Fix And Flip Exit Strategies
To take a different exit strategy options for you to fix and flip is very important. Depending on how the properties are going to your target market, you should choose one of the exit strategy that has the best chance of winning the risks involved.
Exit Strategies - Part1
Here's the scenario: ARV = $ 85,000, repairs, sales price = $ 10,000 = $ 42,000 is 30 days from the end of CASH. In this case, an investor looking for wholesalers, quick profit of $ 8000 - $ 13,000. Examine some of exit strategies and other possibilities.
Fix and Flip with hard money: If the market moves in the region, the investor may apply for funding through a hard money lender-(5 - 7 points, plus interest of 14%). In this scenario, the investor will pay an additional $ 5,000 or more in interest and about $ 2,000 in closing costs. Bringing the total cost of $ 59,000 ($ 42K $ 10K + + $ 2K + $ 5K), with a potential benefit of $ 26,000 ($ 85K - $ 59K). The investor would have to obtain redress quickly and get the property back on the market. If an agent is used to sell the property, the potential benefit would be around $ 20,000 ($ 26K - $ 6K in commissions). Before choosing this exit strategy, the investor has a reasonable expectation of selling the house quickly. This may mean losing the sale price, reducing the potential gains and the increased risk. This exit strategy is probably not the best option for this property.
Fix and Flip with a private lender: Using private money can do these offers highly cost-effective. In general, you can offer to private lenders only 8% interest that the reasonable cost of ownership. In this case, a private lender provides $ 55 000 for the purchase, repair of transaction costs and all costs of ownership. If this money is used for six months, an interest of 8% is only $ 2200. Bringing the total cost based on $ 57 200 and a potential benefit of $ 27.800 ($ 85K - $ 57,200). Once again, the investor must assess the market and determine if there is a reasonable expectation of making a quick sale at or near the asking price. This is an example of why you really need to build a network of private lenders.
Fix and Flip - Sales: Based on the negotiated end of 30 days is unlikely to work well. It would have been possible if the investor had negotiated a 90-day closure or use the control of the property. In this scenario, investors in property markets to a list of first time buyers. You set the price below market value, for example, $ 80 000. The investor said the home buyer credit first combined with a total bid price within 30 days. The investor said the new owner may choose the colors and counters (which had to be replaced). Bringing the cost basis of $ 60,000 ($ 42,000 purchase $ 10,000 repairs, and $ 8.000 for tax credit) and the sale price of $ 80 000 provides a potential benefit of $ 20 000. The good news is that repairs will be made after closing.
Stay tuned for Part 2 of this post, we will consider other options that can be used in this scenario. Please leave your comments if you have other options to suggest.
The buyer has a new home that included 13 000 dollars in equity and receives a government check for $ 8,000 to more updates or decorate your new home. This exit strategy requires a time of just over 30 days and a list of retail customers.
Pictures/SnapShot :
Exit Strategies - Part1
Here's the scenario: ARV = $ 85,000, repairs, sales price = $ 10,000 = $ 42,000 is 30 days from the end of CASH. In this case, an investor looking for wholesalers, quick profit of $ 8000 - $ 13,000. Examine some of exit strategies and other possibilities.
Fix and Flip with hard money: If the market moves in the region, the investor may apply for funding through a hard money lender-(5 - 7 points, plus interest of 14%). In this scenario, the investor will pay an additional $ 5,000 or more in interest and about $ 2,000 in closing costs. Bringing the total cost of $ 59,000 ($ 42K $ 10K + + $ 2K + $ 5K), with a potential benefit of $ 26,000 ($ 85K - $ 59K). The investor would have to obtain redress quickly and get the property back on the market. If an agent is used to sell the property, the potential benefit would be around $ 20,000 ($ 26K - $ 6K in commissions). Before choosing this exit strategy, the investor has a reasonable expectation of selling the house quickly. This may mean losing the sale price, reducing the potential gains and the increased risk. This exit strategy is probably not the best option for this property.
Fix and Flip with a private lender: Using private money can do these offers highly cost-effective. In general, you can offer to private lenders only 8% interest that the reasonable cost of ownership. In this case, a private lender provides $ 55 000 for the purchase, repair of transaction costs and all costs of ownership. If this money is used for six months, an interest of 8% is only $ 2200. Bringing the total cost based on $ 57 200 and a potential benefit of $ 27.800 ($ 85K - $ 57,200). Once again, the investor must assess the market and determine if there is a reasonable expectation of making a quick sale at or near the asking price. This is an example of why you really need to build a network of private lenders.
Fix and Flip - Sales: Based on the negotiated end of 30 days is unlikely to work well. It would have been possible if the investor had negotiated a 90-day closure or use the control of the property. In this scenario, investors in property markets to a list of first time buyers. You set the price below market value, for example, $ 80 000. The investor said the home buyer credit first combined with a total bid price within 30 days. The investor said the new owner may choose the colors and counters (which had to be replaced). Bringing the cost basis of $ 60,000 ($ 42,000 purchase $ 10,000 repairs, and $ 8.000 for tax credit) and the sale price of $ 80 000 provides a potential benefit of $ 20 000. The good news is that repairs will be made after closing.
Stay tuned for Part 2 of this post, we will consider other options that can be used in this scenario. Please leave your comments if you have other options to suggest.
The buyer has a new home that included 13 000 dollars in equity and receives a government check for $ 8,000 to more updates or decorate your new home. This exit strategy requires a time of just over 30 days and a list of retail customers.
Pictures/SnapShot :
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