Tips on Finding Flipping Money
If you have done any investing in real estate you have probably had this happen. You are sitting around with other real estate investors and it takes no time at all before someone mentions how many more fix and flip deals he would be doing if he could just get a loan. Much like after a fisherman finishes a tale about the one that got away, the audience nods knowingly. While some people just cannot get financing, most can. As a part-time real estate investor, you have a huge advantage—YOU ALREADY HAVE A JOB! The real problem is knowing where to look when getting started.
Big Banks are a Waste of Time
While the large banks (Chase, BOA, Wells Fargo) in our opinion are a waste of time, many local banks are more than willing to do loans for fix and flip properties. Call the bank, ask for a loan officer, and ask him or her if they do Construction or Rehab loans. When you find someone who says yes, set up an appointment to meet. Ask what financial information the bank will need and bring it to the meeting. Most will ask for a Personal Financial Statement which you can download from the SBA. We also recommend a sample proforma or a one-page document showing your goals, what type properties you intend to purchase, etc. This will show you are serious, prepared and have put some thought into the concept and plan. This will set you apart from other borrowers.
Meet with your Loan Officer Soon!
There are 3 reasons to meet with the loan officer ASAP and the this is something you can do this on your lunch hour. First, having a lender in place shows your real estate agent that you are a serious investor. Second, you often need a pre-approval letter when you make an offer. If the bank already has your financial information, it only takes a few minutes to generate a letter. Third, the lender will be able to give you terms and estimated closing costs. This will help as you prepare your estimates.
For reference, here are some sample terms.1. 6 month interest only loan at 6.5%
2. Investor puts down 20% or purchase price
3. Investor pays for appraisal, title work, and ½% origination fee
4. Rehab costs are reimbursed as draws with proof of work being complete
5. Loan can be extended another 6 months for a nominal fee
Search Outside Your Hometown
Finally, do not limit your search to your home town. We haveseveral lenders that are about 50 miles away. Lot's of times those smaller town lesser known banks have less red tape and better loan opportunities for flippers. Don't count them out.
To learn more about Part-Time REI visit us at http://part-timerei.com/
Or visit us on FB at: https://www.facebook.com/PartTimeRei
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