How To Get A Great Fix And Flip Deal With Foreclosures
Real estate investing offers a great opportunity to provide a profitable income; however, there are tips and tricks that can be utilized in order to turn a higher profit on your fix and flip properties. Taking advantage of foreclosures and short sales is one of the ways to keep your initial costs down, and ROI high.
Short sales occur when an owner is forced to sell their property, but the loan balance is higher than the sales price. Through the selling of their property, they are able to pay back only a portion of their loan and the lender takes a lose on the remainder.
While this is a tough situation to be in as a seller, often times this is a great deal for buyers of fix and flip properties. The final cost of the home may be drastically lower in these situations as most other buyers may not want to put in the effort towards inevitable repairs found in these types of sales.
Though short sales can make for a good initial price, there are typically lots of deferred repairs needed. However, this may be a perfect setup for fix and flip properties that have low upfront prices and need more work than most.
When an owner faces pre-foreclosure, this means that the owner is more than 90 days late on their payments. In this situation, the lender has already begun the process of foreclosure but has not officially foreclosed.
Since these types of properties are not listed within real estate websites, finding a property in pre-foreclosure can be a bit tricky. Your best bet is to search county records for Notice of Trustee’s Sale, work with a Title Company to obtain the information or subscribe to a service such as PropertyRadar.
After identifying houses that could be pre-foreclosure, you may want to reach out to the homeowner to see if they have an interest in selling. Though this can be a touchy subject for the homeowner, this may be their best bet as it would save them from damaging their credit score through a foreclosure.
Trustee’s Sales (Foreclosures)
Trustee’s Sales, or commonly referred to as foreclosures, are properties that the bank is auctioning due to borrower’s inability to pay.
You can normally find foreclosure auctions listed through posting and publishing services, the county recorder’s office or services such as RealtyTrac and PropertyRadar.
While the prices may be low, the risk is high on these properties. Often times, these homes have not only fallen into default, but also disrepair. As an auction does not allow for a walk through of the home, you may be inheriting unforeseen costs in an auction foreclosure.
If a home is not sold through auction, the property is turned over to the bank’s ownership – this is called an REO or “real estate owned” property. In this case, the house can be inspected for damages, and a genuine appraisal of costs can be evaluated.
How to Obtain a Fix and Flip Loan
Even before you have identified a profitable foreclosure property, it is important to be prepared for the work ahead by obtaining a hard money loan. Obtaining funding for a fix and flip property is easier than you may think.
Orchard Funding is a hard money lender that specializes in loans for these type of projects. Hard money loans are asset-based loans through which a borrower receives funds using the property as security or collateral. The borrower may also use property that they already own as collateral for the loan.
The terms for a hard money loan are normally 6 to 12 months. In the past, there were hard money lenders who were shady and caused hard money lending to obtain a bad reputation. This is not so today.
Hard money lenders have bounced back better than ever and are providing loans for borrowers every day. People all over the country are receiving loans, flipping properties and living the lifestyle they always wanted.
Call Orchard Funding Today
Contact Orchard Funding for more information on funding for Fix and Flip properties . When investing in this business, it is important to have a professional lender on your side.
If you’re thinking about buying a home that you plan to renovate, Orchard Funding can give you a fix and flip loan. Our underwriting process is easy, and we can approve you in 24 hours or less.
The application process is straightforward and so cases no appraisal is required. If you’re thinking about getting a fix and flip loan, call (310) 356 – 7373.