How To Buy Property Using Hard Money Loans

How To Buy Property Using Hard Money Loans



How to​ Buy Property Using Hard Money Loans!
There are different standards and strategies that real estate investor’s use when evaluating properties .​
In order for us to​ get involved with a​ property,​ the​ following standards are judged for the​ worthiness of​ any rehab project:
You should look for the​ worst house on​ a​ decent block
1) Whether your strategy is​ to​ flip properties,​ or​ to​ hold them for their rental cash flow,​ it's important to​ be able to​ draw potential buyers,​ or​ strong potential tenants,​ as​ quickly as​ possible .​
With this in​ mind,​ you​ should look at​ properties on​ streets that are maintained properly .​
This does not limit you​ to​ higher end homes .​
There are many blue collar areas that properly maintain the​ condition of​ their homes and yards .​
However,​ a​ street that has poorly maintained properties or​ many vacancies do not lend themselves to​ fast turn around sales or​ well suited tenants.
Always remember that this is​ an​ investment .​
You take on​ a​ large risk,​ and a​ lot of​ work as​ a​ rehabber .​
No matter how much loving care you​ put into your property,​ you​ can do nothing about the​ condition of​ your neighbor's property.
2) Make certain that there is​ no structural damage to​ the​ property .​
This could be a​ fatal blow to​ your investment!
You make your money when you​ buy a​ property,​ not when you​ sell it!
Purchasing Formula
There are many formulas used for the​ successful purchase of​ a​ rehab project .​
It's important to​ use one .​
There must always be a​ comfortable cushion between the​ purchase price and the​ selling price of​ investment property .​
This cushion price will help you​ achieve a​ successful investment,​ even if​ you​ have repair cost over-runs,​ or​ hold on​ to​ the​ property longer than you​ had anticipated .​
Remember,​ every day that the​ property is​ not sold or​ rented comes right off your bottom line .​
The interest,​ taxes,​ insurance,​ and utility bills compound each day .​
Buying the​ property at​ the​ right price will protect you​ from Murphy's Law.
Our Funding formula:
1) Establish an​ after repair value for your property.
(Get area comps and view each one .​
Pick out the​ property that has a​ street that is​ most similar to​ your house's street,​ and a​ structure that is​ closest to​ your house's structure,​ and then compare the​ square footage,​ amount of​ bedrooms and bathrooms that are all listed on​ the​ comps .​
This will help establish a​ real fair market value for your property).
2) Multiply the​ ARV x .65 (After Repair Value)
(This will give you​ 65% of​ the​ ARV).
3) Establish a​ comprehensive and accurate list of​ repairs that you​ plan to​ do to​ the​ property,​ and estimate the​ costs for each repair.
(This is​ important .​
If you​ are knowledgeable and experienced in​ doing repair work,​ you​ may not need help .​
If you​ are not experienced or​ skilled in​ this,​ find someone who is​ and have them draw up a​ plan .​
Even if​ it​ costs you​ a​ little money to​ get them out there,​ this could save you​ thousands of​ dollars).
4) Subtract the​ cost of​ repairs from the​ 65% value of​ the​ ARV .​
(After Repair Value) This should be the​ maximum price that you​ pay for the​ property! This is​ a​ conservative formula,​ and it​ usually works well .​
Remember,​ anyone can buy a​ property at​ close to​ fair market value,​ but with your costs and risks,​ you​ must do better!
Written by Jim Olivero




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