Qualifying Tips for Selecting Your Next Fix-and-Flip Property

Making a profit on a fix-and-flip investment requires that a lot of things get done right the first time, and that includes qualifying the property you want to buy. Anchor Loans is ready to finance your next fix and flip property as the nation’s top lender.

 

When qualifying a potential home for a re-hap, consider these three criteria:

 

* Is the property in my target neighborhood?

* Is it in satisfactory condition?

* Is it an outlier in any way?

 

Let’s look at each in a bit more detail to ensure you get the best outcome from your financed flip.

 

Target Neighborhood.

 

First of all, if you don’t have a target neighborhood that you focus on then your results are likely to be as random as the places you look. Having a target neighborhood allows you to build up a level of expertise, contacts, and that “keen eye” that gives you the edge you need to make money or out maneuver potential bidders. So be sure the property under consideration is in your personal neighborhood “zone of competence.”

 

Also make sure that neighborhood isn’t twenty miles from where you work or live.  Sure, maybe you “used to know” the neighborhood.  But if you don’t go there much anymore, someone who does will beat you to the best deals.

 

Satisfactory Condition.

 

Look for quick and obvious negating factors to eliminate a fix-and-flip candidate. These include (but aren’t limited to) things like fire and/or water damage, lead paint or asbestos, foundation or termite problems, and aluminum wiring or collapsed roof. Sure, you could fix these things.

 

But why take on that added challenge when your goal is to fix and flip that property quickly.

 

Avoid the Outlier.

 

People tend to gravitate a particular neighborhood because it conforms to a certain image or expectation.  If you end up picking a property that falls outside that expectation, go ahead and add a few more months of carrying costs to that investment, because your property is likely to sell a lot more slowly. Ask yourself if that “great deal” is because there’s some sort of unusual architecture or lot configuration relative to other homes or the area. Or if it is because the house is too large or two small, or the inside layout is too different, or the street is a lot busier than most, or it’s the only house near power lines. Yes, being unique can add value to a painting or a piece of jewelry. But when it comes to quickly extracting profit on a fix-and-flip investment, stick to the local script.

 

Ready to finance your property with the nation’s top fix and flip lenders? Anchor Loans has funded more than 13,900 short-term loans totaling over $4 billion — the majority of them to borrowers with less than perfect credit and on properties in need of repair. Click here to apply for a loan or get a quick estimate.

 

27 Markets Saw Double-digit Home Price Increases in 2016

Fix-and-flippers will be interested to know about some newly released data from Realtytrac and Attom Data Solutions around home price increases.

 

Out of 201 metropolitan statistical areas they looked at (those with populations of at least 200,000 and sufficient home price data), 179 (or 89 percent) posted a year-over-year increase in home prices in 2016.

In addition, 27 metro areas (13 percent) posted double-digit year-over-year percentage gains, including:

 

* Tampa-St. Petersburg (up 14.0 percent)

* Denver (up 11.3 percent)

* Portland (up 12.1 percent)

* Orlando (up 10.1 percent)

* Jacksonville (up 12.9 percent).

 

Curious which markets had the highest median home prices?  They were:

 

* Manhattan New ($1,400,000)

* San Francisco County, California ($1,175,000)

* San Mateo County, California ($1,075,000)

* Marin County, California ($950,000)

* Santa Clara County, California ($860,000)

 

Not surprisingly, strength in the overall market in 2016 led to distressed sales falling to a nine-year low, and a record high in foreclosure sales to 3rd party buyers.  All of this resulted in a nine-year high in average home sale profits of 21%.

 

To see their full 2016 analysis, you can find it here on Realtytrac.com.

 

Ready to finance your next fix and flip property?  Anchor Loans has funded more than 13,900 short-term loans totaling over $4 billion— the majority of them to borrowers with less than perfect credit and on properties in need of repair.  Click here to apply for a loan or get a quick estimate.

 

Tap Others in Your Network to Get Fix-and-Flip Leads Faster

Finding your next fix-and-flip property doesn’t always need to fall squarely on your shoulders.  In fact, successful fix-and-flip businesses build a team of experts into their network that become their “eyes, ears, and feet-on-the-ground” when it comes to discovering the next great opportunity.

 

What does this network look like?  Well, it can include the following:

 

* Realtors

* Appraisers

* Realtors

* Appraisers

* Lenders

* Inspectors

* Lawyers

* Accountants

* Contractors

* Courthouse clerks

* Builders

* Developers

* Other investors

* And even local residents in your target neighborhood

 

Having these resources on your side can be a great, low-cost way to generate leads.  In addition, your network can tip you off to a potential deal before anyone else finds out about it.  When you combine that with quick and easy financing from a trusted source like Anchor Loans, you will begin to pull away from your competition.

 

Top Criteria to Consider when Targeting Your Next Fix-and-Flip Neighborhood

Experts agree that targeting several key neighborhood criteria can lead to more successful fix-and-flip deals.  One of them is focusing on the right neighborhoods given your own personal location and intentions.

