Owner-occupied hard money loans are considered principal residence Loans, alternative financing, and private money loans. 

Reasons Why Borrowers Use Owner-Occupied Hard Money Loans 

• Bad Credit 
• Hard to prove income 
• Self Employed 
• or dealing with a problem property  
  
  Typical borrowers refinance this loan after qualifying for a conventional or FHA loan. 
  
  Common Uses of Occupied Loans 

• Buying a first or second home. 
• Refinance an existing loan. 
• Cash out for repairs or remodeling. 
• Cash out for debt consolidation.  

Owner Occupied Hard Money Loan Program Options  

100% financing is available if the borrower has another free and clear property, or has a small mortgage with value (substantial equity) to pledge as additional collateral ( aka Cross Collateralized Loan).  

Arizona Hard Money Lender is making real estate loans to both Investors and owner-occupants in Arizona. 

Typical Arizona private hard money programs for owner-occupants are below. 

NO PRE-PAYMENT PENALTY 

Typically, there are no pre-payment penalties on our loans. 

PURCHASE 

Down payment: 30% – 40%. 

Up to 60% or 70% of the appraised value 

Up to 100% financing with a 2nd free and clear property as additional collateral. 

REFINANCE 

Up to 65% of the appraised value 

Up to 100% financing with a 2nd free and clear property as additional collateral  

ORIGINATION FEE 

            A loan Origination fee of 2 to 6 points (2 to 6% of the Loan Amount).  

Requirements For Owner-Occupied Hard Money Loans 

Income must be able to be verified by a 3rd party source. 

If the owner-occupied loan is considered a "high-cost loan," hazard insurance and property taxes must be impounded for the 1st year of the loan. This is the borrower’s responsibility. 

Disclosure laws require us to inform you of the loan terms before signing any loan documents. These are the exact requirements of a traditional bank loan. 

Apply for an Owner Occupied Hard Money Loan 

If you want to see if you qualify for an owner-occupied hard money loan in Arizona, call us today at 602-497-4444 or fill out our loan application to get started. Getting your owner-occupied hard money loan is simple and fast; we do the funding!  So, if we say you’re approved, you’d better start packing to move into your new home! 

The owner-occupied Arizona hard money loans program makes it easy for you to get the new home you need despite not having credit, having bad credit, or even if you’re not from the United States.   

Owner-occupied home loans using private hard money have easier requirements than investor loans and can benefit from our cross-collateral 100% LTV loan option. 

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com
Dennis Dahlberg Broker/RI/CEO

Hello, my name is Dennis; I am a business owner like you with over 44 years of business experience helping business owners worldwide, including 7-figure businesses, small businesses, and startups that now make millions of dollars annually.

But the question is, why do I do this?  I had an extraordinary person do something for me in the past to help me.  It is hard to understand this amount of sacrifice, but I learned from that sacrifice of this particular person that living is not taking, but when you give to others is when you achieve true purpose and happiness.  That is why I do this. I want to serve you so you can achieve the dreams, success, and satisfaction you long for in your business.  Servicing others is true wealth and the path to happiness.  When you are successful, I am successful. So, with that let in mind, I will tell you about my recent struggles.

But do you want to know something interesting? Just a few years ago, my wife and I were homeless, living in a van and sleeping in the office. This is true!  After 30 years, my business was failing, and I was laying off hundreds of employees. I lost $250,000 per month and went down in flaming colors. The only cash I had remaining was the credit line on my credit card, and after I maxed them out, I had nothing but the van and, luckily, a wife who still had faith in me. Creditors were calling; I was being sued and hauled into court to stand before the judge subject to debtor exams. I had judgments filed against and me my coming to the office and seizing assets.  I tried everything, but nothing worked.  I just kept losing money, more money, and more money — till the money was all gone. I lost my business, cars, airplane, and even the home I was living in.  I remember coming home Monday after work, and my wife mentioned that the neighbors across the street were in foreclosure.  I said this was sad, but the real sad part is that we are in foreclosure, and the home is going up for auction on Friday. She looked at me, and I waited for her to pack up and walk out.  But she did not.  She said let us go to Home Depot and buy boxes.  We had a huge yard sale for the week, and what we wanted to keep, we moved into a 10×30 storage unit.  Saturday morning, we moved into the van and became homeless.  Some nights we slept in the van and sometimes on a blow-up air mattress in the office. 

