Whether you’re just starting to flip houses or you’ve become an old pro, it never hurts to read about other people’s experiences and learn about tricks of the trade.
We’ve all seen those “reality” shows on TV, where they showcase a house flipper who makes a ton of mistakes, yet somehow still manages to turn a profit. It makes for nice TV, but it certainly isn’t part of any reality I’ve ever experienced.
Okay, now that you get the basic gist of who’s who on the escalator, let’s run through some examples. That way you can see for yourself how moving down the escalator means higher profits and lower costs.
Ready to roll?
Let’s go:
So, you need a loan for $250,000. That covers purchase price and repairs.
After 6 months of hard work, you fix the property and sell it for $335,000 (nice job!).
Once you take into account all of your holding, closing, and realtor costs, you should walk away with $50,000.
Now, let’s run these numbers down the Fix and Flip Escalator so you can see how your profits drastically vary depending on which step you’re standing on.
Partner/Mentor
Although your partner will take care of the cashflow, they’ll claim at least 50% of the profits. They might even claim the deal as a training fee.
So, instead of walking away with $50,000, you might walk away with $15,000-$25,000.
Yeah, you could do way better.
Hard Money
On average, a hard money lender will charge 4 points and 12% interest (1% a month). They might even deny you the full loan amount you requested—ugh!
Now, instead of $50,000, you’ll be lucky to walk away with $25,000.
That’s better than what you could make with a partner, but still nothing to write home about.
Soft Money
You’ll pay closer to 2 points and 8% interest, but you need to put cash into the deal to get it done—let’s say $40,000. (Just remember, when you put money into the deal, you’ll make more money at the end.)
That means you’ll walk away with $37,000.
Things are starting to look up! Keep going.
Bank Funding
On average, the bank will only charge 1 point and 5.5% interest…and possibly a few other fees.
Like soft money, you need to put money into the deal. In this example, we’ll say $50,000. It’s a large chunk of money, but it’s worth it, because….
You’d walk away from closing with $42,000.
Yippee!
Cash:
You need a lot of cash, and you might have to minimize the number of projects you can take on. But, it pays off because now you’re walking away with $50,000.
Pop that champagne and give yourself a much-deserved toast!
Ready to start making more with your fix and flips? Give us a call and we’ll show you how the escalator works for you.
https://hardmoneymike.com/wp-content/uploads/2019/08/Escalator-2.png42885189Mike Bhttps://hardmoneymike.com/wp-content/uploads/2019/06/hard-money-mike-logo.pngMike B2019-08-07 08:00:322019-09-12 13:39:44Fix and Flip Escalator – It’s Simple Math
https://hardmoneymike.com/wp-content/uploads/2019/07/91_USED-1.jpg616500Mike Bhttps://hardmoneymike.com/wp-content/uploads/2019/06/hard-money-mike-logo.pngMike B2019-08-02 08:00:122019-08-14 11:02:28Friday Fun – So, You’re Saying…
With the Loan Cost Optimizer, our goal is to help you make more money every time you complete a fix and flip or fix and hold. This software will help you discover the real cost of various finance options.
The key benefits you can expect from using the HMM Loan Cost Optimizer include:
Seeing how much money you’ll need to contribute to the project and how it will impact your profits and cashflow.
Comparing all lenders (and their hidden fees) and EASILY calculating the TRUE cost of your loan.
Evaluating your terms and deciding which is better: paying higher points or a higher rate.
How the length of your project will impact the cost of each loan option.
Since the Loan Cost Optimizer is a newer product, we’d love to hear your feedback on how we can make it as user-friendly as possible!
Our goal is to help real estate investors like you succeed, so feel free to share this vital tool with your network.
Ready to make more money on your next deal? Then request our HMM Loan Cost Optimizer and start comparing your options today! For a limited time, we’re offering this tool for free, so email Info@HardMoneyMike.com for your copy or download your copy here.
https://hardmoneymike.com/wp-content/uploads/2019/07/9.png756583Mike Bhttps://hardmoneymike.com/wp-content/uploads/2019/06/hard-money-mike-logo.pngMike B2019-07-29 16:00:082019-08-16 10:37:07Introducing the Hard Money Mike Loan Cost Optimizer!
Do you get frustrated by banks and lenders saying no to you?
Do you wonder why they say no, especially when you know others are getting approved for similar loans?
Do you wonder why it’s different with you? Do you think maybe they just don’t like you?
To be frank, they might not like you. But, it’s FAR more likely you get turned down for good, qualified projects because:
Banks and lenders don’t sell the same loan products, so they might not have something that matches your needs. Heck, most hard money lenders only have one option, and if you don’t fit their box, it’s a big fat NO!
Banks might not like to lend in the fix and flip world.
All banks and lenders have their own niches and likes.
Banks and Lenders have designated amounts they can lend.
Some banks and lenders don’t work with real estate investors. Why? Because they have a lot of money to lend and they don’t like loans that pay off every six months. Instead, they prefer to lend their money, go play golf, and look for a loan again in two to three years.
If you’re tired of hearing “No,” and want to start getting the loans you need, give us a call!
https://hardmoneymike.com/wp-content/uploads/2019/07/adult-art-artsy-278312.jpg14312160Mike Bhttps://hardmoneymike.com/wp-content/uploads/2019/06/hard-money-mike-logo.pngMike B2019-07-24 08:00:132023-01-12 12:08:25Why Lenders Turn You Down
This might seem like a rhetorical question, but it’s not. Believe it or not, many fix and flippers—inadvertently—choose to give their money to bankers and lenders. Sadly, most don’t even know it. Why? Because they don’t fully understand the Fix and Flip Escalator:
The basic goal with the escalator is to move down the steps as fast as you can. Every time you reach the next step, your profits will JUMP!
And you know what that means, right? Yep! More money in your pockets (not a bank or lender’s). And the more money you have, the faster you can flip homes. The faster you flip homes, the faster you can live the life you’ve always dreamed of.
Like, a lot faster!
If you’re ready to get moving, we’re ready to help. Give us a call to chat more about the benefits of the fix and flip escalator.
https://hardmoneymike.com/wp-content/uploads/2019/07/1.png471858Mike Bhttps://hardmoneymike.com/wp-content/uploads/2019/06/hard-money-mike-logo.pngMike B2019-07-15 08:00:492019-08-16 10:40:31Introducing the Fix and Flip Escalator
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