{"id":2434,"date":"2020-06-11T18:16:07","date_gmt":"2020-06-11T18:16:07","guid":{"rendered":"https:\/\/www.coastalcapital.com\/?p=2434"},"modified":"2021-12-17T21:49:23","modified_gmt":"2021-12-17T21:49:23","slug":"fix-and-flip-financing","status":"publish","type":"post","link":"https:\/\/www.coastalcapital.com\/fix-and-flip-financing\/","title":{"rendered":"Fix and Flip Financing"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"2434\" class=\"elementor elementor-2434\" data-elementor-settings=\"[]\">\n\t\t\t\t\t\t<div class=\"elementor-inner\">\n\t\t\t\t\t\t\t<div class=\"elementor-section-wrap\">\n\t\t\t\t\t\t\t<section data-particle_enable=\"false\" data-particle-mobile-disabled=\"false\" class=\"elementor-section elementor-top-section elementor-element elementor-element-c60366e elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"c60366e\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t\t\t<div class=\"elementor-row\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-c396aaf\" data-id=\"c396aaf\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-column-wrap elementor-element-populated\">\n\t\t\t\t\t\t\t<div class=\"elementor-widget-wrap\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-5bd8cab elementor-widget elementor-widget-text-editor\" data-id=\"5bd8cab\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-text-editor elementor-clearfix\"><p><strong>Key takeaways:<\/strong><\/p><ul><li>It cost more to flip a house than purchase one as primary living unit.<\/li><li>It\u2019s more difficult to make money but it doesn\u2019t mean you shouldn\u2019t flip<\/li><li>You can still flip houses without paying out of pocket money<\/li><li>Vetting the private lenders before signing the contract<\/li><li>Hard money lenders are available, and some are amazingly fast to lend money with good ROI<\/li><\/ul><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-1fb8430 elementor-widget elementor-widget-text-editor\" data-id=\"1fb8430\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-text-editor elementor-clearfix\"><p>House flipping has hit decade high thanks to the high home price and the decrease in housing inventory. The limited supply of housing now is helping thousands of flippers earn more profit than ever before, even when compared to 2007. <\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-bfe6a9f elementor-widget elementor-widget-text-editor\" data-id=\"bfe6a9f\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-text-editor elementor-clearfix\"><p><strong>It costs a lot to flip a house. <\/strong><\/p><p>While home flipping returns can be very lucrative, the initial investment can be significantly more than simply buy a house as primary living unit. You not only need money to become the owner of the property, but also need extra funding for renovation, and also to cover property tax, insurance, and utilities from the day of closing to the day you sell it. If you financed the acquisition, you\u2019re also paying interest payment on top of it. Although the interest is tax-deductible under the Tax Cuts and Job Act, it is not a 100% deduction. Every penny you spend on interest shrinks your return on investment. Moreover, depending on your income bracket, you may have to pay an additional 10% to 37% capital gain tax if you decide to flip within one year or less.<\/p><p>High return on investment is a thing in the past. Last year, 2019 marked the lowest average gross ROI within the last 10 years. The average gross profit was only $62,900<a href=\"#_ftn1\" name=\"_ftnref1\"><span>[1]<\/span><\/a>. That doesn\u2019t mean the flipping business is doom.\u00a0 It means flippers must do extra work to minimize cost which includes interest payment on financing.<\/p><p><a href=\"#_ftnref1\" name=\"_ftn1\"><span>[1]<\/span><\/a> <a href=\"https:\/\/www.attomdata.com\/news\/market-trends\/flipping\/attom-data-solutions-year-end-2019-u-s-home-flipping-report\/\">https:\/\/www.attomdata.com\/news\/market-trends\/flipping\/attom-data-solutions-year-end-2019-u-s-home-flipping-report\/<\/a><\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-cd4dbcd elementor-widget elementor-widget-text-editor\" data-id=\"cd4dbcd\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-text-editor elementor-clearfix\"><p><strong>It\u2019s risky business and lenders are more cautious: <\/strong><\/p><p>If you start from scratch and do not have plenty of capital to invest, then house flipping is not an easy start. Today is not 2005 when zero down payment is like charity work. It\u2019s getting harder to get a loan and even if you\u2019re qualified for it, you will eventually pay more when you finance to flip.<\/p><p><strong>Hard Money lender to the rescue: <\/strong><\/p><p>Many people call the term Hard Money because it is much more expensive than traditional financing. However, that is not 100% true. The \u201chard\u201d usually means it\u2019s difficult for conventional lenders to finance the flipping. When traditional lenders failed to provide flippers with the much-needed capital to invest in the lucrative deal, hard money lender steps in to bridge the gap. The hard money loans are usually short term with interest rates of 12% to 18% plus 1-3 points of origination fee. If you borrow $100,000 and the lender charges 2 points, then you would pay $2,000. However, you may not have to pay the points until you sell the house.<\/p><p>The hard money lender usually base max financing amount based on the house\u2019s after repaired value (ARV). For example, if a house is worth $150,000 and ARV is $350,000, you can borrow up to 65% of ARV which is $227,500. After paying the purchase price, you can use the rest of the financed money for closing cost, lender fees, renovation, carrying costs, and selling expenses. This shows that a good lender can help you flip houses without a single penny out of your pocket.