Private Lending To Finance Renovating And Flipping
Have You Considered Using Private Lending To Finance Renovating And Flipping?
The market is in a situation where many properties are not being maintained properly and have not been for well over a year now and they will be starting to look very tired.
On top of that there are still many homes that are being sold because repayments cannot be made on the mortgage.
The combination of these two factors make many homes a viable option to purchase, renovate and flip (sell on).
You many think that this is a tough ask, but have you considered getting private funds to purchase the property and use it for six months or so?
Take the example where you go to contract on a house on 1 August with 60 day settlement and in that time plan your renovations so that when you take delivery of the house you can walk in with your work team and have the house renovated in 6 weeks.
At 4 to 5 weeks of renovation you get the house relisted ready to sell and hopefully sold within 6 months of purchase.
Sound easy? Well, of course there are some very important steps that you need to take.
- You must buy the right house that is going to have extra value once you have renovated – you must buy at the right price
- You must know how much the renovations are going to cost you, if they will be council approved and if you have the money for them before the property becomes unconditional so that ‘if in doubt, get out’ (clauses to this effect need to be in your contract)
- When arranging the finance with your private lender you want to make it either:
a. interest and capital repaid on sale
b. interest only until sale
c. interest only quarterly or half yearly
d. if you find a good funder they may like you to keep the money and go again on another property, in that case you could go for option ‘c’ without paying any principal
The idea is to find an investor who has trust in your ability to carry the project through successfully and the interest rate being offered would probably need to be better than any other option available for them in parting with the finances.
For more information on Flipping properties see 5 Stages of Flipping or Targeting Areas to Flip Properties.
I hope this helps and I would love to hear your comments.
Happy Investing.
Filed Under: Featured • Investment Strategies • Property Investment Tips • Renovations
About the Author: 