Everything gone! No matter how hard I tried, even though I worked 14 hours daily, nothing worked.  I was so stressed that I ground down my teeth and cracked every tooth. I had to find another way of making money, and flipping homes looked like a good way to do this.  However, after failing, I did not think I could do it, but I heard a voice that said, “what you think and feel is not reality; flipping homes is not brain surgery; it is easy; you can do it.” How hard can it be! You need to get educated and find out how other people are making money by flipping homes. So, I figured it out.  I wrote this essential guide to help you.  

Your Guide to Flipping Homes – 8 Things You Must Do To Be A Successful Home Flipper

1. Calculate your profit before you purchase the home.

The old saying is, “you make your profit when you purchase the home, not when you sell it.”  This means calculating a profit and loss on the project before you purchase.  Determine the gain before you buy – work backward.  Do not do a project unless there is clear profit potential.

Calculate your profit/Loss.  Sales price fewer costs is your profit.

Costs

Acquisition

• Purchase Price
• Back taxes and other liens
• HOA Fees (and HOA transfer fees)
• Keys
• Bid or Real Estate Fees
• Title closing costs

Repairs

• Contractor or do it yourself
• Appliances + much more

Holding

• Cost of your capital to hold                         
• Payments on hard money loans
• Utilities
• Insurance
• Maintenance

Selling

• Real Estate Commissions
• Staging
• Title closing costs
• Marketing plans

Administration 

• Bookkeeping/accounting
• Other non-related expenses

2. Have a good team of Contractors/others to do the work.

• Suppliers
• Real Estate Agent (hopefully it will be you)
• Hard Money Lenders (give me a call)
• Insurance agents

3. Get educated.

Do not start buying homes without knowing the process.  The best way to get started is to get your Real Estate License.  Yes, it is work, but it will give you the knowledge you need to understand how homes are transferred and the laws associated with Real Estate.  Also, you will have access to the Multiple Listing Service, which is invaluable for your research.  Plus, you can avoid the partial cost of the seller commission when you are the listing agent.  Every successful flipper I’ve ever met had their Real Estate license.  So, GET IT!

4. Be patient.

There used to be many homes sold on the courtroom steps, sometimes 1,000 homes per day.  Today there are not a lot of houses to purchase.  Looking at other ways of buying and finding deals would be best.  It is going to take time to find, fix and sell.  You can do it, but it is going to take time. In the Real Estate Investment world, timing is everything.

5. Have Money.

Do not believe those people on the radio that say, “you can buy homes for no cash down”.  It is not valid.  You must have cash and skin in the game to purchase the home.  Private Hard Money will require a down payment of 20-30% of the purchase price.  And it is not going to be cheap when you start.  Rates vary from 9-18%.  Do not forget to calculate the cost of Hard Money in your profit/loss in item 1 above. Some Hard Money Lenders market their loans as having the potential to fund investment at 100% LTC (Loan-To-Cost), meaning a borrower will not have to put a dime into the project. Although there are some scenarios where this is true, it is rare.  Some lenders will participate in the deal.  These lenders will fund the deal and share in the profit when the deal is completed.  However, all lenders put a great deal of their decision on working with you on your response to #3 above and still require 10% of your money in the deal.

6. Do not buy something you cannot fix or ever sell. 

There are a lot of deals out there, and they are deals for a reason.  Some are in a bad situation. No matter how much money and work they put into the home, they will never sell it.  For example, a house built on top of a landfill, next to a dump, sewage treatment facility, or the final approach to a major airport.  You are not going to be able to fix these problems.

7. Buy your project through your LLC.

There are a lot of tax and liability reasons to do this.  Plus, private lenders prefer to lend to LLCs.

8. It is going to be work.

Do not believe what you see on those flipping shows.  You will have to work at it, and it will take time.  You must visit the property and ensure the work is progressing correctly.  After the home is completed and on the market, you will need to walk the property daily.

