subject: Achieve Your Financial Dreams Investing In Real Estate With Hard Money Rehab Loans [print this page] Investing in real estate has always been a consistent method of making money. Most individuals who have amassed large fortunes have usually done so through real estate in one way or another. Most people think the real estate market is in bad shape and it is impossible to make money in real estate during the current economy, but they couldn't be more wrong. Now is the perfect time for investors to get started in real estate rehabbing and achieve their financial dreams.
What is real estate rehabbing?
Real estate rehabbing (sometimes referred to as "flipping houses") is the process of buying houses or small multi unit properties in various states of disrepair that may never get sold, fixing them up, and then selling them for profit.
How can I get started with real estate rehab?
The first step of real estate rehab is just a basic investing lesson: Buy low, sell high. You want to find an undervalued property that is in just bad enough shape that you can invest as little time and money into it as possible before selling it. Some distressed properties may just be outdated with obsolete appliances. The next step could be a little more difficult: finding funding. Conventional lenders do not work well financing rehab projects because of time constraints and the condition of the underlying collateral. They also can't sell these loans on the secondary market, making them unprofitable transactions.
The best options for financing a real estate rehab project are private equity hard money rehab loans from a lender that specializes in helping real estate investors or mortgage brokers leverage their capital. Always use a direct private lender who can fund loans within 2 weeks and make sure they offer rehab home loans or investor rehab loans designed for investors with special circumstances and/or special needs with an easy submission process, fast underwriting and quick closings.
How much money should I spend on a rehab property?
Always prepare a rehab budget and keep your rehab expenditures simple without getting into major construction. Keep acquisition prices very low, around 40-60% of A.R.V. (After Repaired Value), and don't be afraid to make multiple offers on multiple properties to get the best deal. Be prepared to walk from as many as 10 deals before landing just one prospective property.
How can I keep repair costs down?
It can be tough to keep repair costs down, but try to stay away from major roofing, H.V.A.C., electrical, or plumbing, these can get out of control and eat any profit margin you might have gained. Keep products simple and inexpensive. Use new cost effective appliances, lights, fixtures, and paints from well known and inexpensive home improvement retailers. Work with small mom and pop handyman services that can perform most of your repairs. These companies have low overhead, generally complete the work themselves, and can provide you with the best price, often with the best and fastest service.
Anything else I need to know?
Yes, of course! There's so much to know and learn about real estate rehab, this article is only the tip of the iceberg. Real estate rehab investors must have strict organizational and computer skills, and exposure to real estate, construction or maintenance, and finance are always a plus! You must have a keen understanding of your local real estate market, and of course you must have a good lender who specializes in hard money rehab loans for purchase, rehab and resell of distressed properties. Last but not least, always have a back up exit strategy to either sell, or refinance and rent the property within 6 months from initial purchase.
Now more than ever is the perfect time for investors to get started and achieve their financial dreams and take advantage of all the distressed properties flooding the market in 2009 and 2010. With the right financing, and a great hard money rehab loan real estate rehabbing can be very rewarding and financially lucrative. Get started finding a rehab loan lender and start building your fortune today!
by: Sarah Simmons
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