Home flipping has become increasingly popular again over the past few years. Real estate investors shunned it as a result of the Great Recession, but they are now once again cautiously optimistic. In fact, according to a report by Attom Data Solutions, 2017 was an 11 year high.
ATTOM Data Solutions, curator of the nation’s premier property database, today released its Q4 and Year-End 2017 U.S. Home Flipping Report, which shows that 207,088 U.S. single family homes and condos were flipped in 2017, up 1 percent from the 204,167 home flips in 2016 to the highest level since 2006 — an 11-year high.
There Is Money to Be Made in Home Flipping
The total amount spent on flipping was $16.1 billion in that year. All real estate investors know that it can be very difficult to get a loan for an investment property and that it is vital that the loan is right. In fact, this can be the difference between failure and success. This is for anyone who wants to get involve in flipping properties or investing in these properties and become a landlord.
Many of us like the idea of making extra money. Who doesn’t want a little more cash in their pocket each month? Becoming a landlord is a nice way to earn some passive income, but not everyone can afford to buy a new place or purchase an apartment building.
There are numerous options available to you if you want to get a loan for an investment property. Traditional banks continue to be not cautious, however, which means you will have to do a little bit of research into other potential financing options. They include home improvement loans, home equity lines of credit (HELOC), cash out refinance options, partnerships, seller financing, FHA loans, personal loans, and hard money loans.
All About Hard Money Loans for Investment Properties
When people want to get a mortgage for an investment property, they often consider the traditional lenders, i.e. banks, first. However, since banks continue to decline applications for these types of properties, investors must become a little bit more creative. House Heroes is a Florida based house flipping startup business who is looking into hard money loans instead.
We’ve been buying property in Florida for over 5 years. We help homeowners sell in all sorts of situations: sell fast, major renovations, inherited house, relocation, foreclosure, eviction, late taxes.
Hard money loans are incredibly popular with home flippers. It means that money is borrowed from a business or individual and this money is used to fund a real estate investment. While a non-traditional type of loan, it is often possible to borrow more than the sale value of the property. This means that money remains available to upgrade the property, which in turn means an investor can sell it rapidly. Of course, this is a gamble as it is necessary for the property to then sell for more once it has been upgraded, eventually leaving the flipper with a profit. Ideally, the profit is then used to fund part of the next property, and so on.
However, it is common for hard money lenders to want to see an investor have some money to their name as well, usually at least 20% of what they hope to borrow. Additionally, in return for a quick and easy application process and a willingness to take risks, borrowers do have to pay a much higher interest for the loan. This is understandable, since a hard money loan is private money and people would only agree to put some of their money at risk if the gain is large enough. Additionally, provisions are in place that enable hard money lenders to rapidly repossess a property if payments aren’t made.