“Land Mines” that caused me to fail on flips over the years:

• I did not verify the back taxes.  On one Flip, I found that there were $20,000 in back property taxes, bummer
• Underestimated the total time to fix up the property. Planed on 30 days, but it to took 180 days. Ouch!
• Bought a home in the middle of nowhere called Sun City Festival.  Nice home, but the closest market was ONLY 25 miles away. It took eight months to sell. Broke even on this deal, no profit.
• Trusted a contractor to do the job correctly, but he did not, kept the money, and stole the appliances.
• Bought a condo and paid too much. I failed step 1.  When I went to sell it, I realized I would lose 10K.  Solution?  I turned it into a two-year rental and then sold the condo.
•  
• How do I find a good contractor?  I am asked this question all the time.  I usually ask for a referral from a friend or another trade person that I trust.  But you must live by the number one rule: “Don’t hire anyone with nothing to lose if they screw you.”  What does this mean?  Do not hire someone living out of their car or with no assets. In the trade business, the joke is that plumbers, tile layers, and painters tend to be drunks.    That is why they started working for themselves; they could not keep a job because of their drinking problem. I have hired tile layers that were so drunk, and, on my job, they placed the tile upside down. I know an excellent tile layer that has been sober for three years(yahoo), and he does excellent work.  Every time I hire him, I ask him bluntly, ‘are you drinking again’ and so far, he says no.  It took me too long and a lot of money to realize that many people say they can do the job but are only planning to screw you.  Craigslist is full of these dudes.  Follow these rules:

• Do not pay for any labor in advance. Not following this rule costs me a lot of money.
• Ask for references and call them. Hopefully, it is not their mother. 
• Do not hire relatives (they will screw you the most).
• For appliances, purchase them yourself and have the company install them.
• If they say they are licensed, check to see if they are.

But mostly, I hire the largest home improvement company in the world for carpets, tiles, appliances, and counters.  They have a lot to lose if they screw me.  They diligently check out the workers and ensure that it is done correctly.  So, who are they? Home Depot.  Use them; they can get it done and sometimes have huge sales on appliances, carpets, and counters.  Does it cost me more?  At this point, it probably does, but I do not care.  They get the job done on time, and it’s correct.  Plus, they give you a warranty on the work.

Get insurance on your property ASAP.  But here is one problem with the standard Homeowner’s Policy.  That is, there is an exclusion on coverage. Suppose the home is vacant for more than 30 days with no more coverage.  You can get a rider that will cover the house for longer.  Ask you,r agent. I learned the hard way when one of my flips was broken into, and tools, doors, and appliances were stolen. I thought, hot doggie, I have insurance.  I called the insurance company, and they were genuinely lovely to point me to the language in the policy that says no coverage after 30 days of vacancy (you are screwed, dude)—a very costly lesson. 

You will have to assume that your flip will get broken into and that items were stolen.  So, plan for it. Plan to walk the property every day.  Even if no one is working, we must keep a close eye on the home. I have come to flips to find the following:  Someone living in the house, the door unlocked, appliances stolen, $1,000 front door gone, neighbor swimming in the pool, A/C gone, pool equipment gone.  It is tough out there. 

If it is a bad area, I usually wait on appliances until the new owner moves in.  I usually put a picture on the counter of what is coming and say it is back order and should be in soon.

So, what do you do first when you own the property?

