The popularity of home improvement shows on cable television stations have a lot of people thinking about going into the business of fixing and flipping real estate. They reason that there is a lot of money to be made by buying low, making a few repairs, and selling high. The biggest sticking point to starting a career in real estate investing is almost always the absence of enough cash. Finding traditional lenders for the fix and flip loans Seattle investing newcomers need is hard. In order to get into this business, thinking outside the box is often necessary.
Once you've found a house you are interested in buying, renovating, and reselling, you need to come up with a plan to pay for it. The loan you will need has basically four parts. The most obvious is the purchase price. For that you will need anywhere from twenty to forty percent for the down payment.
Your loan will have to cover holding costs, like homeowners fees and insurance, during the time the property is being renovated. The building supplies and materials have to be covered, as well as the cost of labor. There will be closing costs and a commission paid to the Realtor.
Since finding a bank to lend you the funds you need is going to be difficult, the best bet may be to come up with something more creative. If you are a first time flipper, you might want to discuss your project with family and friends and offer them part of your business in return for financing your first house. If you can get a family loan, you want to put everything in writing, including the interest rate and the length of time you've got to repay the loan. Most of the time, the borrower doesn't pay anything during the renovation, but starts paying back the loan, with interest, once the house is sold.
If you have the know how, but not the cash, you should consider finding a money partner. These types of arrangements have one partner handling the real estate purchase negotiations, remodeling, and the resale. The other partner is the financier. This works well as long as everyone sticks to the bargain.
A home equity line of credit is a possibility if you own a home. This only works if you have some equity in the house, and it's your primary residence. With a line of credit you can use the money at your own discretion.
You only pay interest on the funds you use. You should be able to borrow about eighty-five percent of the value of the home minus your outstanding balance. This may not be enough money to completely underwrite your project. If not, you'll have to find another source for the rest.
For investors with retirement savings accounts, there is a possibility of borrowing from them. No one near retirement should take this option however. You could also take out a personal loan, but only in a case where you need a small amount of cash for a relatively short time.
Once you've found a house you are interested in buying, renovating, and reselling, you need to come up with a plan to pay for it. The loan you will need has basically four parts. The most obvious is the purchase price. For that you will need anywhere from twenty to forty percent for the down payment.
Your loan will have to cover holding costs, like homeowners fees and insurance, during the time the property is being renovated. The building supplies and materials have to be covered, as well as the cost of labor. There will be closing costs and a commission paid to the Realtor.
Since finding a bank to lend you the funds you need is going to be difficult, the best bet may be to come up with something more creative. If you are a first time flipper, you might want to discuss your project with family and friends and offer them part of your business in return for financing your first house. If you can get a family loan, you want to put everything in writing, including the interest rate and the length of time you've got to repay the loan. Most of the time, the borrower doesn't pay anything during the renovation, but starts paying back the loan, with interest, once the house is sold.
If you have the know how, but not the cash, you should consider finding a money partner. These types of arrangements have one partner handling the real estate purchase negotiations, remodeling, and the resale. The other partner is the financier. This works well as long as everyone sticks to the bargain.
A home equity line of credit is a possibility if you own a home. This only works if you have some equity in the house, and it's your primary residence. With a line of credit you can use the money at your own discretion.
You only pay interest on the funds you use. You should be able to borrow about eighty-five percent of the value of the home minus your outstanding balance. This may not be enough money to completely underwrite your project. If not, you'll have to find another source for the rest.
For investors with retirement savings accounts, there is a possibility of borrowing from them. No one near retirement should take this option however. You could also take out a personal loan, but only in a case where you need a small amount of cash for a relatively short time.
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Get a summary of the things to keep in mind when taking out fix and flip loans Seattle companies offer at http://www.privatecapitalnw.com/fix-and-flip-rehab-loans right now.
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