House flip pros will tell you that private financing is the way to go if you want to take advantage of housing market opportunities.
Are you dreaming of flipping a house that was either repossessed or inherited? Whether or not you have flipped a house before, do you need funding?
The key to financing your flip: Speed
Unlike private mortgage lenders, banks ask you to complete page after page of application forms and they take a long time to analyze your files. In the time it takes them to process your files, you will likely risk losing the building that you had hoped to make a profit from.
Flipping houses is a bit like investing in the stock market. You always have to be on the lookout and your have to draw more quickly than your competitors as soon as an opportunity presents itself.
If you go with a private mortgage lender, you can get a letter of approval the same day
Actually, you can get a letter of approval on the spot. Being able to make a purchase offer with no financing conditions will give you a competitive advantage.
Did you know that if you go through a private lender, you will be able to receive financing within a few days? Even if;
- the property needs major repairs;
- the banks have refused a loan based on your credit rating or because your debt-to-credit ratio is too high;
- you have declared bankruptcy or have submitted a consumer proposal;
- you have no capital, but you have other property assets and plenty of equity;
And if your file is well prepared, private financing will allow you to obtain funds in less than one week.
Do you know why financial institutions refuse to finance flips?
- Banks don’t make a lot of money on short-term loans;
- They hesitate when it comes to taking risks (i.e. a legal construction hypothec);
- Banks are scared of the idea of being stuck with an empty house on which the renovations have not been completed;
Two words to remember: flexibility and simplicity
First, the process of obtaining private financing through Victoria Financial is much easier than going through a bank. Here’s all we need from you:
- The address of the property in question;
- A list of the work that needs to be done, as well a proof of funds required to complete the work.
- The amount of money you would like to borrow;
- The property value (the amount paid);
- A certificate of location, if you have it;
Secondly, here are some general financing terms that you will encounter when you finance a house flip:
- Short-term loan (6 months or more);
- Financing for up to 75% of the market value;
- Possibility of receiving 100% financing if you own other buildings and have plenty of equity to guarantee the loan;
- Monthly interest-only payments;
- No bankruptcy or insolvency records search, no credit check, no income verification.
Of course, certain conditions apply. The interest rate for private mortgage loan starts at 12%, a rate that often causes borrowers to hesitate.
Even if the role of the private mortgage lender is a passive one, the private lender has to be seen as a financial partner and not as a traditional capital source. Furthermore, going through a private mortgage lender will make it possible for you to flip more than one house at a time if several opportunities become available.
You might pay a higher interest rate, but if you are in a position to make a considerable profit when you sell the property you’re flipping, it really is worth the money.
Contact me via email at firstname.lastname@example.org or by phone at 1 (877) 220‑7738, ext. 101. I will help you calculate the profit on your next flip.