1. Utilities need to be turned on. Water, Electric, Trash, Gas.  Be prepared to pay deposits for these services. Deposit requirements are going to be based on you.  If you are an existing customer, they will check your payment history and sometimes pull your credit.  The trick I use is that I keep a credit on my account on the local utility companies such as APS and Southwest Gas.  I usually prepay for six months on my personal account, so when they go and look, they all smile.  For city services, water/sewer/trash, they do not care and always ask for a deposit.  If you do pay a deposit, you must remember to get the deposit back.  Sometimes it’s automatically returned, but not always. 
2. Get the locks and keys figured out.  The flip usually will not come with keys. Put a lock on the gate and garage door; this is particularly important!  I typically carry a lock pick and bolt cutters in my trunk.
3. Security sign.  Over the years, I have collected those small security signs from ADT and Honeywell that say, “this house is protected by so and so.”  I bang the security sign in the ground ASAP.  I once put security cameras in the home only to come back and find that the cameras were gone.
4. Meet the neighbors.  I usually knock on the neighbors’ doors around the house and introduce myself.  This is good to do. I hand them my business card and ask them to call me if they see any problems.  (Or call the police.)  One time I knocked on the door, and the person who answered was the past owner. Oh No.  It turns out he was a nice guy and could tell me details about the house. 
5. Put lights inside on timers.  Make it look like someone is living there.
6. Focus on landscaping and lot cleanup.  Why?  Grass and plants grow at their own pace, and everything must be green and lush when you sell.  So, plat the grass and shrubs now, do not wait till you are ready to sell. I am lucky, I have developed a relationship with Javier, my landscaper.  I call him and tell him to fix it, and he does.  He has worked for me for 20 years, and I probably have paid for his kid’s college tuition.  But he is worth it.  (FYI, He has been sobered for ten years.)
7. Schedule the appliances.  They sometimes are weeks out till they are available.  Purchase them now and have them scheduled when you think you need them, usually at the end.
8. Paint.  The painting is a mess, and the paint gets everywhere.  So, paint before you put in flooring, counters, and cabinets.  Tell your painter not to worry about the floors they are being replaced.  They will love you for this.

So, where do you start? I suggest that you start with #3 Get Educated.  However, do not pay for those weekend training seminars that cost 1,000s of dollars.  Start at your local Real Estate School and get your State License. 

Dennis Dahlberg
Broker/RI/CEO/Realtor
Level 4 Funding LLC
Private Hard Money Lender
23335 N 18th Drive Suite 120,
Phoenix AZ 85027,
623-582-4444
NMLS 1018071 AZMB 0923961

About the author: Dennis has been working in the Real Estate industry in some capacity for the last 45 years. He purchased his first property when he was just 18 years old. He quickly learned about the excellent investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in Real Estate investing led him to specialize in alternative funding for Real Estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have two beautiful daughters and five amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Buying a house has become synonymous with “the American dream.”

However, far too many prospective buyers have found that owning a home has many prerequisites. In addition to having enough money for a downpayment, one hurdle has proven problematic for many to overcome: learning how to buy a house with bad credit Arizona. Fortunately, a low credit score won’t prevent a borrower from buying a home. While options may be more limited, buying a house with bad credit is possible if you know where to look and the appropriate steps.

What Do Mortgage Lenders Consider A Bad Credit Score?

Contrary to what many believe, today’s mortgage lenders do not establish a good or bad credit score benchmark. Moreover, most mortgage lenders neglect to require a minimum credit score in return for their services. Instead, the quality of a credit score is entirely dependent on the cumulative data provided by three main credit bureaus: TransUnion, Equifax, and Experian.

Borrowers’ credit reports for a Bad Credit Mortgage in Arizona largely depend on the information generated by these three credit bureaus. However, instead of relying on three independent reporting agencies for their knowledge, mortgage lenders will generally look to the cumulative FICO scores to determine how creditworthy a borrower is. A FICO Score is a three-digit number based on the information in the previously mentioned credit reports and indicates how likely a borrower is to repay their loan.

There are five primary credit score categories prospective homebuyers may fall under (according to FICO):

• Poor: Less than 580
• Fair: 580 – 669
• Good: 670 – 739
• Very Good: 740 – 799
• Exceptional: 800 or more

According to the latest FICO scores, anything less than 670 is bad—or subprime. It should be noted, however, that mortgage lenders will consider more than a borrower’s FICO Score. In particular, lenders will also consider the following:

• The borrower’s down payment
• The amount of debt the borrower has
• How much income does the borrower make
• Whether or not the borrower has any debts in collections

Anyone interested in learning how to buy a house with Mortgage Loans for bad credit must first look into what today’s lenders view as acceptable; only then will borrowers be able to take the next step.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com
Dennis Dahlberg Broker/RI/CEO


NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701

Equal Housing Opportunity. This is not a Good Faith Estimate and this is not a Guarantee to lend and should not be considered as such. Costs, rates, estimates, and terms can only be determined after the completion of a full application. Actual payments will vary based on your individual situation and current rates. APR for loans vary from 7.99 – 29.5% and is based on Credit Score, Down Payment, LTV, and Income. Mortgage rates could change daily. To get more accurate and personalized results, please call 623 582 4444 to talk to one of our licensed mortgage experts. Terms and conditions of all loan programs are subject to change without notice. Level 4 Funding LLC, 22601 N 19th Ave Suite 112, Phoenix AZ 85027, 623-582-4444 NMLS 1018071 AZMB 0923961 This e-mail is for the exclusive use of the intended recipients and may contain privileged and confidential information. If you are not an intended recipient, please notify the sender, delete the e-mail from your computer, and do not copy or disclose it to anyone else. Your receipt of this message is not intended to waive any applicable privilege. Neither this e-mail nor any attachments establish a client relationship, constitute an electronic signature or provide consent to contract electronically, unless expressly so stated by Dennis Dahlberg RI/CEO, Level 4 Funding LLC, in the body of this e-mail or an attachment. To the extent, this message includes any tax or legal advice this message is not intended or written by the sender to be used, and cannot be used, for legal or tax purposes or advice.
 

About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Buying a house has become synonymous with “the American dream.”

However, far too many prospective buyers have found that owning a home has many prerequisites. In addition to having enough money for a downpayment, one hurdle has proven problematic for many to overcome: learning how to buy a house with bad credit Arizona. Fortunately, a low credit score won’t prevent a borrower from buying a home. While options may be more limited, buying a house with bad credit is possible if you know where to look and the appropriate steps.

What Do Mortgage Lenders Consider A Bad Credit Score?

Contrary to what many believe, today’s mortgage lenders do not establish a good or bad credit score benchmark. Moreover, most mortgage lenders neglect to require a minimum credit score in return for their services. Instead, the quality of a credit score is entirely dependent on the cumulative data provided by three main credit bureaus: TransUnion, Equifax, and Experian.

Borrowers’ credit reports for a Bad Credit Mortgage in Arizona largely depend on the information generated by these three credit bureaus. However, instead of relying on three independent reporting agencies for their knowledge, mortgage lenders will generally look to the cumulative FICO scores to determine how creditworthy a borrower is. A FICO Score is a three-digit number based on the information in the previously mentioned credit reports and indicates how likely a borrower is to repay their loan.

There are five primary credit score categories prospective homebuyers may fall under (according to FICO):

• Poor: Less than 580
• Fair: 580 – 669
• Good: 670 – 739
• Very Good: 740 – 799
• Exceptional: 800 or more

According to the latest FICO scores, anything less than 670 is bad—or subprime. It should be noted, however, that mortgage lenders will consider more than a borrower’s FICO Score. In particular, lenders will also consider the following:

• The borrower’s down payment
• The amount of debt the borrower has
• How much income does the borrower make
• Whether or not the borrower has any debts in collections

Anyone interested in learning how to buy a house with Mortgage Loans for bad credit must first look into what today’s lenders view as acceptable; only then will borrowers be able to take the next step.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com
Dennis Dahlberg Broker/RI/CEO


NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701

Equal Housing Opportunity. This is not a Good Faith Estimate and this is not a Guarantee to lend and should not be considered as such. Costs, rates, estimates, and terms can only be determined after the completion of a full application. Actual payments will vary based on your individual situation and current rates. APR for loans vary from 7.99 – 29.5% and is based on Credit Score, Down Payment, LTV, and Income. Mortgage rates could change daily. To get more accurate and personalized results, please call 623 582 4444 to talk to one of our licensed mortgage experts. Terms and conditions of all loan programs are subject to change without notice. Level 4 Funding LLC, 22601 N 19th Ave Suite 112, Phoenix AZ 85027, 623-582-4444 NMLS 1018071 AZMB 0923961 This e-mail is for the exclusive use of the intended recipients and may contain privileged and confidential information. If you are not an intended recipient, please notify the sender, delete the e-mail from your computer, and do not copy or disclose it to anyone else. Your receipt of this message is not intended to waive any applicable privilege. Neither this e-mail nor any attachments establish a client relationship, constitute an electronic signature or provide consent to contract electronically, unless expressly so stated by Dennis Dahlberg RI/CEO, Level 4 Funding LLC, in the body of this e-mail or an attachment. To the extent, this message includes any tax or legal advice this message is not intended or written by the sender to be used, and cannot be used, for legal or tax purposes or advice.
 

