Flipping a house for profit using a hard money loan, in its simplest form can be broken down into a 6 step process. If you play your cards right and follow a simple system you can make thousands of dollars every time you flip a house and do it in 3 – 6 months.
STEP 1: FINDING A PROPERTY
I’m not going to sugar coat it, the first step is the most difficult and time consuming. Here are a couple of tips to get you onto step 2. If you’re new to the Real Estate industry than I recommend consulting a Realtor. Leverage someone else’s expertise until you become an expert yourself.
Educate yourself on the real estate market in the area you’re investing. The ideal marketing conditions are fairly bearish, in simple terms this means there’s a high demand for real estate.
Last, you’re looking for a home with room for improvement; worn carpet, a distressed yard, and other things that can be repaired with little money and a little sweat. Look for a home where the average family in the area would be able to afford it. It will sell the fastest.
Flip a House means you’re moving quickly!
STEP 2: EVALUATING THE PROPERTY
Once you think you’ve got a property that meets the initial criteria for being able to easily fix it and flip a house you need to do a thorough evaluation. You’re evaluating the property for two things:
- Property Condition – Bring in an inspector, an expert that can determine if there are any major problems. Get a firm bid from contractors and go into it with your eyes wide open. Don’t fall in love with the property, do your due diligence.
- Property Price – Look for comparables, active listings and recently sold. For both active listings and properties that have recently sold, start with looking at the lowest price comparison. Start with the least expensive and work your way up. Don’t over value the property.
STEP 3: APPLYING FOR A HARD MONEY LOAN
You will need to get a loan that is at least thousands of dollars more than the property. The advantage of a Hard Money Loan through DoHardMoney.com is that the focus is on the merits of the deal and less to do with you credit history, available funds, etc… Not all Hard Money Loans and Hard Money Lenders are created equal. For a comprehensive breakdown on Hard Money Lending refer to our homepage DoHardMoney.com.
STEP 4: REHABBING THE PROPERTY
If you’re working with contractors put them on a strict time line. Be very specific in each bid – I recommend that you type the bid out yourself. Make sure there are no surprises for you or the contractor. In your agreement with the contractor, put in a bonus if they get the work done early and a deduction if they take too long.
STEP 5: RE-EVALUATE THE PROPERTY
With all of the rehab work done, the next step is to re-evaluate the property. This should mirror step 2, the initial evaluation. Be sure your evaluating for both Property Condition and Property Price.
STEP 6: LIST THE PROPERTY FOR SALE
As I mentioned previously in Step 1, leverage the expertise of others. List it with an agent. And just as important, list it for what the properly is truly worth based on the evaluations. Don’t inflate the price with the idea of it being negotiated down. Time is a major factor; you can’t sit on the house for a coupe of years. Get it sold as quickly as possible.
Follow these steps and you’ll see the results you’re looking for when you Flip a House using Hard Money Loans!