Flipping Houses In Arizona

Risks of Flipping Houses

By on June 26, 2024   /   Flipping Houses In Arizona, House Flipping  

Risks of Flipping Houses

Flipping houses can be a profitable venture, but it also comes with significant risks. Here are some of the main risks associated with house flipping:

**1. Market Risk:

Market fluctuations can dramatically affect the profitability of a flip. A downturn in the real estate market can lead to longer selling times and lower-than-expected sale prices.

**2. Renovation Risk:

Underestimating renovation costs is a common issue. Unexpected problems such as structural issues, plumbing, or electrical problems can quickly increase expenses.

**3. Time Risk:

Delays in renovation can lead to increased holding costs, including mortgage payments, property taxes, insurance, and utilities.

**4. Legal and Regulatory Risk:

Navigating building codes, permits, and other local regulations can be complex and costly. Failing to comply can result in fines or delays.

**5. Financing Risk:

Securing financing can be challenging, especially if interest rates increase or if lenders change their terms.

**6. Buyer Risk:

Finding a buyer at the right price can be difficult. The property may sit on the market longer than expected, leading to increased holding costs and reduced profits.

**7. Economic Risk:

Broader economic factors, such as a recession or changes in employment rates, can impact the housing market and reduce demand for flipped homes.

**8. Experience Risk:

Lack of experience can lead to mistakes in budgeting, renovation, and market analysis. This can result in lower profits or even losses.

**9. Location Risk:

The property’s location plays a significant role in its resale value. Poorly chosen locations can lead to difficulties in selling and lower returns.

**10. Competition Risk:

In a competitive market, finding undervalued properties to flip can be challenging. Increased competition can also drive up purchase prices, reducing profit margins.

**11. Contractor Risk:

Hiring unreliable contractors can lead to delays, subpar work, and increased costs. It’s crucial to vet contractors thoroughly and have clear agreements in place.

**12. Inspection Risk:

Failure to conduct thorough inspections before purchasing can result in unexpected issues and costs. It’s essential to understand the property’s condition fully.

Mitigation Strategies

  • Conduct thorough market research to understand trends and demand.
  • Create a detailed budget and timeline, accounting for potential overruns and delays.
  • Build a reliable team of contractors, inspectors, and real estate agents.
  • Secure flexible financing options and have contingency plans.
  • Stay informed about local regulations and ensure compliance.
  • Perform comprehensive inspections before purchasing.
  • Choose properties in desirable locations with strong resale potential.

Conclusion

House flipping can be profitable, but it’s essential to understand and manage the risks involved. Thorough planning, research, and having a reliable team can significantly increase your chances of success in the house flipping business.

Hard Money Lenders in Phoenix, AZ

When you are searching for hard money loans near me in Phoenix, Scottsdale, Glendale, Tempe, Mesa, Chandler, or Gilbert, Arizona; Brad Loans is Arizona’s most trusted direct hard money lender!  We specialize in hard money loans for Fix and Flip, refinancing mortgages with bad credit, business loans secured by real estate, real estate purchases, short sales, and other endeavors with quick turnaround in the Phoenix Valley.

BradLoans.com is the most trusted direct hard money lender and private money lender in Arizona! We are the best hard money lender in Arizona with the ability to fund commercial & residential hard money loans many times within a couple of days or less. Our lending rates and fees are reasonable compared to other Arizona hard money brokers or mortgage brokers in Arizona.

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Uses For A Hard Money Loan in 2024

By on March 1, 2024   /   Flipping Houses In Arizona, hard money loans, Investment Property Loans  
Uses For A Hard Money Loan 2020

Hard money loans serve various purposes, primarily catering to borrowers who need quick access to capital or who may not qualify for traditional bank financing due to factors like credit history, property condition, or speed of transaction. Here are some common uses for hard money loans:

  1. Real Estate Investments: Hard money loans are frequently utilized by real estate investors to finance the purchase, renovation, or development of properties. Investors often use these loans for fix-and-flip projects, rental property acquisitions, or land development.
  2. Fix-and-Flip Projects: Investors use hard money loans to purchase distressed properties, renovate them quickly, and then sell them for a profit. These loans provide the necessary funds for purchasing the property and covering renovation costs.
  3. Bridge Financing: Hard money loans can act as bridge financing to cover short-term gaps in funding, such as between the purchase of a property and securing long-term financing. This allows investors to acquire properties or capitalize on opportunities without delays.
  4. Construction Financing: Builders and developers use hard money loans to finance construction projects, including ground-up construction, property rehabilitation, or commercial development.
  5. Cash-Out Refinancing: Homeowners may use hard money loans to access equity in their properties by refinancing existing mortgages. This allows homeowners to use the cash for purposes like home improvements, debt consolidation, or other investments.
  6. Non-Traditional Properties: Hard money loans are often used for properties that traditional lenders may deem too risky or unconventional, such as distressed properties, properties in poor condition, or those with unique characteristics.
  7. Emergency Funding: Individuals or businesses facing urgent financial needs may turn to hard money loans when traditional financing options are unavailable or too slow. Hard money lenders can provide fast access to capital to address pressing financial issues.
  8. Credit Issues: Borrowers with less-than-perfect credit histories or insufficient documentation may opt for hard money loans when traditional lenders are unwilling to extend financing. Hard money lenders focus more on the value of the collateral (the property) than the borrower’s creditworthiness.