About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Hello, my name is Dennis; I am a business owner like you with over 44 years of business experience helping business owners worldwide, including 7-figure businesses, small businesses, and startups that now make millions of dollars annually.

But the question is, why do I do this?  I had an extraordinary person do something for me in the past to help me.  It is hard to understand this amount of sacrifice, but I learned from that sacrifice of this particular person that living is not taking, but when you give to others is when you achieve true purpose and happiness.  That is why I do this. I want to serve you so you can achieve the dreams, success, and satisfaction you long for in your business.  Servicing others is true wealth and the path to happiness.  When you are successful, I am successful. So, with that let in mind, I will tell you about my recent struggles.

But do you want to know something interesting? Just a few years ago, my wife and I were homeless, living in a van and sleeping in the office. This is true!  After 30 years, my business was failing, and I was laying off hundreds of employees. I lost $250,000 per month and went down in flaming colors. The only cash I had remaining was the credit line on my credit card, and after I maxed them out, I had nothing but the van and, luckily, a wife who still had faith in me. Creditors were calling; I was being sued and hauled into court to stand before the judge subject to debtor exams. I had judgments filed against and me my coming to the office and seizing assets.  I tried everything, but nothing worked.  I just kept losing money, more money, and more money — till the money was all gone. I lost my business, cars, airplane, and even the home I was living in.  I remember coming home Monday after work, and my wife mentioned that the neighbors across the street were in foreclosure.  I said this was sad, but the real sad part is that we are in foreclosure, and the home is going up for auction on Friday. She looked at me, and I waited for her to pack up and walk out.  But she did not.  She said let us go to Home Depot and buy boxes.  We had a huge yard sale for the week, and what we wanted to keep, we moved into a 10×30 storage unit.  Saturday morning, we moved into the van and became homeless.  Some nights we slept in the van and sometimes on a blow-up air mattress in the office. 

Everything gone! No matter how hard I tried, even though I worked 14 hours daily, nothing worked.  I was so stressed that I ground down my teeth and cracked every tooth. I had to find another way of making money, and flipping homes looked like a good way to do this.  However, after failing, I did not think I could do it, but I heard a voice that said, “what you think and feel is not reality; flipping homes is not brain surgery; it is easy; you can do it.” How hard can it be! You need to get educated and find out how other people are making money by flipping homes. So, I figured it out.  I wrote this essential guide to help you.  

Your Guide to Flipping Homes – 8 Things You Must Do To Be A Successful Home Flipper

1. Calculate your profit before you purchase the home.

The old saying is, “you make your profit when you purchase the home, not when you sell it.”  This means calculating a profit and loss on the project before you purchase.  Determine the gain before you buy – work backward.  Do not do a project unless there is clear profit potential.

Calculate your profit/Loss.  Sales price fewer costs is your profit.

Costs

Acquisition

• Purchase Price
• Back taxes and other liens
• HOA Fees (and HOA transfer fees)
• Keys
• Bid or Real Estate Fees
• Title closing costs

Repairs

• Contractor or do it yourself
• Appliances + much more

Holding

• Cost of your capital to hold                         
• Payments on hard money loans
• Utilities
• Insurance
• Maintenance

Selling

• Real Estate Commissions
• Staging
• Title closing costs
• Marketing plans

Administration 

• Bookkeeping/accounting
• Other non-related expenses

2. Have a good team of Contractors/others to do the work.

• Suppliers
• Real Estate Agent (hopefully it will be you)
• Hard Money Lenders (give me a call)
• Insurance agents

3. Get educated.

Do not start buying homes without knowing the process.  The best way to get started is to get your Real Estate License.  Yes, it is work, but it will give you the knowledge you need to understand how homes are transferred and the laws associated with Real Estate.  Also, you will have access to the Multiple Listing Service, which is invaluable for your research.  Plus, you can avoid the partial cost of the seller commission when you are the listing agent.  Every successful flipper I’ve ever met had their Real Estate license.  So, GET IT!

