or to buy a new one.
5. Permanent Bank Loan and Online Mortgage- This solution is idea for “buy and hold” investors who want to purchase a property and flip it over a long period of time before selling. This isn’t for the fix and flippers who want in and out of the investment in 60 days.

When it comes to financing your upcoming fix and flip, remember the process is going to be quite different than securing a loan on a primary residence. Explore these different financing options to find the loan solution that works for you and you can quickly be on your way to making the most out of this unique type of real estate investment.

House flipping has become extremely popular in recent years. From reality television shows like Flip or Flop and Fixer Upper filling up the screens, to city neighborhoods completely transforming thanks to home flippers, there is no shortage of people talking about home flips.

Now, many people, including many with no prior home renovation experience are considering buying homes and flipping them for profit. Whether you are planning on living in this flipped home or if you are just looking to make some money, there are a few things that you should consider when deciding whether or not to flip that house. Here are the biggest mistakes people tend to make that turn flips into flops.

1. Not Enough Funding

It can be easy to underestimate the costs associated with home flipping. You need to make sure that you have enough money for the acquisition costs, and the ability to finance all of the repairs. If you are financing the renovations, not paying for them cash, you will need to make sure you are paying attention to the interest costs. After all, every cent you spend, means another cent you need to earn when you cell.

2. Insufficient Time

It takes a lot of time to renovate and flip a house. The whole process can take months and months and you need to make sure that you take the time to insure your project meets building codes. Remember, the more time you spend in the home once you buy it, the more it will cost you. Every day, you spend fixing up the property is a day you are spending paying back the loan.

3. They Don’t Know What They’re Doing

There is a lot that goes into flipping a home. You need to find the right property, the right neighborhood and you need to buy and sell for the right price. It requires researching the neighborhood and knowing what you are getting into. Say you buy a house for $100,000 in a neighborhood where homes are selling for $130,000-$140,000. You may have big dreams for your renovation, but If you put $120,000 into renovations, can you really expect to sell the home for more than $220,000? You need to know where you’re buying.

4. They Don’t Have the Patience

Flipping a home, especially for the first time, takes a lot of time and a lot of patience. You need to wait and find the right property, wait and find the right contractor and wait to make sure that the job is done correctly. Not having this type of patience only means cutting corners and delivering a sub-par final product.

Of course, the main goal of a successful home flip all comes down to buying low, selling high and making a smart investment. However, as with all things related to real estate, nothing is ever guaranteed and the market can be tricky, so the more research you do the better.

November 24, 2023

Investing in real estate has long been recognized as a lucrative venture, offering the potential for substantial returns and portfolio diversification. While traditional financing options are commonplace, some investors are turning to hard money loans, despite their higher interest rates. In this article, we explore the reasons why investors should consider utilizing hard money loans for real estate investments and how the benefits may outweigh the seemingly disadvantageous higher interest rates.

Understanding Hard Money Loans

Hard money loans are a form of financing that is secured by the value of the real estate property rather than the borrower’s creditworthiness. These loans are typically provided by private investors or organizations and are known for their faster approval processes and shorter repayment terms compared to traditional loans.

1. Speed and Accessibility

One of the primary advantages of hard money loans is their speed and accessibility. Traditional financing methods often involve a lengthy approval process, requiring extensive documentation and credit checks. In contrast, hard money lenders focus primarily on the value of the property being used as collateral. This expedited process allows investors to seize time-sensitive opportunities that might slip away with a slower conventional loan approval.

2. Flexibility in Approval Criteria

Traditional lenders heavily weigh a borrower’s credit history, income stability, and debt-to-income ratio. Hard money lenders, on the other hand, prioritize the collateral property’s value and the investor’s exit strategy. This flexibility in approval criteria makes hard money loans an attractive option for investors who may have difficulty securing traditional financing due to credit blemishes or unconventional income sources.

3. Investing in Distressed Properties

Real estate investors often encounter opportunities in distressed properties, such as foreclosures or those in need of significant renovations. Traditional lenders may be hesitant to finance such projects due to their perceived higher risk. Hard money lenders, however, specialize in financing these types of investments, recognizing the potential for substantial returns once the property is rehabilitated and its value increases.

4. Short-Term Investment Strategy

Hard money loans are inherently short-term, typically ranging from a few months to a few years. This aligns well with investors who aim to buy, renovate, and sell properties quickly, commonly known as “fix and flip” strategies. The higher interest rates associated with hard money loans are often outweighed by the shorter loan duration, making the overall cost of financing reasonable for investors focused on swift returns.

