Why Banks Don't Like to Give Loans to Flip Houses in Arizona (And What You Can Do About It)

Going to banks for Loans to Flip Houses in Arizona usually results in a big fat “DENIED” letter. The good news is, there are other ways to increase your eligibility for funding.

Working on fix-and-flips can increase your wealth dramatically, especially if you’re already handy or have some experience in real estate or finance. However, getting your hands on financing, particularly for your first few properties, is a real challenge because traditional financing doesn’t work. Banks will typically tell you “no” for one of three reasons;

1. You’re not living in the home. Banks like owner-occupied homes because the person making the payments obviously needs a place to live. In other words, you’d move mountains to keep your home, no matter what else happens in your life. If you’re not living there, the bank will likely consider offering any kind of cash too risky.

2. The property is not in good repair. Some of the best fix-and-flip deals have serious issues, like roof or structural damage. They can’t be lived in because of this. If the bank were to give you Loans to Flip Houses in Arizona and you didn’t make good on payments or fix it, they’d be stuck with an unlivable house that they’d have to fix before unloading. It’s an expensive and undesirable situation for them.

3. Your credit isn’t spectacular and you don’t have business credit yet. It takes small businesses quite some time to establish credit, especially if you’re asking for tens of thousands or hundreds of thousands of dollars. In most industries, the business owner uses his or her personal credit until the business is established, but most people don’t have strong enough credit to cover the large amounts of cash needed for purchasing a property. If you already have a mortgage for your own home, that’s a double ding. They’ll be looking at it from the standpoint of making two mortgage payments; something most people cannot do.

Increase Your Eligibility by Choosing Alternative Funding

Banks aren’t the only ones you can go to when you need Loans to Flip Houses in Arizona. Oftentimes, people in the industry go with hard money instead. This refers to financing based on the value of an asset, rather than the criteria banks usually use. It’s easier to get and it doesn’t matter if the house is a wreck or if your credit is rotten. You’ll also hear it referred to as private money, simply because the people financing your project are regular people versus institutions or banks.

A seasoned broker can help make your dreams come true.

It probably goes without saying, but private individuals with cash to invest don’t hang around street corners asking people if they need cash. To get Loans to Flip Houses in Arizona with great terms, you’ll need to work with a broker who is familiar with multiple investors and can match you with someone who’s a good fit for your project. A seasoned broker will also help you shore up your plan if need be, so the deal looks good to investors and you have more success with your rehab projects. Whether you’re just looking for info or already have a property picked out, speak with a broker who works with hard money and you’ll increase your chances of getting approved dramatically.

Dennis Dahlber Broker Ri CEO Level 4 Funding LLC 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

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 and 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.