4. Be patient.

There used to be many homes sold on the courtroom steps, sometimes 1,000 homes per day.  Today there are not a lot of houses to purchase.  Looking at other ways of buying and finding deals would be best.  It is going to take time to find, fix and sell.  You can do it, but it is going to take time. In the Real Estate Investment world, timing is everything.

5. Have Money.

Do not believe those people on the radio that say, “you can buy homes for no cash down”.  It is not valid.  You must have cash and skin in the game to purchase the home.  Private Hard Money will require a down payment of 20-30% of the purchase price.  And it is not going to be cheap when you start.  Rates vary from 9-18%.  Do not forget to calculate the cost of Hard Money in your profit/loss in item 1 above. Some Hard Money Lenders market their loans as having the potential to fund investment at 100% LTC (Loan-To-Cost), meaning a borrower will not have to put a dime into the project. Although there are some scenarios where this is true, it is rare.  Some lenders will participate in the deal.  These lenders will fund the deal and share in the profit when the deal is completed.  However, all lenders put a great deal of their decision on working with you on your response to #3 above and still require 10% of your money in the deal.

6. Do not buy something you cannot fix or ever sell. 

There are a lot of deals out there, and they are deals for a reason.  Some are in a bad situation. No matter how much money and work they put into the home, they will never sell it.  For example, a house built on top of a landfill, next to a dump, sewage treatment facility, or the final approach to a major airport.  You are not going to be able to fix these problems.

7. Buy your project through your LLC.

There are a lot of tax and liability reasons to do this.  Plus, private lenders prefer to lend to LLCs.

8. It is going to be work.

Do not believe what you see on those flipping shows.  You will have to work at it, and it will take time.  You must visit the property and ensure the work is progressing correctly.  After the home is completed and on the market, you will need to walk the property daily.

“Land Mines” that caused me to fail on flips over the years:

• I did not verify the back taxes.  On one Flip, I found that there were $20,000 in back property taxes, bummer
• Underestimated the total time to fix up the property. Planed on 30 days, but it to took 180 days. Ouch!
• Bought a home in the middle of nowhere called Sun City Festival.  Nice home, but the closest market was ONLY 25 miles away. It took eight months to sell. Broke even on this deal, no profit.
• Trusted a contractor to do the job correctly, but he did not, kept the money, and stole the appliances.
• Bought a condo and paid too much. I failed step 1.  When I went to sell it, I realized I would lose 10K.  Solution?  I turned it into a two-year rental and then sold the condo.
•  
• How do I find a good contractor?  I am asked this question all the time.  I usually ask for a referral from a friend or another trade person that I trust.  But you must live by the number one rule: “Don’t hire anyone with nothing to lose if they screw you.”  What does this mean?  Do not hire someone living out of their car or with no assets. In the trade business, the joke is that plumbers, tile layers, and painters tend to be drunks.    That is why they started working for themselves; they could not keep a job because of their drinking problem. I have hired tile layers that were so drunk, and, on my job, they placed the tile upside down. I know an excellent tile layer that has been sober for three years(yahoo), and he does excellent work.  Every time I hire him, I ask him bluntly, ‘are you drinking again’ and so far, he says no.  It took me too long and a lot of money to realize that many people say they can do the job but are only planning to screw you.  Craigslist is full of these dudes.  Follow these rules:

• Do not pay for any labor in advance. Not following this rule costs me a lot of money.
• Ask for references and call them. Hopefully, it is not their mother. 
• Do not hire relatives (they will screw you the most).
• For appliances, purchase them yourself and have the company install them.
• If they say they are licensed, check to see if they are.

But mostly, I hire the largest home improvement company in the world for carpets, tiles, appliances, and counters.  They have a lot to lose if they screw me.  They diligently check out the workers and ensure that it is done correctly.  So, who are they? Home Depot.  Use them; they can get it done and sometimes have huge sales on appliances, carpets, and counters.  Does it cost me more?  At this point, it probably does, but I do not care.  They get the job done on time, and it’s correct.  Plus, they give you a warranty on the work.