5. No Prepayment Penalties

Unlike many traditional loans that impose prepayment penalties, hard money loans often do not penalize borrowers for paying off the loan ahead of schedule. This feature is particularly advantageous for investors who complete their projects faster than anticipated, enabling them to minimize interest payments and maximize profits.

6. Less Stringent Property Standards

Traditional lenders may have stringent requirements regarding a property’s condition and marketability. Hard money lenders, while still concerned with the property’s value, are generally more lenient in terms of its current state. This allows investors to take on projects that may not meet traditional financing standards but hold significant potential for value appreciation.

7. Negotiation Power

Real estate transactions often involve negotiation, and having the ability to close a deal quickly with a hard money loan can provide investors with a competitive edge. Sellers may be more inclined to work with buyers who can secure financing rapidly, especially in competitive markets where time is of the essence.

While hard money loans do come with higher interest rates, their benefits often outweigh the drawbacks for certain real estate investment strategies. The speed, flexibility, and accessibility of hard money loans make them a valuable tool for investors looking to capitalize on time-sensitive opportunities, particularly in the realm of distressed properties and fix-and-flip projects. When used strategically and with a clear exit plan, the advantages of hard money loans can contribute to a successful and profitable real estate investment portfolio, making them a viable option despite their higher associated costs.

August 1, 2023

Financial freedom is a goal that many individuals aspire to achieve. It refers to the state where one has enough passive income to cover their expenses, allowing them to pursue their dreams and passions without being constrained by financial limitations. One powerful tool that can aid in achieving financial freedom is the strategic use of hard money loans. In this article, we will explore what hard money loans are, how they work, and how you can leverage them to attain financial independence.

Understanding Hard Money Loans

Hard money loans are a type of asset-based financing, usually secured by real estate. Unlike traditional bank loans, which focus on the borrower’s credit history and financial standing, hard money lenders primarily evaluate the value of the property being used as collateral. These loans are typically offered by private investors or companies who are willing to take on higher risks in exchange for potentially higher returns.

The primary advantage of hard money loans is their speed and accessibility. Traditional bank loans can be time-consuming and subject to strict underwriting guidelines. In contrast, hard money loans offer a faster approval process, making them an attractive option for real estate investors, house flippers, and entrepreneurs looking to seize time-sensitive opportunities.

Leveraging Hard Money Loans for Real Estate Investment

1. Identifying Profitable Investment Opportunities: Real estate investment presents numerous opportunities to grow wealth. With hard money loans, investors can quickly secure funding to purchase distressed properties, renovate them, and then sell them at a profit. The key is to thoroughly research the market, location, and property to ensure that the potential for a positive return on investment is high.
2. Fix and Flip Strategy: The fix and flip strategy involves buying a property that needs repairs at a discounted price, using a hard money loan to finance the purchase and renovations, and then selling it for a higher price. This strategy can generate substantial returns if executed correctly. However, it requires careful planning, accurate cost estimates, and a thorough understanding of the local real estate market.
3. Buy and Hold Strategy: For those seeking a long-term approach to financial freedom, the buy and hold strategy may be more suitable. Investors can use hard money loans to acquire rental properties and then generate passive income through monthly rents. As the property appreciates over time, the investor’s equity grows, providing a source of wealth and financial stability.
4. Diversification: Hard money loans can be used to diversify one’s investment portfolio by entering different real estate markets and asset classes. This diversification helps spread risk and can provide a more stable source of income over time.

Managing Risks and Pitfalls

While hard money loans offer lucrative opportunities, they also come with risks and pitfalls that need to be carefully managed:

1. High-Interest Rates and Fees: Hard money loans often carry higher interest rates and fees compared to traditional bank loans. Borrowers must be confident in their ability to generate returns that outweigh these costs.
2. Market Volatility: Real estate markets can be unpredictable, and economic downturns can adversely impact property values. Investors should have contingency plans in place to weather market fluctuations.
3. Due Diligence: Thoroughly research potential hard money lenders to ensure their credibility and reputation. Some lenders may have predatory practices or hidden fees that can harm your financial goals.
4. Exit Strategy: Always have a clear exit strategy in place before taking on a hard money loan. Whether it’s selling the property, refinancing with a traditional lender, or using other funds, having a plan for repayment is essential.

