DD: 3 Must Haves Before Getting Your First Fix & Flip Loan

[Cole Simpson]

Daily Dose!

3 Must Haves:

1) You Still Need Cash

You won't be able to finance 100% of the purchase price and renovation costs in the vast majority of circumstances. To make the arrangement appealing to your lender, you'll almost certainly need a large sum of money. This holds true whether you're applying for a standard loan or a loan from a hard-money lender. 

2) It's Not Always Easy

If you have less-than-perfect credit and are new to the fix-and-flip business, you'll almost certainly hit some hurdles. These types of investments are considered dangerous by traditional mortgage lenders, banks, and credit unions, who shun them. This type of loan also takes a long time to complete, which could result in you losing the opportunity and having to start over. 

3) There is a Risk Involved

Investing in real estate is a dangerous business, even if you perform rigorous market research. There is no certainty that your property will sell, especially if you are selling it quickly. You should expect to lose money on a fix and flip deal, just as you would on any other investment. You can reduce some of the risks by getting guidance from other successful business people.

What other must-haves do you have in mind?