When you find the perfect home to flip, traditional banks aren’t usually as thrilled about your potential investment as you are. Most banks are unwilling to lend to house flippers because the properties the flippers are buying are too dilapidated or uninhabitable. Another issue that often stands in the way of receiving a standard bank loan is time — banks are rarely able to approve and issue a cash loan quickly enough to buy a flip house before someone else gets to it.
That’s why smart investors turn to residential private money lenders. A residential private money lender can typically get you a cash loan faster and with more flexible terms, but there are a few things to watch out for when obtaining a private money loan. Here are three of the most important factors to consider:
- Rate & ReputationResidential private money lenders invariably charge higher interest rates than traditional banks because private money lenders are willing to take on risks that banks are not. Typically, private money lenders put up their own private equity and offer a faster approval process than banks, so a slightly higher rate is inevitable. That said, be sure to consider not just the rate of your residential private money loan but also the flexibility of the loans terms and the investment of the lender in you. In other words, consider the numbers carefully, but also be sure to factor in whether or not your lender will work with you to secure the best possible investment properties or if they’re only interested in turning a quick profit.
- SpeedEvery experienced house flipper knows that time is of the essence. Choosing the right house in the right market is a delicate balancing act. Being able to act quickly is equally important. If you can’t purchase the home you’re interested in because your loan doesn’t come through in time, months of research and planning could go to waste. Be sure to look for residential private money loans that can be approved within 7 to 10 business days.
- ReliabilityPerhaps the most important consideration when choosing a private money lender is finding a company that you can rely on, a company with a solid track record of working with investors to maximize opportunities and provide sizeable loans quickly.
Zinc Financial has years of experience helping clients leverage their wealth for optimal investment success. With an annual ROI of 30-35%, we know what the best investment opportunities are and we’re able to help our clients capitalize quickly and effectively.
Call 559.326.2509 to learn more about our residential private money loan programs and get the financing you need to move forward with your next real estate project!