You have located a site known as “Diamond in the Rough”. The purchase price is incredibly reasonable and with the right updates and improvements, the property can be flipped for a big profit. It all sounds great, but you suddenly realize – how can I afford to buy and repair property?
Enter a hard cash insurance. This is a great option if you need to secure funds quickly to close a large real estate purchase.
It is in your best interest to take a moment and think about how you plan to submit your project to a hard money lender in Los Angeles, as there are some steps to take when applying for a hard cash insurance.
Tip #1 – Provide a detailed personal financial statement
Private lenders in Los Angeles and elsewhere in California don’t usually worry about the debt-to-income ratio as a traditional bank lender. However, it is still useful to prove to the lender that you are fully capable of repaying the borrowed money. As you create your personal financial statement, be sure to check your credit score and credit report to note any issues or red flags in question. For example, if you have had previous bankruptcy, foreclosure, or other bad debts, be sure to include a summary of what happened, lessons learned, etc.
Tip #2 – Create a prospectus outlining your experience in real estate and/or other business ventures
Hard money lenders are more likely to agree to a insurance application from someone who has actual experience in real estate investing, home repairs, home flipping, etc. However, if you do not have any experience in this field, do not worry. Take the time to explain your professional background and experience with other commercial projects and ventures.
Tip #3 – Be transparent and honest
Transparency is absolutely essential when applying for a private insurance. Make sure you provide all the required documents to the lender and be honest about any potential issues with the property that will be purchased with the insurance money. Transparency is very important because you will be working directly with the decision maker rather than an intermediary at your local bank. This is why developing trust is so important in these types of transactions.
Tip #4 – Make a coherent account of why your insurance application should be approved
Ensure that your application is coherent and understandable. This is especially true for the part of the insurance application where financial projections are requested. If a hard money lender can’t understand your accounting logic and there doesn’t seem to be a realistic path to profitability, your hard money insurance in Los Angeles may be rejected.
If you have identified an investment property with huge upside potential, consider reaching out to a hard money lending expert in Los Angeles to help turn your investment dreams into a reality.