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-cfc70d7 elementor-widget elementor-widget-text-editor\" data-id=\"cfc70d7\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-text-editor elementor-clearfix\"><p><strong>Where your credit score becomes irrelevant: <\/strong><\/p><p>Unlike conventional lenders who must follow a long list of bureaucratic red tapes, hard money lender can lend money on houses in disrepair with bad credits. A smart hard money lender will make decision based on how lucrative the deal is. If the home flipper is a trust-worthy person and the deal is strong, hard money lender will make the loan in a heartbeat.<\/p><p>When the lenders evaluate the borrow, unlike conventional banks, credit score and debt-to-income ratio are out of the windows. That\u2019s when another meaning off the \u201chard\u201d comes in. Hard means collateral for the loan as hard assets. If the repair cost and the resell value make sense, the lender will lend out money because the ROI justify the risk. There is always a safety net for the lender. Should the flipper flop, the lender can always foreclose and sell the house at a profit.<\/p><p>There is one common thing between hard money lender and conventional lender: first position lien. Until the borrower fully repay the loan, the lender will hold a lien but the borrower is still the owner and hold the deed.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-fd5a83f elementor-widget elementor-widget-text-editor\" data-id=\"fd5a83f\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-text-editor elementor-clearfix\"><p><strong>Looking for hard money lender: <\/strong><\/p><p>Hard money lender\u2026 They are everywhere. However, good ones are hard to come by.<\/p><p>A simple google search will give you a long list of lenders eager to give you money for the right interest rate. However, you should look for the lender that has:<\/p><ul><li>Fast turnaround time<\/li><li>Quick decision making (your deal is not going to wait forever. If you don\u2019t get it today, some one else will.)<\/li><li>Reasonable rates<\/li><li>No big committee: Remember, you choose hard money lender to avoid the bureaucratic committee of the conventional bank.<\/li><li>Decades of experience.<\/li><\/ul><p>\u00a0<\/p><p>In general, you should expect:<\/p><ul><li>1 to 3 points origination fees<\/li><li>Interest rate as low as 9% up to 18%<\/li><li>Term 6 months to 18 months<\/li><li>Loan to Value: 65%<\/li><li>Loan to Cost: up to 80%<\/li><\/ul><p>Depending on your performance, you may get less interest rate or slightly more. For example, a flipper with 10 complete flips will often see origination fees of 2% and 9% interest rate compare to a newcomer with only 2 flips who can still get a loan at slightly higher rate of 11% and 3% origination fees.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section data-particle_enable=\"false\" data-particle-mobile-disabled=\"false\" class=\"elementor-section elementor-top-section elementor-element elementor-element-67daa8a elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"67daa8a\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t\t\t<div class=\"elementor-row\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-b0e5bc5\" data-id=\"b0e5bc5\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-column-wrap elementor-element-populated\">\n\t\t\t\t\t\t\t<div class=\"elementor-widget-wrap\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-8fd7beb elementor-widget elementor-widget-text-editor\" data-id=\"8fd7beb\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-text-editor elementor-clearfix\"><p><strong>Bottom line: <\/strong><\/p><p>If you\u2019re short on cash to flip houses, financing is your friend. Remember, if you don\u2019t catch the deal, somebody else will. Hard money lenders will likely benefit your case because they don\u2019t have a minimum credit score. Their price reflects the nature of the high-risk business you\u2019re in, but with hard money lender, you can get started with little or no cash to invest. This is also help you flip more houses at faster interval, which in turn increases your ROI.<\/p><p>Check out<a href=\"https:\/\/www.coastalcapital.com\/services\/\" target=\"_blank\" rel=\"noopener\"> Coastal Capital program highlights<\/a> and give us a call at<span style=\"color: #3366ff;\"> (310) 280-9173<\/span>. Since we are a direct lender, we have our own underwriting guidelines and standards which translates into a quick, fast and efficient process to approve your loan and get it funded fast! In loan transactions, our focus is on the current value of the property, the purpose of the loan and your ability to repay the loan. We are honest, efficient, and reliable, and our 35 years of success in this business is testament to our commitment to our clients.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section data-particle_enable=\"false\" data-particle-mobile-disabled=\"false\" class=\"elementor-section elementor-top-section elementor-element elementor-element-55e826d elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"55e826d\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t\t\t<div class=\"elementor-row\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-e79c907\" data-id=\"e79c907\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-column-wrap elementor-element-populated\">\n\t\t\t\t\t\t\t<div class=\"elementor-widget-wrap\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-7eb9ac3 elementor-align-center elementor-widget elementor-widget-wgl-button\" data-id=\"7eb9ac3\" data-element_type=\"widget\" data-widget_type=\"wgl-button.