There are several different types of Arizona Fix and Flip Loans that you can obtain when looking to get into this lucrative real estate investment. Know the pros and cons before deciding which is best suited for your particular situation.
You not alone if you are wondering on how to finance a house flip. This endeavor of buying a home, fixing the home and renovating can be highly lucrative. Getting a Hard Money Loans in Arizona is unlike getting a mortgage for the house you plan on living in. There are various Arizona Fix and Flip Loans that buyers can utilize to buy distressed properties and then sell them. The qualification process has its pros and cons.
Hard Money Loans in Arizona: These are loans that are short term in nature. These loans are intended for real estate. The issuer is often a private lender and can be an individual, group of investors, or a licensed mortgage broker. The terms of these loans are much shorter than conventional loans. Most are six months to one year, though some can go up to five years. Interest rates can be considerably higher at 12% to 21% with 3 to 6 points upfront. These loans fund 60% to 70% of the value of the property. There is much less paperwork than conventional lenders, and the lenders will accommodate people with lower credit scores, as low as 550.
Cash out refinance: If your property has increased in value, then you have an option to refinance and get a new mortgage for more than you owe. This gives you cash in your pocket for new ventures. Closing costs in the range of 3% to 6% of the total loan will need to be paid. Home equity loan or line of credit: If you’ve been able to build equity up in your primary residence, then you could apply for a home equity loan or line of credit and use your home as collateral. With a home equity loan, you have the full amount of the loan up front. With the line of credit, you draw on the line as you need it. You may be able to borrow up to 80% of your home’s equity.
This line is used for buying investment properties. This is drawn upon as needed. This type of Arizona Fix and Flip Loan lasts anywhere from 18 to 24 months. If you have a track record of flipping houses, this type of Arizona Fix and Flip Loan is best suited for that. The time frame for establishing this type of loan is usually about three weeks. The loan amounts range from $1 million to $50 million. The interest rates generally run 5% to 8%.
There is also peer to peer lending which is also known as crowd funding. This brings together a large amount of people who contribute funds to the project. This is usually raised through the internet.
High net individuals invest in these projects with a minimum of $5,000. There is not a lot of data about crowd funding for real estate projects. One firm funds up to 70% of the properties after repaired value. This type of funding can fund in as little as 10 days and the interest rates run 8% to 11% with the average loan term being 12 months. There is also an option for investors to take partnership interest in the property which allows the investor to benefit from interest and upside potential of the project.
Level 4 Funding LLC
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About: 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.
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