Creating a Flipping Business Plan
If you’re just getting started in real estate creating a business plan can be helpful. Even if you’ve been flipping houses and investing in real estate for a long time, going back and creating a business plan or revamping your original plan could prove wise. In the very least, the plan helps outline your business, provides direction and can even help clarify and put meaning to why you’re in business. When you get stuck or lost, the plan can be a great tool to revisit. We’ve put together a brief outline of items you might want to include in your home flipping business plan.
- A Mission Statement. On a deeper level this may touch on your purpose or what they now call in business your, “why.”
- Summary of Objectives. This might include what it is you aim to do, or problem you aim to solve and/or what your goals are for your business.
- Leads and Sales. This section might include a brainstorm of ideas for how you plan to generate and follow up with leads as well as manage leads through the sales pipeline. This includes leads for both the properties themselves as the buyers once you’re ready to sell the properties.
- Timelines. You might consider thinking about how much time you’ll spend or already do spend buying, fixing and selling the property. Once mapped out you may see room for improvement!
- Budget. This is a no brainer. However, sometimes business owners forget to include things like marketing and advertising budgets. Remember to consider these areas as well as the cost of property and renovation costs.
- Funding. List out any and all funding resources.
- Exit Strategy. This one is huge because investors will want to see it. Your exit strategy outlines how you plan to get out of the property. (Usually selling.)
Carve out time to complete your business plan so it’s ready to go when an investor requests it. This will save you time and money! For additional information on real estate investing and private lending please contact our loan specialists, Michael Barker. MBarker@LendSomeMoney.com or reach out via our website chat feature!
One Where, Everyone Wins
We want to help fund your investment projects. So, we’re sharing key insight on what lenders look for when striking a deal. Remember, if the lender doesn’t see the value, then it’s a good indicator that you might want to think twice about the viability of making money on that project too! Here’s what makes a good deal through the eyes of the lender:
The down payment compared to the purchase price – The more the merrier in terms of what you have to contribute. When investors are seeking 100% financing it raises a red flag for lenders. It’s to everyone’s advantage for both parties to have some skin in the game. Additionally, it motivates each party to move the project along.
The renovation cost compared to the purchase price – A good rule of thumb is not to exceed 50% of the purchase price. From the lender’s prospective the collateral for producing an asset-based loan should have value throughout the entire project. The scenario both parties want to avoid is: an investor attempts a complete gut or tear down of a property, and then can’t finish the project, the lender has to attempt to sell a property that has less value then the loan amount. Smaller projects also pose less risk for those new to investing.
The overall condition of the property – As the lender we’ll evaluate the property from the following point-of-view, would we like to live there ourselves? Not only do we look at the condition of the home but we consider the neighborhood in terms of location and safety. These are questions you should ask yourself too. Remember, even if the end goal is to rent the property, the lender still has to consider its ability to be sold in the event that the investor defaults on the loan.
Location – You’ve heard it before but we’ll say it again; location, location, location. Properties near/on water are the easiest to fund. Properties in major cities are also easier to fund simply because the market is larger making it easier to unload a property and finally, due to the fact that the values of the homes in these areas are typically higher.
We acknowledge there’s many other factors. However, keep these four things in mind as you search for your next investment property. Then, keep us in mind as your private lender! Questions? Contact us today, we’re available by phone (860.670.4309), email or live chat.
Lend Some Money is Now a Direct Lender
What does this mean and how does it benefit you? Take a look at some of the advantages provided to you by working with a direct lender versus a mortgage broker.
- Relationships – Our customers matter and we strive to build relationships that lead to more lending. Meaning, we’ll prove ourselves to be a reliable partner you can trust for each and every transaction.
- Access – Using a direct lender means you deal directly with the source of your loan and with our loan officer and no one else.
- Savings – By being the originator of the loan, LSM can save you money during the loan process.
- Time – Time is money and we want you to have both. Direct lending is the fastest route between loan application and closing.
In order for us to make a deal we are looking for applications which:
- Start at 75K
- FICO Minimum of 620
- Renovations are half the purchase price or less
Our loan expert, Michael Barker is on standby, waiting to hear from you. Visit our website to chat with him or call/text: 860.670.4309 today!
A message to brokers. We understand the value of your role! This is why we have a strong focus on our relationships with the brokers we work with, offer broker protection, and work expeditiously with you so you can deliver the same service to your clients.
Quick Loan Approval
We all know that hot properties move quick. Sometimes they sell before they’ve barely hit the market or spend less than a day on MLS. What should you do when find yourself scrambling to scoop up a property other people are interested as well? First, you’ll need to make sure you’ve got a partner that can provide you quick and reliable financing so you don’t have to worry about missing out on the investment.
We spoke last month about the average time it takes to close on a loan. Two weeks, but what if you don’t have two weeks to wait around to see if you’re financing will pull through? One thing that can help is by building a rapport with one lender. At Lend Some Money, we can close on loans faster with those who have borrowed from us in the past. Some of the reasons behind this are, because we know the investor has experience and we likely already have their credit, background and LLC information on file.
Additionally, the hotter the property and the more potential the investment has, the easier it is push the deal through and to close at a quickened pace. We also mentioned last month that who you choose to use for the appraisal can help get a little more time on your side. By using a lender, verified appraiser you know you’ve partnered with someone who understands that the turnaround time needs to be immediate.
When you think about building your investment business, carefully consider who is on your team. Starting with trusted partners from the beginning can help move your career along smooth and faster. Our goal at Lend Some Money is to earn your trust and help you do business over and over again. Contact us today, let’s chat and get this party started!
It’s a Done Deal
Plus, Insider’s Tip
Ever have a deal get denied with no explanation as to why? Do you find it confusing when some of your deals are pushed through no problem while others seem to struggle down the pipeline? If you’re a newer investor maybe you’ve simply never been educated on the qualities that make an attractive deal. Here are five things that Lend Some Money looks for when presented with an opportunity.
- Asking for a loan of at least 75K.
- A credit score of at least 620.
- This includes: contracting, wholesaling and of course, investors who have previously bought, renovated and resold property. In addition, those who hold property for rental purposes are considered to have experience.
- Hard money lending deals with cash. It’s ideal if you understand the value to having money to bring to the table in addition to the cash you borrow.
And last but not least; location, location, location! Properties in metropolitan areas, by water and in well-kept neighborhoods make an application appear more attractive. This is because the resale opportunity is likely higher.
If you’ve got a deal that meets the aforementioned qualities then let’s work together! If you’re not quite there yet, don’t worry! Contact us today and we’ll help education you on the necessary steps to take to become a lenders ideal customer.
Insider’s Tip: In addition to getting your deal accepted, everyone wants a quick close. The industry standard is two weeks although, most loans will require a longer amount of time. The reason is for that is usually due to the appraisal process. It takes time to obtain, process and deliver. One work-around is by having a property in a hot location, or an area where we’re able to used preferred appraisers. Our preferred appraisers move fast and understand the important of an ARV appraisal. Which helps us cut down time and close faster!