For consumers with bad credit, flipping houses is a good way to earn a good profit and rebuild your credit. But first, you need to understand how to get fix and flip loans.
Having bad credit makes it nearly impossible to go to a traditional lender to get a loan for anything, let alone a business venture such as fixing and flipping homes. But if you are really ready to repair your credit, earn some good money and create a business to ensure your financial future, then Arizona Fix and Flip Loans could be the answer to all of your issues.
There is a nontraditional type of loan which is called hard money or sometimes asset-based lending. These are loans which are granted not based on the borrower’s credit score, credit history or even current debt level. These loans are granted based on the value of the property that you are going to purchase, which makes the name asset-based lending more meaningful. The secret is that the loan is secured by the property that you are purchasing. This offers the lender protection in case you default on the loan.
These hard money lenders are not just out to loan money to feel good about a selfless act though, they are interested in making money as well. And if you are using hard money due to bad credit, then you represent a higher risk. So the hard money lenders will expect you to pay a higher interest rate for the money that you borrow. In some cases, the rate can be as high as 15%. In addition, you will pay other fees such as closing and lender fees. But you are getting the loan even though you have bad credit.
Loan to Value
Hard money or Arizona Fix and Flip Loans are based on the value of the property. In most cases, the lender will offer anywhere from 70% to the property value to 80% depending on his or her personal preference. This is an added protection for the lender in the event that you default on the loan. If you default, the lender will seize the collateral for the loan, the property, and sell it to recover the investment in your loan. And the lender wants to be certain that the property is always worth more than the balance of the loan. So with a loan of 70-80% of the property value, there is always built in equity.
Understand the Terms of Fix and Flip Loans
Asset-based loans are a great option for someone who has bad credit but wants to get into the fix and flip business. But it is critical that you understand the full cost of the loan and use that number to create the budget for the project so that you will make a profit and be able to use that money to improve your personal credit and to also make your next purchase to continue your flipping business.
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis Dahlberg Broker/RI/CEO
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
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.© 2016 Level 4 Funding LLC. All Rights Reserved.