Hi Everyone, I'm looking to gain traction on this flipping real estate business in Upstate SC location. I would like some feedback from experienced "flippers" on how to finance my 1st purchase/flip without having to pull my 401K and/or Roth IRA funds. I've heard a lot about "Hard Money" loans as well as "Investment Loans" from the banks. What are your experiences with each of those types of loans and what would you recommend to start a flipping real estate business?
Thank you all for your feedback and recoommendations.
Hope you are doing well and hope I can be a resource to you. I am a hard money lender and have worked with several borrowers in SC from Myrtle Beach to Columbia, SC. This is not a pitch to use me but I wanted to try to explain a hard money loan to you. Hard Money is a loan that is based on the value of a hard asset (the property) rather than the deciding factor being your credit and income. That doesn't mean that credit doesn't come into play with some lenders, but unlike a traditional mortgage they don't qualify you solely based on credit score, debt and income. Most lenders will want to know about the numbers of the deal (purchase price, renovation budget, after repair value) and some will want to know experience (newbie doesn't mean you can't use hard money but it may impact the terms you are quoted). The idea is that the loan is usually based upon the value of the property and some lenders will only lend up to a certain percentage of ARV (typically 60-75% of ARV which included purchase price and renovation). You typically will need some money as a down payment or skin in the game (typically somewhere between 10-20% of purchase price but this may vary. As far as renovations are concerned you provide the renovation budget in the form of a draw schedule and most lenders will require you to fund each draw and then get reimbursed when the work is completed and inspected. The point I am trying to make on that is that you will probably need to have some cash/credit available to make that happen so plan accordingly. If you have any more questions about hard money please feel free to post those questions, I am sure there are PLENTY of lenders who will gladly answer questions including myself. Hope this helps!