Without a doubt, Houston Fix & Flip Loans are the most popular. Houston remains the hottest Investment Property areas in the US. Much of the current opportunity is the result of Hurricane Harvey. Ranked as the Best Fix-and-Flip Loan Markets, it gives Houston Real Estate Investors an advantage.
The practice of fixing-and-flipping houses has skyrocketed since the end of the recession. Creating a record level demand for fix-and-flip loans and an excellent business opportunity for brokers.
The Houston real estate market, demand for housing has risen, thanks to an improving economy and soaring rents that are forcing many families to buy instead of renting.
According to a Money Magazine report, increased demand for housing– along with a dearth of available homes for sale– has sent housing prices soaring.
This trend is spurring self-employed investors to pursue Houston home flipping opportunities in dozens of cities across America.
According to Money, the average flipped house, for instance, has never been smaller. However, there is still substantial money to be made. Realty Trac reports that the average gross profit for flipped properties was almost $63,000 in 2016. Nevertheless, securing the capital to fund a home-flipping strategy can be challenging for some investors.
Due to the housing shortage, Houston Rental Property Loans are in huge demand. Many Houston fix-and-flip investors don’t qualify for traditional bank loans because their income can be seasonal or irregular. Moreover, most banks offer longer-term loans that typically require more time to close.
Flippers generally acquire, renovate, and sell their properties within a few months. So, waiting for a loan to close could translate into a lost opportunity for flippers.
Although Fannie Mae does provide a Home Style renovation mortgage program for 1-unit investment properties. It’s difficult to find a bank that offers the program.
And, while crowdfunding websites offer loans to experienced flippers, approval rates for submitted deals run around 5 percent, are limited to only a few markets, and charge interest rates from 10 to 14 percent.
Finding the right loan can be tough. One of the most knowledgeable Houston Hard Money Lenders is Unlimited Mortgage Solutions. Since bank loans are hard to find, flippers often look to alternative lenders as a source of funds.
Alternative lenders can include Houston hard money loans from private investment groups, as well as specialty finance companies. These concentrate on residential investment and commercial property loans.
Hard money lenders Houston have lower qualification requirements and can typically close loans in a shorter period. However, investors pay for these luxuries with significantly higher interest rates, in the neighborhood of 10 to 20 percent.
With no appraisal, the value of the property and the loan amount could be somewhat arbitrary. Moreover, Houston hard money lenders usually tack on additional fees making the total cost even higher and their LTVs are typically capped at a conservative 75 percent.
Together, the higher interest rates and fees take a bigger bite out of the profits for fix-and-flip investments financed with hard money, while the lower LTV forces borrowers to provide a larger down payment.
As a general rule, it’s best to use Houston hard money loans if the property must close within a few days and when borrowers can’t arrange alternative financing.
For most flippers, a specialty finance company like Unlimited Mortgage Solutions is typically a better option if a slightly longer time to close (14-21 days) is possible.
The interest rates and fees charged by specialty finance companies are substantially lower than a hard money lender, so the borrower earns a higher return on their investment. Additionally, some specialty finance companies offer higher LTVs up to 75 percent. At Unlimited Mortgage Solutions for fix-and-flip investments, so the borrower has a lower down payment.