What is the Fix and Flip Escalator: Terms

So, we mentioned the Fix and Flipper Escalator, but what IS it?

Today, we’re going to breakdown its terms so you can begin to understand the SIMPLE math behind it.

Ready?

Here we go!

Money Partner

Cost:

Pros: Allows you to work on a project when you have no money, and also learn as you go.

Cons: These arrangements almost always favor the partner/mentor with at least half of the money going to them.

Hard Money

Cost:

Pros: Most hard money loans will fund up to 100% of your project. If you finish your project on time (or ahead of schedule), it’s cheaper than a partner/mentor.

Cons: Charge higher interest rates. If you take longer than planned to finish your project, most (or all) of your profits will vanish.

Soft Money

Cost:

Pros: Comes with lower costs than hard money, and less paperwork and hassles than banks.

Cons: Requires you to put more money and experience into the project. It might also require a better credit score.

Banking

Cost:

Small, local banks (pros and cons):

  • Offer ease and convenience.
  • Might charge a little more than larger banks but they make the process easier.
  • Smaller banks also look at your project history but give you some credit for the projects you’re about to do.

Big, commercial banks (pros and cons):

  • Require all documentation and make the process tougher.
  • If you have all your ducks in a row, they will typically save you money, but most of the time it’s not worth the hassle.

Cash

Cost:

Pros:

  • All of the profits go straight into your pocket
  • No monthly cashflow issues.

Cons:

  • Limits you on the number of projects you can work on (which, honestly, might be a good thing).
  • Eliminates the leverage factor of completing more deals in a year.

Okay, now that you get the basic gist of who’s who on the escalator, we can start introducing some samples.

If you don’t want to wait, give us a call to start chatting about how you can start making, rather than losing money.

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