How To Get A Loan To Fix-and-Flip A Property In Maricopa County

Real estate investing is a good way to earn money and many are getting into it. One of the more popular investing strategies newbie investors try out is a fix and flip. If you are looking for ways to obtain financing for flipping houses you’ll find out that there are several ways to get funding.

Maricopa County is an ideal location for home flipping and you would want to work with a trusted and experienced lender to get the best loan available. Castle Rock Mortgage in Maricopa County, AZ can help ensure a smoother funding process for your next flipping project. 

What is a “fix and flip”?

With the rise in viewership of home renovation shows, it’s no surprise that house flipping has been one of the top real estate investment strategies that investors dive into. House flipping involves buying a property and holding it for a short time and then selling it for a profit. The strategy has gained popularity in recent years as 5.9% of all U.S. home sales are labeled as house flips in 2020 according to millionacres.com.

Before you take the leap in house flipping, you should check out residential investor loans in Paradise Valley, Maricopa County, to learn more about how to fund your project.

How much does it cost to flip homes?

Watching those home improvement shows on TV has made turning rundown homes and renovating them into sellable properties seem fun and profitable. The question is, how much does it really cost to flip homes?

House flipping can be a lucrative strategy in real estate investing but you have to consider the costs that come with the project. You’ll need funding to purchase the property, renovate it, and cover expenses like property taxes, utilities, and homeowner’s insurance until the day it gets sold.

You should also take note that the majority of lenders may not deal with inexperienced flippers. Getting approved for a loan means you have to prove that you have a successful track record of selling at least one property and making a profit. If ever you find a lender who would work with newbies chances are they will charge you higher rates and fees.

If you want to get funds for your flipping project you can check out our residential investor loans in Phoenix, Maricopa County.

How to fund a flip property

If you have decided to fix and flip an investment property in Scottsdale, Maricopa County, a conventional mortgage may not be an ideal option.

Traditional home loans like 15 or 30-year term loans are not ideal for a short-term house flipping project. Conventional loan lenders are slow to close which will not work in a house flipping scenario. They will also prefer to lend for properties that are in good condition compared to dilapidated homes which are usually what house flippers go for.

Loans for flipping projects are also more expensive compared to home purchase loans. You pay higher interest rates and fees for house flipping loans.

You may wish to consider the following ways of funding your project instead of conventional loans: 

Hard Money Loans

Hard money loans are short-term loans that usually require you to use real property or equity as collateral. Private lenders or investor groups offer this type of loan which comes with interest rates as high as 15%.

High-interest rates aside, these loans have proven to be useful for house flippers who need funds quickly to purchase properties. They are more flexible than traditional lenders and will most likely finance the renovation and cost of purchasing the property. As long as you work with a reputable lender, you’ll be fine.

Crowdfunding

One of the ways you can fund your fix and flip project is through crowdfunding. Crowdfunding has individuals or institutions collectively financing loans. Each lender provides a small percentage of the loan amount and earns interest on that money.  

Private Lenders

A private lender can be an individual (like a friend or family member) or an organization that agrees to finance your fix and flip project. Private lenders aren't associated with a bank so they typically have fewer funds overall to loan to projects. As such, private lender interest rates may be higher, but that is not always the case. A notable perk of private lenders is that they are often more willing to approve a loan than a bank.

In some instances, the private lender may be open to partnering on a deal and take a share of the profits in exchange for not charging interest. 

Lenders who fund house flips want your property to sell quickly so that they can recover their money. Private lenders will have a lien on the property so that they can take possession and sell it if you default on the loan.

Need funding for your fix and flip property?

Choosing a loan for your flipping project can be challenging especially for first-time real estate investors.

We understand that Maricopa County house flippers need quick funds to purchase, repair, and flip their investments. 

If you are looking for the best way to fund your fix and flip property, reach out and talk with our experts to learn more about fix and flip investor loans by Castle Rock Mortgage.

 

We can help you choose the right type of loan for your project so that you’ll get your project up and running in no time. Loans can be funded within 1 to 2 days after approval. Give us a call or send us a message on our website today!

 


* Specific loan program availability and requirements may vary. Please get in touch with the mortgage advisor for more information.