Are you aware that in Q1 of 2019, close to 50,000 houses were flipped? During the past few years, the percentage of flipped houses that have been turned into home sales has been gradually increasing. Also, the average gross profit for every house flipped has from $60,000 to highs of $68,000 in different periods.
As the data suggests, house flipping is a lucrative venture if done well. Real estate investing is capital intensive, and self-funding your enterprise might limit your growth. This is why many seasoned house flippers rely on hard money loans.
Atlanta hard money lenders can help you scale your business. However, to access the most suitable hard money loans for your fix and flip, here are some things you should ask your lender.
How Long Have You Been Issuing Hard Money Loans?
Due to the increase in popularity in house flipping, more fix-and-flip institutions offering their services are popping up all over the place. Keep in mind, however, that it is better to work with a lender with sufficient experience in hard money lending than the cheapest option on the market.
First, you should ensure that the hard money lender is licensed. Check for their license ID on their website, promotional materials, or simply ask for it when you chat with the agent. With their license ID, you can find additional information such as disciplinary cases against the lender on the state website.
Though lucrative, fixing and flipping a home is not straight forward. Even if a lender is licensed and has no disciplinary cases, the level of experience they bring on the table is essential. Always invest in Atlanta hard money lenders that have the requisite experience, networks, and partnerships to support you. By leveraging your lender’s experience, you can mitigate risks and avoid potential pitfalls.
Are You the Direct Lender or Do You Sell the Loans?
Loan processes with hard money lenders are often fast and smooth. However, some hard money lenders do not have the resources to finance loans in house. They work with other funding sources or sell your loan as a third party.
In such a case, you will not be working directly with the company funding your loan. Worse yet, a company that is not local may not understand the local real estate market dynamics.
When taking a loan, it is important to know the philosophy of the lending institution. Are they consumer-centered or all about business? Such insight lets you know what they will prioritize when issues arise.
What Happens if the Fix and Flip Process Takes Longer than Expected?
With fix and flips, always expect the unexpected — especially during the renovation stage. It’s not uncommon to find out that there are issues with the electrical system or plumbing that need urgent fixing.
You must find out how such scenarios are handled while applying for hard money loans. Will the lender offer an extension or go for a foreclosure? If they offer an extension, how long will it be, and what will be the terms?
In Atlanta, the average interest on hard money loans is 13.3%. In addition to having a keen eye for spotting opportunities, it is essential to identify a lender with a friendly interest rate and suitable terms. If you cultivate a strong relationship with them, you will be able to access financing for multiple projects at the same time and scale your business.
Are you ready to invest in a hard money loan provider you can trust? Rely on Hard Money Georgia for the best experience on the market.