Tag Archive for: purchase price

How to Sell Your Fix and Flips Faster in 2025

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Today we are going to review how to sell your fix and flips faster in 2025. Selling a fix-and-flip property quickly can mean the difference between a good profit and unnecessary losses. With rising interest rates, it’s more important than ever to make your property attractive and affordable to buyers. Here are practical steps to sell your fix-and-flips faster while maximizing your profits.

Why Affordability Matters More Than Ever

In 2025, most buyers focus on payments, not just price. Whether it’s a car, a boat, or a house, people think in terms of what fits their budget—and what they can qualify for. For a property to sell quickly, you need to control the buyer’s monthly payment. That means focusing on two key numbers:

  1. The purchase price
  2. The interest rate

Instead of dropping your price, consider strategies to lower the interest rate for your buyers. This expands the pool of people who can afford your property, creating more competition and selling your property faster.

Example: $400,000 Property in a High-Interest Market

Let’s say you’re selling a property for $400,000. Current market interest rates are 6.875%, and your target is to keep the monthly principal and interest payment under $2,000. Here’s how the numbers play out:

  • At 6.875%, the payment for an 80% loan (with 20% down) would be $2,100.
  • To attract more buyers, you need to lower the payment below $2,000. This could double or triple the number of potential buyers who qualify.

You have two main options to achieve this:

Option 1: Drop the Purchase Price

A common strategy is to reduce the property price. Here’s what that looks like:

  • A 5% price drop from $400,000 brings the price down to $380,000.
  • At 6.875%, the payment drops to $1,997.

This method works, but it costs you $20,000. If your profit margin was 10%, you just lost 50% of your profits. For a 15% margin, you lose a third of your profits. That’s a significant hit just to open up the buyer pool.

Option 2: Buy Down the Interest Rate

Instead of reducing the price, focus on lowering the buyer’s interest rate. Here’s how:

  • Keep the purchase price at $400,000.
  • Offer to buy down the buyer’s interest rate by 1.5 points.
  • The cost of the rate buy-down is based on the loan amount, not the purchase price. For an 80% loan of $320,000, 1.5 points would cost $4,800.

This strategy lowers the payment to $1,996, the same as the price drop, but it costs only $4,800 instead of $20,000. By focusing on payments rather than price, you keep more money in your pocket while still attracting more buyers.

How to Market This Strategy

When advertising your property, emphasize lower monthly payments, not the buy-down itself. Many buyers and even Realtors don’t fully understand rate buy-downs, but everyone understands affordability. Use phrases like:

  • “Affordable monthly payments”
  • “Lower payment options available”
  • “Permanent payment savings”

Highlighting the payment advantage makes your property stand out in a competitive market.

Key Takeaways for 2025 Fix-and-Flips

  1. Buyers focus on payments, not just price.
  2. Lowering the interest rate is often more cost-effective than dropping the price.
  3. Market your property by emphasizing affordability and payment savings.

At Hard Money Mike, we’re here to help you succeed with your fix-and-flips. Whether you need financing for your next project or strategies to sell faster, we’ve got you covered. Reach out to us for the best tools, rates, and terms to make your projects a success.

Watch our most recent video to find out more about: How to Sell Your Fix and Flips Faster in 2025

Does Your Real Estate Loan Cover All of Your Costs?

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Does Your Real Estate Loan Cover All of Your Costs?

Hey everyone, it’s Mike with Hard Money Mike! When you’re planning to invest in real estate, one of the most important questions to ask is: does your real estate loan cover all of your costs? Today, we’ll dive into what goes into your loan, how to verify it, and how you can make sure you’re covered.

What Goes Into Your Loan Amount?

When you’re dealing with real estate loans, it’s easy to know your loan amount. But the real question is, what can fit under that loan amount? Let’s break down what could be included to ensure you’re not caught off guard by unexpected costs.

The Basics: ARV and LTV

Two key numbers determine the maximum loan available for your property:

  1. After Repair Value (ARV): This is the value of your property after all repairs and improvements. It’s the price you expect to sell it for or its value when you refinance.
  2. Loan-to-Value Ratio (LTV): This is the percentage of the ARV that a lender is willing to lend you. Most lenders offer between 70% to 75% of the ARV.

Example:

Let’s say you have a property with an ARV of $200,000. If your lender offers an LTV of 75%, they’ll lend you $150,000 (which is 75% of $200,000). Now, the question is, will that amount cover everything you need?

Breaking Down the Costs

To figure out if your loan will cover all your costs, you need to look at the expenses involved in your project. Typically, these costs include:

  • Purchase Price
  • Rehab Costs
  • Closing Costs

Let’s see how these add up in a real-world scenario.

Real-World Example: Are You Covered?

Imagine your total costs look like this:

  • Purchase Price: $100,000
  • Rehab Costs: $40,000
  • Closing Costs: $5,000
  • Total Costs: $145,000

With a maximum loan amount of $150,000 based on your ARV and LTV, you’re in good shape! Your total costs of $145,000 fit comfortably under the loan amount, so you won’t need to come up with extra money out of pocket.

But what happens if your costs increase?

What If Costs Go Up?

Let’s say your purchase price jumps to $120,000 while keeping the rehab costs at $40,000 and closing costs at $5,000. Your new total cost is $165,000. Since your loan maxes out at $150,000, you’d have to cover the extra $15,000 on your own.

