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The home improvement shows on the cable tv channels are so popular a lot of people are considering buying investment real estate for the purposes of fixing and flipping it. Their reasoning is that you can make plenty of money when you buy low, make a few repairs, and sell high. The biggest hurdle to actually starting a real estate investment career is the lack of capital. It's hard to get approved for the fix and flip loans Seattle investors initially need. If you are determined to try this, you'll have to think outside the box.
After you have found the house you want to buy, renovate, and resell, you have to figure out how to pay for it. There are basically four parts to the loan you need. The first is the purchase price. You will need twenty to forty percent down payment in cash.
Your loan will have to cover holding costs, like homeowners fees and insurance, during the time the property is being renovated. The building supplies and materials have to be covered, as well as the cost of labor. There will be closing costs and a commission paid to the Realtor.
Because getting approval for the funds from a traditional source is difficult, you will have to think of something a little more creative. If you're flipping real estate for the first time, you could bring your project up to friends and family, offering them a part in your venture in return for loaning you the money you need. If you get a personal loan like this, everything needs to be in writing, including how long you have to repay your creditor and what the interest rate will be. The majority of the time, borrowers do not make payments while the renovation is taking place. They begin repaying the loan, with interest, after the house sells.
When you have some real estate and construction expertise but are cash poor, you might need a money partner. That way you can concentrate on the real estate negotiations, remodeling details, and the resale. Your partner will provide the funds. This is a great plan as long as both partners live up to the agreement.
If you are a homeowner you may be able to get a home equity line of credit. You will need about twenty percent equity in the house, and it has to be your primary residence. The line of credit lets you use the money as you need it.
The only interest you pay is on the money you actually use. Most lenders will loan up to eighty-five percent of the home's value after deducting the outstanding balance. This often is not enough to complete a project. If it is not, you will need another financial resource.
Investors who have retirement savings accounts might consider borrowing from them. This is not recommended for flippers nearing retirement however. You may also consider a personal loan, if you don't need much money and are able to pay off the loan in a short period of time.
After you have found the house you want to buy, renovate, and resell, you have to figure out how to pay for it. There are basically four parts to the loan you need. The first is the purchase price. You will need twenty to forty percent down payment in cash.
Your loan will have to cover holding costs, like homeowners fees and insurance, during the time the property is being renovated. The building supplies and materials have to be covered, as well as the cost of labor. There will be closing costs and a commission paid to the Realtor.
Because getting approval for the funds from a traditional source is difficult, you will have to think of something a little more creative. If you're flipping real estate for the first time, you could bring your project up to friends and family, offering them a part in your venture in return for loaning you the money you need. If you get a personal loan like this, everything needs to be in writing, including how long you have to repay your creditor and what the interest rate will be. The majority of the time, borrowers do not make payments while the renovation is taking place. They begin repaying the loan, with interest, after the house sells.
When you have some real estate and construction expertise but are cash poor, you might need a money partner. That way you can concentrate on the real estate negotiations, remodeling details, and the resale. Your partner will provide the funds. This is a great plan as long as both partners live up to the agreement.
If you are a homeowner you may be able to get a home equity line of credit. You will need about twenty percent equity in the house, and it has to be your primary residence. The line of credit lets you use the money as you need it.
The only interest you pay is on the money you actually use. Most lenders will loan up to eighty-five percent of the home's value after deducting the outstanding balance. This often is not enough to complete a project. If it is not, you will need another financial resource.
Investors who have retirement savings accounts might consider borrowing from them. This is not recommended for flippers nearing retirement however. You may also consider a personal loan, if you don't need much money and are able to pay off the loan in a short period of time.
About the Author:
Get a summary of the things to keep in mind when taking out fix and flip loans Seattle companies offer at http://www.privatecapitalnw.com/fix-and-flip-rehab-loans right now.
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