Hard money loans can be a powerful tool for achieving financial freedom through real estate investment. By identifying profitable opportunities, carefully managing risks, and executing well-thought-out strategies, investors can leverage these loans to grow their wealth and create passive income streams. However, it’s essential to conduct thorough due diligence and be prepared for the challenges that come with this type of financing. With the right approach and a commitment to smart investing, hard money loans can pave the way toward financial independence and a brighter financial future.

June 16, 2023

When it comes to financing real estate investments, hard money loans have traditionally been associated with fix and flip projects. However, these loans offer much more versatility than meets the eye. Savvy investors are discovering innovative ways to leverage hard money loans for a wide range of real estate deals beyond fix and flips. In this article, we will explore how you can effectively use hard money loans for various investment strategies, providing you with the financial flexibility and opportunity to grow your real estate portfolio.

1. Bridge Loans for Time-Sensitive Opportunities  One effective strategy for utilizing hard money loans is through bridge financing. Bridge loans serve as a temporary financing option, allowing investors to secure properties quickly while they arrange for long-term financing or execute value-added strategies. This approach is particularly beneficial for time-sensitive opportunities, such as auctions, short sales, or distressed property acquisitions. By leveraging hard money loans for bridge financing, investors can seize lucrative deals that would otherwise slip away.
2. Renovation and Rehabilitation Projects Hard money loans can also play a pivotal role in renovation and rehabilitation projects. These loans provide the necessary funds to upgrade properties and improve their value. Whether you aim to renovate a multi-unit residential building, convert commercial space into residential units, or revamp outdated properties, hard money loans offer a convenient solution. With their flexible repayment terms and expedited approval process, investors can promptly access the funds needed to transform properties and maximize their potential.
3. New Construction Financing For real estate developers, hard money loans can be an invaluable tool for financing new construction projects. Traditional lenders often have stringent requirements and lengthy approval processes, which can hinder timely execution of development plans. Hard money loans provide an alternative source of financing that enables developers to acquire land, fund construction costs, and cover other expenses associated with new projects. This approach empowers developers to pursue their visions and capitalize on emerging opportunities in the real estate market.
4. Distressed Property Acquisitions Investors seeking distressed property acquisitions can leverage hard money loans to their advantage. These loans offer the necessary capital to purchase properties in foreclosure, bankruptcy, or other distressed situations. By accessing hard money loans, investors can swiftly acquire distressed properties, often at below-market prices. With the potential for substantial returns on investment through property rehabilitation, repositioning, or resale, hard money loans serve as a valuable tool for capitalizing on distressed real estate opportunities.
5. Cash-Out Refinancing Hard money loans can also facilitate cash-out refinancing, allowing investors to extract equity from their existing properties. Cash-out refinancing can be used to fund new investments, diversify portfolios, or consolidate debts. By leveraging the value of their properties and obtaining a hard money loan, investors can access capital quickly, providing financial flexibility and the opportunity to take advantage of emerging market trends or investment opportunities.

While hard money loans have traditionally been associated with fix and flip projects, they offer a range of applications beyond this single investment strategy. From bridge financing to renovation projects, new construction, distressed property acquisitions, and cash-out refinancing, hard money loans provide investors with the flexibility and agility to pursue diverse real estate deals. By understanding the versatility of hard money loans and working with reputable lenders, investors can unlock new avenues for growth, enabling them to thrive in the dynamic and lucrative world of real estate investment.

June 1, 2023

When it comes to financing various ventures, traditional lending institutions can sometimes be too rigid and time-consuming. However, hard money loans have emerged as a flexible and efficient alternative for funding a range of loan types beyond the traditional fix and flip projects. These short-term, asset-based loans offer investors and entrepreneurs the opportunity to access quick capital for diverse purposes. In this article, we will explore the versatility of hard money loans and shed light on the different loan types they can effectively fund.

Real Estate Development Loans

Hard money loans can be invaluable for real estate developers looking to embark on projects that extend beyond the scope of simple property renovations. From ground-up construction to large-scale developments, hard money lenders can provide the necessary funds to cover land acquisition, construction costs, and development expenses. These loans offer developers the financial flexibility and speed required to seize opportunities in a competitive market. The property being developed serves as collateral, ensuring the lender’s security while allowing the borrower to access capital quickly.

