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NYC Fix and Flip Lenders
A Fix and Flip loan is a type of real estate investment based on the hard money loan concept. When you get this type of loan, it means that you want to get a loan so that you can buy a house at a bargain and then fix it up so that you can “flip it” for a profit. In order to do this, you’ll need the help of many experts to help you along the way, but most of all you’re going to need the dollars to get the job done. No matter how great of a bargain you get on your purchase, you’re going to need to have the money to make the repairs and improvements you must make in order to sell the home for a profit. Remember that people who get fix and flip loans don’t buy the home so that they can grow old in it. They’re buying it to sell it, and that’s a different form of real estate investment. The fix and flip has two parts to it.
When you’re trying to pick out a house to flip, you’ll need to get the advice and wisdom of real estate agents as well as professionals who can assess the condition of the home. If it has electrical problems, you need to know exactly what they are. If the problem is with the foundation, you need to know about that, too. Most homes are sold at a bargain for a reason. Sometimes it’s because the house is in what is traditionally and casually called a “bad neighborhood” and for you, that can spell disaster. Sometimes no matter what kind of work you do on the home, it’s not going to help you sell it at a profit because you’re selling it in a neighborhood most people wouldn’t want to live in. Someone who can afford to pay the heftier price might just buy the same kind of house in another neighborhood. It’s vital to get a list of everything you need to fix before you ask for your loan. Why? Because you need to know what the cost for repairs and improvements will be before you ask for you loan. The loan isn’t just to buy the home. It’s to fix it as well. Your lender will appreciate it if you have a solid understanding of how much your budget needs to be in order to make a true profit.
Real estate agents are invaluable in the flip process. They can re-assess your home, tell you what else might make it sell for more, and clear up any rough edges the home might still have. They’re also going to be the people who sell the home for you, and a good real estate agent can always get more than an average one. You want good, quality people with lots of experience and enthusiasm for your job working on your side every step of the way. This means that when you’ve done all your improvements and repairs, you’ve got a real estate agent who’s going to work overtime making sure you get the most amount of money possible for your investment.
Delancey Street is one part of a successful fix and flip plan. We’re hard money lenders who are going to extend a line of credit to you based on the projected value of your home. In other words, if you pitch your plan to us, and we approve you, we have a good feeling that at the end of the day, your home is going to make a hefty profit, and that’s exactly what we want to help you do. In order to do that, though, you have to get in touch with us. We’ve made that super easy and convenient to do. You can write to us on our website with any questions or comments you might have, explore a bit further and read more about fixing and flipping homes, or simply give us a call and tell us what your ideas are.
As we say to anyone who’ll listen, we’re people who love busy people who are creating and getting things done. We suspect that, like us, you’re this type of person, and you have a great dream to fix and flip a house this year. Let us be a part of your plan. You can apply for a hard money loan directly through us. We’re a direct lender with years of experience in this exciting industry, and we’re capable of helping you move mountains in the fix and flip world. Count on us to be there every step of the way as you take on the project that you’re passionate about.
What is the largest factor in qualifying for a hard money loan?
If you’re interested in applying for a hard money loan to purchase a property, then it’s important to know what the lender will be looking for when deciding whether to approve your application. Fortunately, there’s one factor that reigns supreme, making it somewhat easier to figure out your chances. Here’s what that key factor is, as well as some other items lenders will typically look at.
The Property Is Most Important
The simplest answer is often the correct answer, and that’s true when it comes to hard money loans. Your credit score and income are not the factors on loan applications.
Since hard money loans have a balloon payment at the end of the term, lenders are most concerned with whether you’ll be able to pay that entire amount back, and that depends on the value of the property that you’re buying with the loan. Therefore, the lender will look at the property’s current value compared to the amount you’re interested in borrowing. This also means that the amount of money you’ll be putting down on the property is important.
It’s normal for hard money lenders to issue loans covering anywhere from 60 to 80 percent of what the property is currently worth. There are, however, exceptions to this. You could find a lender that’s willing to use the after repair value (ARV) of the property when deciding on a loan application. The ARV is simply an estimate for how much said property will be worth after you make repairs and upgrades to increase its value.
When a hard money lender uses the ARV instead of the current value, this obviously results in more risk on their part, as there’s no guarantee what the property will be worth in the future. This means that you can expect a higher interest rate to compensate for that increased risk.
The bottom line is that the lender wants to know is if you’ll be able to resell the property and make enough money to pay them back.
Other Factors Hard Money Lenders Take into Consideration
The property and its value may play the pivotal role in a hard money loan, but it’s far from the only thing lenders use to make their decisions.
How the lender feels about you as a borrower can also affect your application. If you have experience renovating properties and flipping them for a profit, that gives the lender some peace of mind compared to if you are a first-timer. Everyone needs to start somewhere and you’re not necessarily out of luck if you’ve never done this before, but it could come into play.
The way you present yourself during the application process can be a factor, as well. When you have a professional, organized approach, that will give the lender a better impression than if you came in without important documents and plans for the property. For the best results, make sure you bring:
- A contract for making the property purchase
- Your plans for the property
- Cost estimates for those plans
Since you don’t want to end up wasting any time, it’s important to give yourself the best shot at approval on your hard money loan the first time around.
Choosing the right property and having a concrete plan for it is paramount here, because everything hinges on the lender’s faith in you selling that property for a sufficient amount (or being able to refinance it to pay them back that way). You should also make sure that you can demonstrate enough income or capital, and that you have all the potential documents a lender may ask to see when you apply.