The fix and flip investment strategy involves purchasing the ideal property that is ripe for renovation or a quick turnaround. There are several types of Arizona Fix and Flip Loans that can help make your dream a reality.
The fix and flip real estate investment strategy involves purchasing property that is in need of either minor renovation or major construction. After improving the property, you then sell it for a profit. As simple as it sounds, there are many moving parts and areas that require a certain depth of knowledge. Let’s dig a little deeper.
You purchase a property through an auction or a foreclosure or, lastly, a bank foreclosure sale. At that point, depending on the property, you may choose to sell it “as is.” A true fix and flip, however, involves improving the property first, adding value, and then selling it. Improving the property can range from small but important updates to the kitchen and bathrooms to a complete renovation of a home.
A successful fix and flip involves many components. As a Fix-and-Flipper, you must be able to acquire a property at a price that allows you to do the renovations and make a profit. You, as an acquirer, must know your market, as a project manager, you must be able to manage the various contractors to execute the improvements, and, finally, you need to be able to secure funding for your project. One major hurdle is obtaining financing from a bank. You will find that this process may too long and costly. For example:
· Typically, the fix and flipper is opportunistic and purchases distressed properties. This means that time is of the essence and a lengthy and cumbersome bank loan will delay the process.
· The bank route depends heavily on the buyer’s credit history. Your track record and expertise in fix and flip investments is usually discounted by banks.
· The bank route may not lend for improvement costs for a fix and flip property.
Fix and Flip Loans—The Bridge Loan
Loans for fix and flip investments are typically known as Arizona Bridge Loans. The bridge loan is the “bridge” between the sale of the purchased property once renovated. These loans are short term in nature and secured by the real estate. The number and type of Arizona Fix and Flip Loans are varied. Some of the different types are:
· Purchase the property: A seller has a distressed property and the buyer has the opportunity to purchase the property at a deep discount, make some minor renovations, and then sell it.
· Renovation loan: A buyer has the opportunity to purchase a single-family home. The borrower will renovate the home to make it more eye appealing and modernize it with a new kitchen, bathroom, painting, and landscape, and then put the property up for sale.
· Arizona construction loan: A vacant piece of land is available with a dilapidated single-family home. The borrower demolishes it, replaces it with a 2-unit duplex and then sells it.
At Setabay, we work with hundreds of private Arizona Hard Money Lenders, many of which specialize in fix-and-flip loans. Our interest rates start as low as 5.99 percent with terms that range from 3 to 60 months.
The cause of capital inefficiencies in the lending market allows Arizona Hard Money Lenders the opportunity to provide liquidity while the borrower pays higher interest, organizational costs, and points. These loans are collateralized by the property or land involved in the project. The term of the loans is usually 12-24 months. An individual who invests in Arizona Fix and Flip Loans has their money going directly to the originator who then provides their clients with the working capital to fund their projects. At Setabay, we offer some of the best interest rates in the market. Call us for a no-obligation quote.
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About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.