Here’s another article that expresses my same thoughts. What a wonderful market to be flipping houses!  Now, if you’re a newbie to the market, you have to make sure to stay on top of your numbers. Plan on fixing up the property to be the nicest in the area, for the cheapest price. Which means, plan on listing it BELOW MARKET VALUE to have a chance at selling. It can be done, I’m doing it, as well as many of my clients.

Here’s an excerpt-

So how do we make money? The short answer is that we need to return to value investing. Gone are the days of buy high and sell higher, the music has definitely stopped in that game. A value investor will make his money when he buys, he doesn’t acquire property in the expectation that the price is going to appreciate. Making your money when you buy simply means that you buy a property that has a lot of potential equity. To do this you need to locate a motivated seller, someone trying to dispose of a distressed property will usually be highly motivated in this market. 

Stay tuned as I will be posting details of deals I am doing, or, am passing over to some of my clients for big profits…

I am constantly asked about using Hard Money in my deals, and am surprised by the amount of people who don’t know or understand the benefits. So, I’m going to write a 2 Part post as to what a Hard Money loan is, and the benefits to using one.

A Hard Money loan is typically made from a single Investor, or, group of Investors under one corporate umbrella or entity. The differences between a Hard Money loan and traditional loans are:

• Higher Interest rates
• Very few points, closing costs and fees, if any
• Equity based loan- doesn’t use your credit score or debt to income ratios
• Can close in a matter of a few days or as soon as a Title Report can be issued
• Payments may be deferred until payoff
• Meant for short term loans

The going interest rate for Hard Money in Arizona is 18% APR. Now, pick your jaw up and keep reading further- you’ll see the benefits soon, I promise. Yes, it’s insanely high compared to a traditional loan. However, most Hard Money Lenders charge a nominal processing fee. All the lenders I’ve used here in AZ charge $500-600 flat fee, that’s it. There’s no points, processing or other junk fees added in. We’ll look at this a little more in depth in Part 2.

A Hard Money loan is issued SOLELY on the amount of equity in the property, and intent of the loan. They don’t pull credit reports or report to credit bureaus. They don’t care about your Debt to Income ratios- shoot, I’ve never even had a HML ask me for income statements or my social security number! So I could have filed Bankruptcy last week, and still be able to obtain a Hard Money Loan on a deal. Most HMLs want to see 25-30% of equity in a property before agreeing to do the loan. They pull their own comps, might do their own drive-by appraisal, and then decide the maximum amount they will lend against the property. Most won’t do a loan in a foreclosure bailout situation- typically they only lend to Investors looking to flip, or, refinance their position out and hold as a rental. Also keep in mind a Hard Money Loan will always be a first lien holder. No HML will loan money for a 2nd position lien. Read the rest of this entry »