It’s crucial for borrowers to carefully assess their needs, financial situation, and repayment ability before pursuing a hard money loan. While these loans offer flexibility and speed, they often come with higher interest rates and shorter terms compared to traditional bank loans. Working with a reputable hard money lender and conducting thorough due diligence on potential investments can help borrowers make informed decisions and maximize the benefits of hard money financing.

Phoenix Hard Money Real Estate Loans

If you’re interested in getting involved with real estate investing and need the capital to purchase properties hard money is a great way to get started.  Brad Loans has extensive experience in both real estate investing and hard money lending and is proud to offer Phoenix Valley real estate investors the financing they need.  It is easy to get started applying for hard money loan and Brad Loans is able to work with clients with bad credit and no credit. We are your source for hard money when traditional banks say no.  Read more about Brad Loan’s hard money loan programs or get started fill out our hard money loan application or give us a call to ask questions at 602-999-9499.

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ARV: What You Need to Know About It and How It’s Calculated

By on August 20, 2020   /   Flipping Houses In Arizona  

ARV: What You Need to Know About It and How It’s Calculated

ARV means After Repair Value when it comes to property evaluation. This calculation is crucial for investors looking for real estate to purchase. This helps them determine the price as the home currently sits, and what it would be after the home has gone through repairs and renovations. With this calculation in mind, it helps you understand whether or not there would be enough property value for profitability.

Understanding After Repair Value

The initial step in figuring out the property ARV would be to look at similar properties in design and value. Checking recent sales in your neighborhood or area is always a good reference when estimating ARV. There are countless ways investors perform research on the property, such as:

  • Cross referencing MLS’s to review pricing for properties in the area.
  • Partnering with brokers or agents that have access to an MLS.
  • Leverage online resources such as realtor.com, or LoopNet and many others.

When reviewing similar properties be on the lookout for the following:

  • Properties that have been sold in the last 2 to 4-month window.
  • Homes of similar size and amenities.
  • Places in the same neighborhood that have been sold or are currently for sale.

Repairs and Renovations For Property

Once you have done your homework on similar properties and you have an estimated value of the property, now would be time to calculate the cost of repairing the property. This would come down to the investor’s knowledge. They can a.) estimate the cost on their own or b.) work with local, experienced contractors and ask for estimates.

There are several more expenditures to property flipping than meets the eye. Most people think it’s just repairs and renovations, which is not at all the case. Additional hidden costs to the investor can be found when closing the deal, financing for the property, holding the property, and whether or not the investor is looking to flip quickly. Marketing and the entire sale is another factor in the process.

The General Rule of 70%

When it comes to flipping real estate, most investors follow the general rule of 70%, which involves leveraging the ARV and estimation for repair costs. This helps the investor understand the pricing they should ideally pay for the property.

Here’s an example: lets say the property we’re investing in is $300,000. 70% of the After-Repair Value ($300,000 x .70) is $210,0000. So, minus the estimated cost for repairs, lets average about $30,000. In short, you should not be paying any more than about $180,000 for a property of that value ($210,000 – $30,000).

In most cases, this general rule of 70% is just a base guideline; there are other factors that play into the value. Factors include the market, property conditions, and special property features. This being said, trust your intuition when it comes to the evaluation of the property, itself.

Hard Money Lenders in Phoenix, AZ

When you are searching for hard money loans near me in Phoenix, Scottsdale, Glendale, Tempe, Mesa, Chandler, or Gilbert, Arizona; Brad Loans is Arizona’s most trusted direct hard money lender! We specialize in hard money loans for Fix and Flip, refinancing mortgages with bad credit, business loans secured by real estate, real estate purchases, short sales, and other endeavors with quick turnaround in the Phoenix Valley.

BradLoans.com is the most trusted direct hard money lender and private money lender in Arizona! We are the best hard money lender in Arizona with the ability to fund commercial & residential hard money loans many times within a couple of days or less. Our lending rates and fees are reasonable compared to other Arizona hard money brokers or mortgage brokers in Arizona.

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