For many new investors, buying a property, renovating it and selling it for a profit is an attractive way to enter Massachusetts’ real estate market. But before you make an offer, you need a realistic plan for funding the project. If you find yourself asking, “How do I finance my first fix and flip?” exploring private lending options may be a good place to start.
Make Sure the Numbers Add Up
Look beyond the listing price. The purchase price, renovation work, permits, insurance, taxes, loan costs and the expense of holding the property until it sells should all be accounted for when making your budget. Research comparable homes in the area to estimate the property’s after-repair value (ARV). Then leave some extra room for unexpected repairs and delays.
Whether you’re considering a single-family home in the suburbs, a multi-unit building in Greater Boston or another property in Massachusetts, make sure the numbers make sense before you make a commitment. Having a solid budget in place can also help you secure funding from a potential lender.
The Private Lending Advantage for First-Time Flippers
A traditional bank may be reluctant to lend on a property that needs substantial repairs. Conventional lending timelines can also make it difficult to compete when sellers expect a quick closing. That’s where private, asset-based financing can be advantageous.
At The Raymond C. Green Companies, we provide short-term loans for real estate acquisitions and property rehabilitation. Rather than relying primarily on credit scores and other rigid criteria, we focus on the property’s value, available collateral and the strength of the investment opportunity overall. Our flexible loan terms offer borrowers a variety of options to fit their project’s scope, budget and anticipated timeline.
Because we fund and service loans in-house, we can make lending decisions directly, without waiting for outside appraisal companies or bank committees. We also personally inspect the properties we finance.
Come Prepared with a Plan
Even with the right financing, your first flip needs a clear strategy. Be ready to discuss the property’s purchase price, proposed renovations, contractor estimates, anticipated resale value and expected completion date. Plan for any cash you may need to contribute, since your fix and flip loan may not cover every expense.
Be prepared to explain your exit strategy. For most fix and flip investors, that means selling the property and using the proceeds to pay off the financing.
Let’s Talk About Your Investment
Your search for answers to “how do I finance my first fix and flip” ends here. The Raymond C. Green Companies has provided private real estate financing throughout Massachusetts for more than 50 years. Call us at (617) 947-8070, email [email protected] or contact us using the form here on our website to get started.
