Closing a deal on a fix and flip property requires knowledge of the property and access to fast capital. This is harder said than done in a competitive market where there’s likely to be several bids on a property. With no time to waste, you must put in a bid that is strong and convincing. The stronger your bid is, the more likely the seller is to accept it. However, there’s more to a bid than putting in the most money. We’ll explain how to successfully close a fix and flip deal so that you can be on your way to an even greater investment.
Get a Pre-approval
A pre-approval letter comes from your lender and verifies that you are able to acquire a loan based on your qualifications. To get a letter of pre-approval, your lender will need your credit score, the money you have to put down and your income. Some hard money lenders will write a “proof of funds” letter in place of a pre-approval letter. Either way, come with this document to show that you have the funds ready to go.
Know Your Profit Margins
Before you jump into a property, do your homework. It’s easy to get excited about an opportunity, but you need to put your resources into fix and flips that will give you a strong profit. To avoid offering too much for the property, ask yourself a few questions. How much rehab does the property need? How long will the repairs take to complete? What are the comps in the area going for? If your profit is thin, it’s okay to walk away from the property.
Have Access to Capital
If the seller accepts your offer, you’ll need immediate funds to close the deal. To show the seller that you can do this, find a lender that will give you this capital. Because there are many strings attached with conventional lenders, house flippers often work with hard money lenders. These lenders can typically fund loans within a week – sometimes sooner. The application process is even faster, usually a day or two. If you can close in 7-10 days, and another bidder can close in a month, you are likely to win the bid.
When you find properties that will turn a good profit, you must be ready to put in a strong bid. This can be done by working with a fast, reliable hard money lender like First Equity Funding. Not only do you get loans for buying properties but also for repairs and renovations. Call us today to learn more!