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Steps to Flip a House Using Hard Money Loans

Steps to Flip a House Using Hard Money Loans
by John Carlucci - July 26, 2022

Getting into the real estate market is a great way for you to make some money and take advantage of how hot the market is right now. There are different ways that you can get into the market and see some results, but flipping a home with a hard money loan is one of the easiest ways to get the work done. 

Before you jump right in and start flipping a home with the help of a hard money loan, you need to know the proper steps to get all of this done. The steps you can use to help with this include:

Find the Right Property

This can sometimes be the most difficult step to get done. You can’t pick out just any property or you will never make money on all that work. You need to work with a real estate agent to help you learn more about the market and to ensure that you pick a home that may need some love and care, but can make you some money when you are done. 

You need to be educated in the real estate market for any area where you plan to invest. The ideal marketing conditions will be bearish, meaning that there is a high demand for real estate at any given time. And you want to look for things that are easy to repair, even if other homeowners don't want to do it, such as the carpet or some landscaping. 

Evaluate the Property

Once you feel like the property may have some of the initial criteria that you are looking for, it is time to do a more in-depth evaluation of it to make sure that it will work for your needs. Some of the things to consider when evaluating the property include:

  • Condition of the property: Try to bring along an inspector with you to see whether there are major problems that need to get done. Get a firm bid so that you can see how much it will cost you to fix up the property before selling. 
  • Property price; You need the property to come in at a good price. Look at comps to help with this, both the active listings and properties that have recently sold to help you get a good idea of how much the property is worth right now and what it will be worth later when you fix it up. 

Applying for the Hard Money Loan

It is unlikely that you have enough money in your pocket to do the purchase on your own. Using a hard money loan will help you to get the amount that you need to purchase the property so you can begin some of the work. 

You should shop around a bit to find the right hard money loan. Not all companies will be the same with this and you want to make sure you get the right money at the right rate with the best in customer service all rolled into one. There are different lenders who can promise to help with this, but none are going to provide you with the ease of use and application quite like Patch Lending

Rehabbing the Property

Once your offer is accepted and the closing is done, it is time for you to get to work on making the property look amazing. You may be working with some contractors to get the work done, so keep them on a strict deadline to ensure that everything gets done on time and you won’t spend more than you need on the property. 

You can also do some of the work on your own, but get ready to move fast if you wish to do this. It may save you some money if you have a good idea of how to do some of the work, but it could make you delayed if you mess up or do the repair the wrong way. 

Keeping to a good deadline here is going to be important for helping you get the property re-listed again and ensuring that you will be able to make the most profit possible. Take a look at ways that you can cut down on construction time, while maintaining high-quality, to ensure that you are able to take care of your investment. 

Re-Evaluate the Property

With all of the rehab work done, it is time for you to go back through some of the steps above and re-evaluate the property. The steps will be similar to what you did in the second step with your initial evaluation. Just make sure that you take the time to evaluate the property condition and the property price once again. 

This is the price that you will use later on to help you when selling the property. You will be able to see how much you can list the property for and how much profit you will earn. 

List the Property for Sale

You can choose to list the property on your own or with an agent. You can use your evaluation from before to determine how much the property is now worth thanks to your evaluations. Do not try to inflate the price because this will turn away some of the potential buyers and may make them turn the other way. 

Time is going to be a big factor here. You can’t let the house sit there for a few years. You make the best profits when you are able to sell within a few months or less. 

Author

  • John has worked alongside Real Estate Giants across USA and Canada for decades. Since he started Prudentialcal, he has been actively rendering service as business adviser to many companies in the real estate industry. He formed Prudentialcal in hopes of providing the most reliable stories and information there is in the vast industry of real estate

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