Are you ready to flip a house for the first time? Empower yourself to be a real estate investor and flip a house with hard money. Be conservative but be decisive. Be prepared with information and a network of people who know what you don’t, whether that’s market data, construction, or something else.
1. Know a Deal When You See One
You need to get really comfortable analyzing deals before you’ll know you have one, particularly since once you find one, you also need to act fast. Get intimately familiar with your real estate market, your favorite neighborhoods, your “farm.” A real estate license (or the help of a licensee) is generally required to do good MLS sales research in Texas.
Know your rough construction numbers backwards and forwards, either with your own experience or a General Contractor (GC) so you’re empowered to make offers that make good business sense.
2. Land a Deal to Flip
Now that you know a deal when you see it, next, find a deal so good that you would be crazy NOT to buy it. Hard money lenders like us will always lend on a property with 30% or more equity. So if it’s worth $1MM, buy it for $700k or better, including your construction budget.
On a good deal, hard money loans won’t even require any cash out of pocket. Your credit doesn’t matter to us – no, seriously it doesn’t. Find a great deal in Austin and we can make you a loan. It’s really that simple.
3. Be Decisive: Indecision is a Bad Decision
Don’t have paralysis of analysis: flipping a house isn’t an exact science. If you’re conservative with your numbers every step of the way, you may even make more money than you expect to. That’s a much better outcome than scrambling and worrying at the end of a project that’s gone way longer than expected.
Step 4 will help support your decisiveness as well…
4. Have Confidence in Your Builder (or Subs)
You need to have a good GC (or be one) to have a successful flip project. Hard money is expensive leverage. Be confident with your GC or subcontractors, particularly when it comes to time estimates. On a central Austin project where your hard money loan might be for $500k or more, a few unexpected weeks or months of interest expense at 13% adds up very quickly. Suddenly the time factor starts to matter as much or more as the cost of materials and labor.
5. Have (or Be) a Great Realtor
Most serious buyers are working with a Realtor and the MLS is still the best place to market your property. An experienced agent, especially one who works with buyers in your “farm” areas, can also be an excellent consultant for what buyers in the area are seeing/wanting. We also recommend our borrowers visit the competition for their flip projects. Unless you’re a licensed agent, you need one on your team.
What else is stopping you? Are you using these excuses so you “can’t” flip a house?
No Money? No problem, hard money loans are perfect for flipping a house. Yes, you can do your first deal with a hard money loan.
Contracts? See this for Texas contract basics.
Legal? Title companies generally handle everything for a hard money closing.
Insurance? All you need on a hard money loan is a builder’s risk policy for at least the loan amount.
Construction? See #4. Find (or be) a great GC.
Marketing? See #5. Find (or be) a great Realtor.
If you’re in the Austin area and you’re ready to start flipping houses, let us know!