New Funding Resources 
Private lenders believe that borrowers’ financial contribution to the house flip transaction makes loans less risky. By investing their own funds, borrowers demonstrate their ability to save and manage money. They also show their faith in the transaction and its profitability. Having “skin in the game” motivates borrowers to move fast, work hard and make responsible decisions.
At New Funding Resources we fund the lion’s share of what’s needed to buy and rehab a property. However, it’s not uncommon for the new investors to struggle when coming up with their own share of the funds. Some have little in reserves and need to save more before becoming real estate investors. Others have some seed capital, but still might fall short of what’s needed. For that group, bringing in partners who can contribute the rest of the funds might be the right solution. However, before you run out to find such partners, consider these three mistakes. They will not only complicate your foray into rehab business, but also cause a havoc in your relationships with your partners.
Hard Money Blog: Invest, Revitalize, Create, Prosper
Pulling Permits for Your House Flip: Things NOT to Do
When planning construction costs for your house flip, you need to decide in advance whether you need a construction permit or not. Pulling permits requires opening your property up to an inspector who might ask you to bring many areas of your home “up to code.” This adds extra expenses to your renovation. On the other hand, not getting a permit might result in retroactive changes to the areas you’ve already completed. As the result, not only your costs increase, you might also experience major delays. One of the worst mistakes a rehabber can make is to plunge in the house flip process without carefully considering whether to get a construction permit or not.
Estimating Rehab Costs: Things NOT to Do
Investing in real estate is a fantastic way to supplement your income or to build long-term wealth. Like with every other business though you’ve got to keep your eyes on the profit. When estimating rehab costs you need to account for three major components: the price you’ve paid, the costs you’ve incurred during the renovation process and the sales price that your property fetches on the market. Our previous blog installment highlighted common pitfalls in evaluating the after-repair value of the property. Today’s article is focusing on major mistakes in evaluating the costs of owning and rehabbing your investment property.
Determining Rehab’s After-Repair Value: What NOT to DO
In real estate your make money when you buy. What it means that you need to put a property under contract at a price that will allow you to make a reasonable profit after the costs of owning, renovating and selling that property. The process of estimating these moving parts might be better described by the former Secretary of Defense Donald Rumsfeld: “There are known knowns; things we know we know… There are known unknowns – things we do not know. But there are also unknown unknowns – the ones we don’t know we don’t know.” I’m sure he wasn’t referring to the real estate rehab business, but you get my drift.
Working With Rehab Contractors: What NOT to Do
In the real estate rehab business you make your money when you buy. However, as a hard money lender, I cannot emphasize enough the importance of a well-planned and efficient renovation process. Your general contractor and crew can make you additional money or, at minimum, save you time and hassle. Alternatively, they can drain your profits and make your life a living hell. So how do you avoid being driven nuts managing them? For starters, try to avoid these six costly mistakes:
Working With A Private Money Lender: What NOT To Do
Many of our previous blogs focused on things you should be doing to succeed as a real estate investor. For example, we shared our perspective as a private money lender on how to get real estate deals and how to build a real estate investing team that will propel you forward. We talked about what it takes to be a rehabber and what you need to do to minimize your risk. However, what’s equally important is to know what NOT to do in order to succeed.
