Great news! It’s not hard getting hard money financing for flipping houses Philadelphia. You may be looking for a hard money loan, but know this: hard money lenders are also looking for you. We want to finance solid real estate investing deals. Here are four tips to help you make sure you can secure financing for flipping houses Philadelphia.
1. Have a good deal
To secure financing for flipping houses Philadelphia, you need to have a good deal. For example, find a rowhouse in Brewerytown where the neighboring houses have already been rehabbed and resold, and you might have a good deal. But if your deal is a similar rowhouse in Strawberry Mansion where the neighboring houses have not been rehabbed and you don’t have solid comps, are you really sure it’s a good deal?
Why not ask your mentor to look over your deal or meet up with a more experienced investor who would review your in exchange for a good breakfast. You could even get online in the BiggerPockets.com forum and ask investors from Philadelphia what they think about your deal. You want to be confident that you’re presenting a good deal to the lender.
2. Invest in your deal
You may have seen YouTube videos claiming you can invest in real estate with no money down, but in the real world, most private lenders are going to require you to put capital into the deal. Hard money lenders generally fund at a loan to value of 60%. The more capital you put into the deal yourself, the higher your chance of getting your deal financed. Be clear with the lender how you’re putting skin in the game: down payment, labour, rehab costs, project management. Be prepared to show that you have cash reserves, not just six months of PITI (Principal, Interest, Taxes, Insurance), but cash that can be used to pay for rehab overruns. If you’re short of capital to put into the deal, find a lender who accepts cross-collateralization (other real estate properties with serious equity).
3. Be professional
Securing financing for flipping houses Philadelphia is going to require you to be confident and clear when presenting your deal. It’s best to prepare a package that includes a one-page business plan, a detailed spreadsheet showing all your numbers, and, if it’s your first time approaching this lender, information about your flipping experience.
4. Follow through
The lender is going to want underwriting documents and you should aim to provide everything they ask for as quickly as possible. If the lender calls or emails you, be sure to be get back to them immediately. Even after your loan is approved, it’s really important that you follow your rehab plan exactly as you presented to the lender. In the bigger picture, you’re looking to build trust with your lender so doing what you say you’re going to do is critically important.
Follow these four tips and you’ll have a much better chance at securing financing for flipping houses Philadelphia.