I%26#039;m planning to %26quot;flip%26quot; a house in the midwest, but I%26#039;m not sure how to go about financing. I plan to purchase the house for $130k, spend $20k in repairs, and sell for $160k. I would need to finance the purchase and repairs.
1) I don%26#039;t know what type of loan to go with
2) I don%26#039;t know if it%26#039;s better to go to a bank, like National City, a financing company, like CitiFinancial, or a different type of company...|||You need to re-think your numbers a little. If you finance a $130K loan, the cost is going to be several thousand dollars. You are talking about a high risk loan so expect to pay a few points at closing also, if you can get a loan. Check with all of the above until you find a mortgage broker that you are comfortable working with. However, this property in particular may not be well suited for a rehab. If there is only a $10K spread on a $150K investment, I would be extremely careful. You need to consider ALL of the costs. How will you sell the property? What if it doesn%26#039;t sell right away? The loan service on a $130K loan will be $1,000 per month or more (depending on taxes and insurance). If you sell the house quickly, say 4 months to rehab and flip, that would be $4,000 of your projected $10K profit. What if it takes an additional 6 months to sell?
Best of luck to you.|||If you can%26#039;t afford to pay cash for the investment, then don%26#039;t do it.
Also, if you don%26#039;t know what type of loan you might go with or type of bank to use, then you need to spend more time learning about finance.
Third, if all you are going to make is $10,000 it is more than likely the interest on the loan will be greater than that and you will end up losing money.|||the best is go yo a financial consultant
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