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t            <div class=\"elementor-button-wrapper\">\n                <a href=\"https:\/\/www.coastalcapital.com\/services\/\" class=\"elementor-button-link wgl-button elementor-button elementor-size-lg elementor-animation-\" role=\"button\">\n                                <span class=\"elementor-button-content-wrapper elementor-align-icon-\">\n                                <span class=\"elementor-button-text\">Loan Program Highlights<\/span>\n            <\/span>\n                            <\/a>\n            <\/div>\n            \t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>Get a loan to flip a house, with the right lender. <\/p>\n","protected":false},"author":1,"featured_media":2437,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v16.0.2 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Fix and Flip Financing - Coastal Capital<\/title>\n<meta name=\"description\" content=\"Fix and Flip Financing - The limited suppy of housing now is helping flippers earn more profit than ever before, when compared to 2007.\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.coastalcapital.com\/fix-and-flip-financing\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Fix and Flip Financing - Coastal Capital\" \/>\n<meta property=\"og:description\" content=\"Fix and Flip Financing - The limited suppy of housing now is helping flippers earn more profit than ever before, when compared to 2007.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.coastalcapital.com\/fix-and-flip-financing\/\" \/>\n<meta property=\"og:site_name\" content=\"Coastal Capital\" \/>\n<meta property=\"article:published_time\" content=\"2020-06-11T18:16:07+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2021-12-17T21:49:23+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.coastalcapital.com\/wp-content\/uploads\/2020\/06\/fix-and-flip.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"2000\" \/>\n\t<meta property=\"og:image:height\" content=\"1333\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\">\n\t<meta name=\"twitter:data1\" content=\"6 minutes\">\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.coastalcapital.com\/#website\",\"url\":\"https:\/\/www.coastalcapital.com\/\",\"name\":\"Coastal Capital\",\"description\":\"Private Lender &amp; Investments\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":\"https:\/\/www.coastalcapital.com\/?s={search_term_string}\",\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"ImageObject\",\"@id\":\"https:\/\/www.coastalcapital.com\/fix-and-flip-financing\/#primaryimage\",\"inLanguage\":\"en-US\",\"url\":\"https:\/\/www.coastalcapital.com\/wp-content\/uploads\/2020\/06\/fix-and-flip.jpg\",\"width\":2000,\"height\":1333},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.coastalcapital.com\/fix-and-flip-financing\/#webpage\",\"url\":\"https:\/\/www.coastalcapital.com\/fix-and-flip-financing\/\",\"name\":\"Fix and Flip Financing - Coastal Capital\",\"isPartOf\":{\"@id\":\"https:\/\/www.coastalcapital.com\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.coastalcapital.com\/fix-and-flip-financing\/#primaryimage\"},\"datePublished\":\"2020-06-11T18:16:07+00:00\",\"dateModified\":\"2021-12-17T21:49:23+00:00\",\"author\":{\"@id\":\"https:\/\/www.coastalcapital.com\/#\/schema\/person\/cf00cddb5abb9c32de35f6df3bac0bd4\"},\"description\":\"Fix and Flip Financing - The limited suppy of housing now is helping flippers earn more profit than ever before, when compared to 2007.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.coastalcapital.com\/fix-and-flip-financing\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.coastalcapital.com\/fix-and-flip-financing\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.coastalcapital.com\/fix-and-flip-financing\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"item\":{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.coastalcapital.com\/\",\"url\":\"https:\/\/www.coastalcapital.com\/\",\"name\":\"Home\"}},{\"@type\":\"ListItem\",\"position\":2,\"item\":{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.coastalcapital.com\/fix-and-flip-financing\/\",\"url\":\"https:\/\/www.coastalcapital.com\/fix-and-flip-financing\/\",\"name\":\"Fix and Flip Financing\"}}]},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.coastalcapital.com\/#\/schema\/person\/cf00cddb5abb9c32de35f6df3bac0bd4\",\"name\":\"Coastal Capital\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","_links":{"self":[{"href":"https:\/\/www.coastalcapital.com\/wp-json\/wp\/v2\/posts\/2434"}],"collection":[{"href":"https:\/\/www.coastalcapital.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.coastalcapital.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.coastalcapital.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.coastalcapital.com\/wp-json\/wp\/v2\/comments?post=2434"}],"version-history":[{"count":1,"href":"https:\/\/www.coastalcapital.com\/wp-json\/wp\/v2\/posts\/2434\/revisions"}],"predecessor-version":[{"id":3071,"href":"https:\/\/www.coastalcapital.com\/wp-json\/wp\/v2\/posts\/2434\/revisions\/3071"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.coastalcapital.com\/wp-json\/wp\/v2\/media\/2437"}],"wp:attachment":[{"href":"https:\/\/www.coastalcapital.com\/wp-json\/wp\/v2\/media?parent=2434"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.coastalcapital.com\/wp-json\/wp\/v2\/categories?post=2434"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.coastalcapital.com\/wp-json\/wp\/v2\/tags?post=2434"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}