 

Here are several targeting items to consider:

 

* Proximity to your work and home – the closer the better.
* Selling prices – are they in a range that you can capitalize on?
* Sales activity – no sales for others could mean no sales for you.
* School district – unless all your buyers don’t have kids, pay attention here.
* Asking prices – when you are buying, the lower the better.
* Style of home – out of date can mean out of market.
* Construction materials – the better the inputs, the better the outputs.
* Square footage – it’s the ratio that matters relative to the neighborhood.
* Number of bedrooms and bathrooms – know the norm for the neighborhood and be careful not to fall short.
* Presence of basement – if people expect one, have one.

 

In addition, here are some additional key areas (from MLS information) to fold into your targeting calculations:

 

* Price per square foot – be in the fat part of the bell curve, not on the edges.
* Property taxes – it’s relative, but understand what people are getting.
* Year built – older homes typically offer better flipping potential, but not with asbestos.
* Days on the market and days to sell – the lower the better.
* Features and Amenities – the more the merrier.
* Neighborhood school ratings – bad ratings can dampen your return.

 

Finally, everyone is concerned about safety and neighborhood appeal factors in their targeting efforts, including:

 

* Established reputation – a bad reputation normally leads to a bad ROI.
* Clean and well kept yards – why work hard if the neighbors around you won’t?
* Low crime rate and good starter homes – if people don’t feel safe, your investment won’t feel safe.
* Close to schools, shopping, mass transportation, business centers, and parks and recreation.  Of course!

 

Net-net, if you are looking at fix-and-flip properties with these considerations in mind – your chances of success have just gone up.

Fix-And-Flip Financing FAQ – Your Top Four Questions Answered

If you are looking to scale up your volume, snap up quick deals and increase your ROI, short-term fix-and-flip financing may be the right choice for you.  At Anchor Loans, we get asked a lot of questions about flip financing projects, and below are four that we probably hear most often.

 

1) Borrowing money means more project overhead. Won’t that lower my ROI?

Fast, reliable funding opens new doors of opportunity and greater access to bargain properties. In an industry where “cash is king,” the savvy fix-and-flip investor will find that the cost of borrowed capital can be well worth the leverage benefits.

 

Flip Financing Example

2) What is fix-and-flip financing and how is it different from a standard bank loan?

Fix-and-flip or “private direct” financing is a short-term loan secured by real estate. Sometimes referred to as “hard money,” these loans are funded by private investors and typically feature higher interest rates (and lower qualifying restrictions) compared to bank loans. The borrower makes monthly interest-only payments followed by a balloon payment at the end of the term when the rehabbed property is sold.

 

3) Aren’t private loans expensive?

A private direct loan typically carries a higher interest rate than a conventional bank loan, but it also comes with benefits a bank loan doesn’tlike higher leverage, funding for renovations, easy qualifying and no red tape.  An experienced flipper with a successful track record who needs cash in hand in under two weeks can offset the cost of a private direct loan with the enhanced ability to compete for bargain properties—as well as faster project turn-around times.

 

4) I need funds right away. Can I really get a fix-and-flip loan in a matter of days?

Yes. While a conventional loan takes up to 45 days to fund, a reputable private lender can fund a qualified borrower’s loan in 5-10 days.

 

Interested in faster loan closings, lower risk, and growing your fix-and-flip business?  Get our free step by step Fix-and-Flip Borrowers Guide for driving ROI and growth.

 

Ready to finance your next fix and flip property?  Anchor Loans has funded more than 16,000 short-term loans totaling over $4.9 billion— the majority of them to borrowers with less than perfect credit and on properties in need of repair.  Click here to apply for a loan or get a quick estimate.

 

Getting Loan Approvals for Distressed Properties and Lower Credit Scores

 

Do you need to quickly get a loan approved for a distressed property but also have a lower credit score?  A private direct lender that specializes in fix-and-flip financing recognizes the potential After-Repair Value (ARV) of distressed property and can quickly approve and disburse the funds you need to purchase and rehab a property you have under contract. This access to fast financing is critical when the ability to quickly close a sale can set your offer apart from other buyers.

 

For example, if you are a fix-and-flip investor with a 620 credit score, a conventional bank loan is not a likely financing option for you next flip project. Before even considering the value and condition of your subject property, a conventional bank will regard your credit worthiness as the main priority in their lending decision.

 

Unlike a bank, a private fix-and-flip lender can approve you with credit challenges because the underlying property serves as security for the loan.  Subject to approval, additional real estate the borrower owns can also be used to secure a private fix-and-flip loan.

 

Interested in faster loan closings, lower risk, and growing your fix-and-flip business?  Get our free step by step Fix-and-Flip Borrowers Guide for driving ROI and growth.

 

Ready to finance your next fix and flip property?  Anchor Loans has funded more than 13,900 short-term loans totaling over $4 billion— the majority of them to borrowers with less than perfect credit and on properties in need of repair.  Click here to apply for a loan or get a quick estimate.

