The FIX & FLIP flipping is the process by which an asset like a house or building is acquired or to be re-sold in a short time. The FLIP is a lucrative business for many potential investors and that implies being able to generate a business process that involves the following phases:
- Locate and identify a property.
- Get financing to buy it.
- Generate the repair or rehabilitation process.
- Place it and sell it in the market.
The fix and flip is a financial scheme aimed at investors, builders and agents involved in the real estate business. This implies generating different options of access to capital for the different stages of the business: Acquisition and Construction.
The main financial products that are counted for this type of business are:
What Are The Keys To Getting Financing To Do Flip?
Key 1: Experience
Experience is key to getting investment financing for this business. An experience that can be proven through documents. When you do not certify experience, the financing conditions will be tougher, being able to obtain financing of up to 70% of the value of the property you want to buy and 95% of the value for repair.
When you certify an experience of between 1 and 2 successful businesses you can get financing of up to 70% of the purchase value and 95% of the repair value.
When you can certify an experience of 3 or more closures, you can get financing of up to 90% of the acquisition value and 100% of the repair value
Key 2: Team
The speed with which the business is done is very important in this business, so it is important to have a team designed for all phases of the business to function properly. This equipment should normally be made up of:
- Lawyers for contracts and titles.
- Real Estate Agent to market and sell
- Construction: For repair
- Mortgage: Prequalification and buyers
Key 3: Credit Construction
An important factor if you want to grow in this business is that you know how to take care of your personal credit and that you learn to build commercial credit. In the case of personal credit, the points you should consider are:
Fico Score: Worry about having your fico score as best as possible, from 640 you can have financing options. Remember the higher your credit score is, the better financing conditions you will have.
Here are the prerequisites associated with it:
- No bankruptcies: Not having bankruptcy proceedings in the last 3 years.
- No tax liens: You are not owing taxes in the last 3 years
- No judgments: Do not have pending judgments.
Key 4: The type of property.
- Properties not inhabited by the owner
- They can form a single family
- 1 to 4 families
- Multifamily up to 20 units
Strategic location: near schools, transport or in urban development areas.
Key 5: Exit Strategy
In the flip business, it is essential to have a clear exit strategy when acquiring the property. What is the exit strategy? Well, it’s clear about the repair cost, the repair time and how much is the resale amount. At the same time, if you are clear about the type of buyer, what are you interested in knowing the property?
So, that is all we have for you today. Stay tuned for more such articles on the real estate market.