Get insurance on your property ASAP.  But here is one problem with the standard Homeowner’s Policy.  That is, there is an exclusion on coverage. Suppose the home is vacant for more than 30 days with no more coverage.  You can get a rider that will cover the house for longer.  Ask you,r agent. I learned the hard way when one of my flips was broken into, and tools, doors, and appliances were stolen. I thought, hot doggie, I have insurance.  I called the insurance company, and they were genuinely lovely to point me to the language in the policy that says no coverage after 30 days of vacancy (you are screwed, dude)—a very costly lesson. 

You will have to assume that your flip will get broken into and that items were stolen.  So, plan for it. Plan to walk the property every day.  Even if no one is working, we must keep a close eye on the home. I have come to flips to find the following:  Someone living in the house, the door unlocked, appliances stolen, $1,000 front door gone, neighbor swimming in the pool, A/C gone, pool equipment gone.  It is tough out there. 

If it is a bad area, I usually wait on appliances until the new owner moves in.  I usually put a picture on the counter of what is coming and say it is back order and should be in soon.

So, what do you do first when you own the property?

1. Utilities need to be turned on. Water, Electric, Trash, Gas.  Be prepared to pay deposits for these services. Deposit requirements are going to be based on you.  If you are an existing customer, they will check your payment history and sometimes pull your credit.  The trick I use is that I keep a credit on my account on the local utility companies such as APS and Southwest Gas.  I usually prepay for six months on my personal account, so when they go and look, they all smile.  For city services, water/sewer/trash, they do not care and always ask for a deposit.  If you do pay a deposit, you must remember to get the deposit back.  Sometimes it’s automatically returned, but not always. 
2. Get the locks and keys figured out.  The flip usually will not come with keys. Put a lock on the gate and garage door; this is particularly important!  I typically carry a lock pick and bolt cutters in my trunk.
3. Security sign.  Over the years, I have collected those small security signs from ADT and Honeywell that say, “this house is protected by so and so.”  I bang the security sign in the ground ASAP.  I once put security cameras in the home only to come back and find that the cameras were gone.
4. Meet the neighbors.  I usually knock on the neighbors’ doors around the house and introduce myself.  This is good to do. I hand them my business card and ask them to call me if they see any problems.  (Or call the police.)  One time I knocked on the door, and the person who answered was the past owner. Oh No.  It turns out he was a nice guy and could tell me details about the house. 
5. Put lights inside on timers.  Make it look like someone is living there.
6. Focus on landscaping and lot cleanup.  Why?  Grass and plants grow at their own pace, and everything must be green and lush when you sell.  So, plat the grass and shrubs now, do not wait till you are ready to sell. I am lucky, I have developed a relationship with Javier, my landscaper.  I call him and tell him to fix it, and he does.  He has worked for me for 20 years, and I probably have paid for his kid’s college tuition.  But he is worth it.  (FYI, He has been sobered for ten years.)
7. Schedule the appliances.  They sometimes are weeks out till they are available.  Purchase them now and have them scheduled when you think you need them, usually at the end.
8. Paint.  The painting is a mess, and the paint gets everywhere.  So, paint before you put in flooring, counters, and cabinets.  Tell your painter not to worry about the floors they are being replaced.  They will love you for this.

So, where do you start? I suggest that you start with #3 Get Educated.  However, do not pay for those weekend training seminars that cost 1,000s of dollars.  Start at your local Real Estate School and get your State License. 

Dennis Dahlberg
Broker/RI/CEO/Realtor
Level 4 Funding LLC
Private Hard Money Lender
23335 N 18th Drive Suite 120,
Phoenix AZ 85027,
623-582-4444
NMLS 1018071 AZMB 0923961

About the author: Dennis has been working in the Real Estate industry in some capacity for the last 45 years. He purchased his first property when he was just 18 years old. He quickly learned about the excellent investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in Real Estate investing led him to specialize in alternative funding for Real Estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have two beautiful daughters and five amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.