Make Sure You’re Prepared

Understanding what fits under your loan amount can make a huge difference in your project’s success. If your costs exceed what your loan covers, you’ll need to have additional funds ready.

Tools to Help You

At Hard Money Mike, we offer free tools like the Loan Cost Optimizer to help you run these numbers. Use it to make sure your loan covers everything, so you’re not surprised by out-of-pocket expenses.

Have Questions?

We know this topic can be tricky, so if you have any questions, drop them in the comments below. We’re here to help you run through the numbers and make sure your next project is a success!

Stay Connected!

For more tips and tools to make your real estate investments easier and more profitable, check out our website at: HardMoneyMike.com. Don’t forget to like, comment, and share this article with other investors! 

Watch our most recent video to find out more!

How to Price a Property When Interest Rates Rise

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Interest rates are changing, and buying power is changing with it. Here’s how to price a property.

“We started looking at this property back in early 2022 when the sale price could have been $800,000… But now what do we do?”

A wholesaler who has a property with us called with this question.

This client isn’t the only one stuck in this situation. If you bought a house earlier this year with a certain price in mind… What should you do now that it won’t sell at that price anymore?

Let’s look at how to price a property when buying power changes.

Interest Rates Change Buying Power

Our client purchased a property in early 2022 with the intent to sell it for $800,000. Unfortunately, 8 months later, that price is very unrealistic for the property.

Right now, they have the property listed at $650k. They’re doing showings but are frustrated with zero offers. Does no one want this property? How much farther will they have to drop the price?

Interest rates have affected buyers’ buying power. Let’s look at some of the numbers at play here.

What Is the Current Buying Power?

Back in the spring, someone looking at a house for $800k could have gotten a 4% interest rate, leaving them with a $3,819 monthly payment.

Now, interest rates are up to 7%. That same $800k property just jumped to a $5,322 monthly payment. If rates climb to the expected 8% next year, that becomes $5,870/month.

In the first quarter of this year, people could buy comfortably at a $800k price tag. Now, due to interest rates, those same people probably can’t even qualify for a loan that large.

How to Price a Property Based on Buying Power

You have to look at it this way: The monthly payment for this property increased by about $1,500 in a matter of months. That’s a 39% increase. Next year will be a 54% increase from early 2022’s buying power! This puts a major strain on the DTI of a buyer trying to qualify.

But what does this all mean when it comes to how to price the property?

Let’s keep working with our previous example. We have the same buyer wanting to keep the same down payment, same monthly payments, and same DTI. Here’s how their buying power changes:

At the beginning of this year, they could afford a $800,000 home.

Now, those same people could only qualify for $575,000.

Next year, only $520,000.

This reality of buying power needs to inform your listing price.

Deciding Listing Price

We recommended our client to sell for $575,000 – the current buying power of their target buyers.

If this client still has this property into next year, they may need to drop the price all the way to $520,000, just to find a buyer who can qualify.

Example at a Lower Price

The trouble with buying power isn’t specific to higher-value homes. Let’s look at an example from a lower price point.

A $250,000 house, at the beginning of 2022, would have cost a homeowner $1,193/month. Now, that same house would cost the same person $1,663. That’s a 39% increase. From earlier this year to early next year, the monthly payments will have gone up by 54%, to $1,834/month.

These numbers are still probably cheaper than rent for a comparable property. However, that doesn’t necessarily mean buyers will be able to qualify with lenders.

If someone could buy a $250,000 house at the beginning of 2022, now the same exact person could only afford $180,000. By next year, they can only afford $162,000.

Since 2021, buyers have lost 60% of their available purchasing power. The market isn’t the same as it used to be, and unfortunately, your selling expectations need to be adjusted.

Affordability and Quality Decide a House’s Value

Two main things decide how much you can sell for: affordability and value.

Affordability changes for buyers when interest rates change. People qualify for loans and choose houses based on what they can truly afford. If you have a house on the market, you have to sell it for what people can financially manage.

Quality also impacts price point. People expect a different level of quality from an $800k house than a $500k house. Our client could keep the $800,000 price tag if the quality of the house matched that number. In that case, the property begins appealing to a different tier of buyer, whose purchase power can get them that house.

We’re still seeing some of our clients selling properties at high numbers. But it’s because their quality is outstanding, and they’ve gone above and beyond to add value. A poor to average house or flip means a minimum of a 10-20% price cut in this market.

Selling Options In This Market

If you’re struggling with a property on the market, there are a few things you could do.

  • Price based on buying power. You need to think about payment sensitivity, purchase power, and whether your target buyers could qualify for a loan. Use the numbers we looked at in this article to determine how to price the property.
  • Use a DSCR loan. If you don’t want to sell at a loss, this is a good option for you. Take the property off the market, hold for 3+ years with a DSCR loan, and turn it into a rental in the meantime. Put it back on the market when buying power improves.
  • Buy down the rate. If you pay to bring the rate down, you can attract buyers at a slightly higher listing price. Buying down the rate might cost $10,000, but it could save you from discounting the list price by $50k.

Help for How to Price a Property

Do you want a second opinion on the pricing numbers for your property? Are you curious about what a DSCR loan might look like for your property?

Send us an email at Info@HardMoneyMike.com, and we’d be glad to help.

For other real estate investment information, check out our YouTube channel here.

Happy Investing.