Tips for your First Fix and Flip Property and Texas Commercial Real Estate Loan

House flipping can be a lucrative venture. Learn from others who have come before you—their mistakes as well as their successes—and the types of Texas Commercial Real Estate loans that work for these projects.

This Texas Commercial Real Estate investment strategy is making a comeback after its decline following the subprime mortgage crisis with 2016 seeing 6 percent of home sales falling into this category. But it has definitely changed over the years. At one time, investors simply bought a property, did little to it, and waited for the prices to increase. Nowadays, investors are adding value by making cosmetic changes such as remodeling a bathroom or kitchen.

The first step is, of course, finding a property that will turn a profit. Expand your search by checking out websites such as Auction.com or HudHomeStore.com, foreclosure notices found at the county recorder’s office, and local banks for REO properties. Many regional banks will list these types of properties on their websites. Search for Notice of Default (NOD) and always check for liens.

You’ve found your property. Now, before you get excited, get it inspected. Many first time flippers lament that they did not do due diligence when it came time to inspecting the property. It is always best to get a home inspection as these can throw light on all types of issues including those that are not readily observable such as a cracked foundation. Before you make an offer, you’ll need to determine the After Repair Value (ARV). From this, you’ll deduct the purchase price, renovation costs, and commission costs if you are working with a real estate agent. Include holding costs such as taxes, insurance, interest payments, utilities and the time it will take to fix and flip. After all, you want your first Texas Commercial Real Estate investment to be profitable!

If you’re not use to city ordinances and there is no construction license hanging up in your garage, be sure to check local laws regarding renovations and building. If you’ve decided to do the work yourself and avoid construction fees, don’t forget getting those pesky building permits, particularly if working on the plumbing, electrical or structure of the home. While on the topic of licenses, if you don’t have your real estate license, consider getting a real estate agent on your team. And if you’re not a contractor or you’re construction challenged, consider making your first property one that can be improved with cosmetic changes instead of a major structure over-hall.

Funding the Operation

Texas Commercial Real Estate often requires more of a down payment than an owner-occupied property. Since the subprime mortgage crisis, it is even more difficult to find a low or no-down payment loan. Options include obtaining a home equity line of credit on your owner-occupied home, conventional loans which require a fairly substantial down payment and take some time to fund, or a hard money loan from a private investor.

A bridge loan from a hard money lender is often used by fix-and-flip investors to obtain capital.

At Level 4 Funding, we work with hundreds of private hard money lenders. We offer 3 to 60 month terms with an APR starting at 7.99 percent. Call us for a quick no obligation quote.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

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 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.