Bridge Loans

Bridge loans act as temporary financing solutions that bridge the gap between a borrower’s immediate capital needs and their long-term funding plans. Hard money loans are ideally suited for bridge financing due to their expedited approval process and shorter repayment terms. Borrowers can utilize these loans to cover costs during transitional periods, such as when waiting for the sale of an existing property or securing permanent financing. Hard money lenders often base their loan decisions on the property’s value rather than the borrower’s creditworthiness, making them a viable option for individuals with less-than-ideal credit scores.

Business Expansion Loans

For entrepreneurs seeking to expand their existing businesses, hard money loans offer an alternative source of funding. These loans can be used to support various expansion activities, such as purchasing new equipment, renovating commercial spaces, or financing marketing campaigns. Unlike traditional lenders, hard money lenders place greater emphasis on the value of the assets being financed rather than the borrower’s credit history. As a result, business owners can access capital quickly and move forward with their growth plans.

Acquisitions and Foreclosure Auctions

Hard money loans are an attractive option for real estate investors looking to capitalize on opportunities presented by property acquisitions or foreclosure auctions. These time-sensitive transactions often require immediate funding, and hard money lenders are well-positioned to provide the necessary capital within short notice. Investors can secure properties quickly, rehabilitate them, and either sell for profit or refinance with traditional financing. Hard money loans enable investors to leverage these opportunities and navigate the competitive real estate market.

While hard money loans are commonly associated with fix and flip projects, their utility extends far beyond this niche. Whether you’re a real estate developer, business owner, or investor, these loans provide quick access to capital for a diverse range of ventures. By considering hard money loans, borrowers can unlock possibilities and pursue their goals with greater speed and flexibility.

January 11, 2023

When many people think about investing in real estate, they often assume they should buy a single-family home. More and more investors, however, are looking towards multifamily commercial real estate like apartment complexes instead as an alternative to invest in new and lucrative real estate properties.  Below we will discuss a few key reasons why you should consider investing in multifamily commercial real estate.

Let us begin with discussing what is multifamily commercial real estate or MFCR. Essentially, multifamily commercial real estate (MFCR) is used to describe residential properties with more than five units.  Often, this term refers to apartment buildings but there are also quite a few different property types within MFCR such as mid- and high-rise apartment complexes and garden apartments.  Included in these types of properties are residential housing units such as assisted living facilities and student housing.  Regardless of what type of multifamily commercial property you decide upon, you’ll have the following asset classes to choose from as an investor.

Class A properties: which are essentially luxury buildings offering high end amenities like fitness centers and pools. These properties bring in the highest rents but require a larger investment.

Class B properties: still offer a good quality value and are in desired locations but they may have less amenities than class A properties.

Class C properties: tend to be more outdated but are the most affordable rent-wise for tenants on a tight budget.

Now that we have discussed the different types of multifamily commercial real estate and how they are classified, lets look at the benefits of investing in these types of properties.

The Benefits of Investing in Multifamily Properties

One of the best benefits of investing in multifamily units is that they are often easier to secure financing for than single family homes if you are intending to utilize them as a rental properties. This is because multifamily homes often come with less risk to the lender.  Since there is more than one tenant in a multifamily building, there will be less impact on the bottom line if something goes wrong, a tenant is unable to pay or the property is unable to be occupied for a period of time.  Additionally, since multifamily housing typically comes with shorter leases, there is more opportunity to adjust the rental rate to current market demands and for inflation.

How to Invest in Multifamily Housing

If you are interested in investing in multifamily housing it is critical to understand your financing options so you can get the best deal possible for your situation. There are several different financing options you should look into before moving forward, but in general there are three main ways to finance these properties we will discuss below.

Government backed multifamily mortgage loans: are typically the best fit for investors who intend to live in one unit and rent out the other units. These loans are typically easier to qualify for than conventional financing and have lower credit requirements.

Portfolio Loans: are worth looking into if you do not qualify for federally backed loans because financial institutions set the requirements to qualify.  Financial institutions also set the interest rates on a case by case basis and keep these loans on the books instead of selling them on the secondary market.

Short term multifamily financing: typically come in the form of a bridge or hard money loan.  These loans are often a good fit for fix and flip investors wanting to rehab a property.

Once you have researched and have an idea of the best type of financing for your situation, you should see what options are available in the particular area you are interested in and work with a real estate agent to zero in on the best possible multifamily property available.

Since multifamily buildings allow you to manage multiple tenants at once, they can be a great way for investors to diversify their portfolios and increase their cash flow. As with any investment, it’s important to understand the market and know what you are getting into ahead of time. Hopefully this article can be a useful guide in deciding if purchasing multifamily commercial real estate is right for you.