How Not to Spend an Arizona Fix and Flip Loan

16 January, 2020 21:16
February 4, 2020
Beware Loaning Money Directly: Use Trust Deed Investing Instead
February 5, 2020

How Not to Spend an Arizona Fix and Flip Loan

If you’re financing a flip, you know how expensive it can be, interest rates above ten percent are the norm in this business and for that reason you need to spend that money wisely to get the greatest return on your investment. Learn some mistakes you’ll want to avoid when it comes to Arizona Fix and Flip loan.

Flip financing is not at all like your standard home loan, anyone in the business can tell you that. Interest rates are high to put it mildly, and time is short. You need to Fix and Flip in the shortest amount of time possible, so that you can pay these loans off quickly. Given the high expense and short term nature of flip financing, If you’re new to the business there’s some mistakes you’ll want to avoid.

Two major pitfalls you want to avoid when it comes to Arizona Fix and Flip loans

Those who are just getting into flipping the game are prone to two common errors, mainly due to the fact that there knowledge of real estate is derived from reality television and not market realities.

• Over-conceptualizing- If a property needs a coat of fresh paint and some new carpets then there’s no reason to start knocking down walls. Despite what HGTV and the Property Brothers claim, a house doesn’t need to be open concept in order to sell. Don’t waste time demolishing walls and re-configuring layouts if it’s not what buyers in the area expect, because all the time you waste on such projects will add up in the form of extra loan payments.

• Over-designing- You need to match finishes and features to homes in the surrounding area. Marble counter tops hewn from the Florentine hillside and sleek German cabinetry won’t add a dime to the final sale price if said features are installed in say a working-class neighborhood. Splurging on high end finishes will add unnecessary numbers to list price, which will hinder resale, which will again amount to extra loan payments.

Tips to avoid wasting Arizona Fix and Flip loans

• Only renovate as needed- Open concept is nice, but it will add very little to the home’s final sale price if it’s not what buyers expect. Basically, you need to plan your renovation in line with homes in the neighborhood. You can update a few things, apply some fresh paint, install new flooring but after your rehab is through the layout of your home should like pretty much match that of the house next door.

• Only add features that add real value in the minds of buyers- Real being the operative word here. It’s true, people do like nice looking things. They might appreciate walking through your shiny polished over-designed home, in the same way they’d appreciate looking at a nice painting. Rarely will their admiration translate into spending an extra ten grand just because your hardwood floors were sourced from the Brazilian rainforest.

Basically, all you need to do to be a successful flipper is, find an undervalued home and bring it to the standard of homes nearby, in the end selling it for more than you paid for it. Loan payments represent a cost that can eat away at your profits. You can minimize loan payments by following the above tips or at the very least following one simple principle and that is to: Keep it simple stupid.

Dennis Dahlberg
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.
Copyright | Privacy Policy | *Terms & Conditions

Comments are closed.