Fix-and-Flip projects are considered the most popular ventures among real estate investors. In a Fix and Flip, an investor buys a rundown property, renovates it, and then sells the real estate property for a profit. The success and profitability of a fix-and-flip project depend on many factors and inputs like investor expertise, managing time constraints and contractors, and financing.
In this article, we will focus on financing through private loans in Houston. In particular, on how private loans can expedite your Fix and Flip Project. You will also learn why the best primary sources of project funds are private lenders, also known as Hard Money Lenders.
4 Scenarios Alternative Loans Make Fix And Flip Projects Easier
The fast and quick decision-making process of a private or hard money lender spells a lot of difference for the success of the fix and flip project. Access to fast funds through private loans lets you start your real estate project almost instantly.
- Quick access to funds helps secure the right property for your investment project. A private lender with quick application processing can issue approvals and release loan funds within seven working days. With private loans, you increase your chances of acquiring prime properties for rehab, virtually staying ahead of the competition. Also, having private lender support lets you focus more on property rehabilitation.
- Aside from the cost of the property, private loans can cover the repairs and other rehab expenses of your fix and flip project. Private lenders use the ARV or After Repair Value to determine the appraisal of the property. Thus, for a real estate investor in fix and flip projects, private loans lessen the burden of looking for additional lenders, give access to readily available funds, and eliminate the funding gap.
- With straightforward lending processes, you can pay your suppliers and contractors on time. On-time payments help you foster better relationships with your business partners.
- Private Loans in Houston stop you from running around for new funds or loans during the property rehab. Your rehab or fix-and-flip project can take longer due to the slow release of funds or lack thereof. In addition, your costs may increase, miss opportunities, or even realize lower profits.
Why you need a PL for your Fix-and-Flipper
Houston area Private Loans give you better chances of securing the real estate project you have your eyes on. Here are some reasons why private loans are the perfect match for your fix and flipper project.
Fast Approval
Private lenders have a simple loan process, enabling them to render quick decisions. In addition, applying for a private loan in Houston does not require you to submit a heap of documents to prove your creditworthiness. Decision-making is locally done, thus reducing approval waiting time.
Flexible Terms / Financing
Because Private Lenders in Houston do not necessarily have regulated and boxed lending policies, they are more flexible in adapting to the needs of their clients. For example, a higher equity or a stellar payment history with your lender can award you premium loan interest rates.
Open Even To Rundown Properties
Unlike traditional bank loans, you can utilize private loans to fund the acquisition of decrepit properties. In addition, private loans can also cover the rehab costs of your project property. For fix and flip investors, a financing scheme that can cover both project costs saves you time and effort as an investor. With private loans in Houston, you only deal with one lender. You do not have to deal with more lenders to complete your fix and flip project.
Even Borrowers With Low Credit Scores are Welcome
Private Loans are impartial to borrowers with low credit scores. Private lenders lean more on the potential of a fix-and-flip project property. Furthermore, a portfolio of successful projects and investor experience positively impact your loan application. Many private lenders are more creative in loan underwriting than traditional lenders.
Lending With Local Vibes
Most private lenders are locally established businesses and are real estate investors themselves. For example, lending companies offering private loans in Houston are well-versed in the updates and trends of the local real estate industry. The support of a private lender will thus give you market insights so you can make informed decisions for your fix and flip project.
Fix-and-Flip Success Story through Private Loans Financing
Here is an example of a successful fix-and-flip project in Texas where an investor used private loans in Houston. A successful real estate investor, Penny, found a perfect fix-and-flip project in Houston. She was trying to acquire a property with the potential for either a fix and flip or a rental but needed more cash to start the project. Penny enlisted the services of a lender offering Private Loans in Houston to facilitate the financing of her project. The Private Lender quickly processed the loan, required only minimal documents, and released the funds within 15 days. Penny was thankful because she managed to acquire the property and still had funds for the repairs.
What to Do When Securing a Private Loan for Your Fix and Flip Project
Here are the general steps in securing a Private Loan in Houston when you intend to invest in the city.
- Search for properties that need refurbishing but have excellent market potential for fix-and-flip projects. Consider locations where you can find infrastructure developments, vibrant economic indicators, or industry expansions.
- Prepare a compelling Fix and Flip project proposal that includes your income projections, rehab cost analysis, CV, list of accomplished projects, and building plan. You can find out more about how to prepare a proposal here.
- Look for a lender you feel comfortable working with. You can attend conventions, check out the internet for local lenders, or ask brokers and other industry players for recommendations. You can also visit private lender offices to learn how they manage loan applications, treat client investors, and build relationships with potential clients. Personal visits give you a better understanding and perception of whom you want to deal with in the future.
- Accomplish pre-approval paperwork and submit additional documents, if required.
- When your loan application is approved, work with your lender to accomplish all post-approval forms before the release of funds. You may find this article about the lending process helpful.
Conclusion
Investing in a flip-and-flip project and realizing excellent profitability requires a financing partner to provide you with quick loans, a fast approval process, and an ARV-based loan amount. When you race against time and competitors for a real estate project, a private loan in Houston is the perfect financing vehicle for your business.
Do you have a fix-and-flip project that needs funding? Call us now at (832)7709415 or send us an email at info@gllholdings.com. If you want to pre-qualify, fill in our online form here. Or, for any other notes you would like to send us, you can also use our online contact form.