 

Anchor Loans Fix-and-Flip Borrowers Guide is Now Available

 

Interested in faster loan closings, lower risk, and growing your fix-and-flip business?  Get our free step by step Fix-and-Flip Borrowers Guide for driving ROI and growth.

 

According to real estate data cruncher RealtyTrac, the average return on investment for U.S. house flips grew from 20% in 2011 to 35% in 2015—with many markets averaging well over 100% ROI.  While you’ve enjoyed success through multiple rehab projects, you may find it challenging to fund the expansion of your proven business model—especially if the bulk of your capital is already tied up in ongoing projects with competing demands.

 

Fix-and-Flip Guide

  • Find out how terms, setup and structuring of hard money loans can advantage your business.
  • Compare the advantages of hard-money lending over traditional bank financing.
  • Find out which borrowers and projects lend themselves to hard money financing.
  • Understand the financing application process and borrowing requirements for hard money lending.
  • Learn how interest rate, term, loan-to-value requirements, time to closing, and points, fees and closing costs can differ between hard money and bank financing.

 

This guide includes real-world examples on how to improve your profit margins by taking advantage of loan options while focusing on delivering great properties.

 

Learn how to improve speed and ability to scale to significantly increase profit margins by managing multiple projects with lower risk.

 

Get your free copy of our Fix-and-Flip Borrower’s Guide and learn how to improve speed, scalability, and increase profit margins by managing multiple projects with lower risk.

 

Anchor Loans Surpasses $4 billion in Total Loan Originations to the Fix-and-Flip Market

 

As the nation’s largest direct private money lender to the “fix-and-flip” industry, Anchor Loans is pleased to announce that we have surpassed $4 billion in total loan origination volume since our inception over 18 years ago.  This milestone is in addition to crossing the $1 billion dollar mark for loans in a single year in 2016, which as far as we know is a first for our industry.

The Nation's Largest Lender to the Fix-and-Flip Industry

 

Given the extremely fragmented nature of lenders to the fix-and-flip market, where substantial numbers of small local firms fund between $5 million and $50 million per year, our attainment of over $850 million in assets under management is helping to significantly expand the number of loans we’re making, which already totals over 13,800.

 

Since 1998 we’ve shown exceptional performance, and 2017 looks to be no different.  Our experience, relationships and proprietary Fintech platform set us apart from other lenders in our ability to rapidly evaluate, underwrite and fund loans, typically in as few as 3-10 business days.

 

About Anchor Loans

With over 18 years of experience and $4 billion in total loans originations, Anchor Loans is the nation’s largest fix-and-flip lender.  In 2016 alone we originated over $1.1 billion in loans to the fix-and-flip market.  Interested in applying for a loan or getting a quick quote?  Just click here.

 

Looking for a flip-worthy house? Here are 6 “must haves” to consider

Finding the right house to fix-and-flip requires a variety of strategies and tactics ~ researching and canvasing your target neighborhood, looking for foreclosed properties, and leveraging your network of real estate agents or contractors to name just a few.

 

But what should you start to consider once you find a potential opportunity?  Below are a few highlights from Forbes and Trulia on “must-haves” for important rooms in the property:

 

1) Basements and attics – give serious consideration to passing on homes with big anticipated costs (e.g. crumbling foundations or bad electrical wiring)

 

2) Dining rooms – Focus on versatility and utility (be careful not to close out certain buyers because of a “too focused” design)

 

3) Kitchens – think big, but feasible (for example, where can and can’t you cost effectively knock out walls)

 

4) Bathrooms – think about adding or enlarging (most want at least 1 and a half)

 

5) Living spaces – finishing touches and small updates in foyers, dens, or living rooms to create clean lines can be just what you need

 

6) Living rooms – look for hardwood floors, and note that it may be hidden under that old carpeting

 

To read the full article and get additional great advice, click here.

 

About Anchor Loans

 

With over 18 years of experience and $4 billion in total loans originations, Anchor Loans is the nation’s largest fix-and-flip lender.  In 2016 alone we originated over $1.1 billion in loans to the fix-and-flip market.  Interested in applying for a loan or getting a quick quote?  Just click here.

 

 

WSJ Says House Flipping Makes a Comeback as Home Prices Rise

According to the Wall Street Journal, this is a great time to be in the house flipping business.  That’s because the number of investors who flipped a house in the first nine months of 2016 has reached levels not seen since the “pre-crisis” 2007 days.

 

One great indicator of this momentum? A third of all deals are being financed with debt, a percentage not seen in eight years.

 

Recognized in the article as one of the beneficiaries is our own Anchor Loans, which has received more than $220 million in new credit facilities and is on track to originate $1.1 billion in loans to real-estate investors in 2016, up from $713 million in 2015.  Anchor’s accomplishment in eclipsing the $1 billion loan origination barrier in a single year is an industry first, and yet another strong sign of the times.

 

All of this is a big change from the early days of the financial crisis, when big banks were reluctant to fund house flipping opportunities.  But with today’s improved market conditions and housing pricing, our CEO Stephen Pollack put it best, “For the first time in our history, we actually have enough money to lend.”

 

To read the full WSJ article, click here.