Timothy Real Estate Group | Vallarta Mexico

How to Save Your House Flips When They Don’t Sell

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One of the biggest worries of new house flippers is what happens when they can't sell their flips.

It's a legitimate fear…but one you don't need to have if you just take a few precautionary steps with your lenders ahead of time.

To do this though, it largely depends what KIND of loan you have on the house.

Here are two scenarios that you may come face to face with and how to deal with them.

1. Private Lender Lenders

When you're working with a private money lender – this could be a family member, a friend or a business acquaintance, you're the one who's setting the terms.

So when you write that promissory note, you're going to personally guarantee the loan. I do this on all my note holders; I personally guarantee them, depending on the situation.

If it's an equity deal, then it's a little different – but on a pure note we usually personally promise them. It's really important to me to make sure my lenders are well protected.

I do this because I don't want to be in a position where I can't pay off that note only because it went beyond the 12 months. So what we typically add in a stipulation our promissory note that includes a “when the property sells” provision.

The idea is not to make you lazy or give you a false sense of security, but to protect you in case hings go wrong.

Never forget that in house flipping, time is money and you never want to be in a property longer than six months.

This provision just gives you a little extra layer of protection to know that you're not going to be foreclosed on hard by your lender.

2. Hard Money Lenders

If you're in a deal with a hard money lender, then the rules are completely different…so this section is a bit more lengthy.

When you borrow hard money, the hard money lender creates the rules, they're professional lenders just like bank and most of them really know their stuff.

Some house flippers, eager to get their first deal funded with a hard money lender, get too aggressive and set their terms for six months.

Big mistake…

Never, ever, ever get into a six-month loan with a hard money lender. I don't recommend them…its just not enough time, especially when you're first starting out flipping.

Its completely plausible that you could buy a property and it could take you 60-plus days just to rehab it. Not that you want to take that long on a rehab, but it can happen.

If the rehab takes 60 days, thats two full months into it and only after that, you can list it and start the selling process.

But lets say its towards the end of the year and it took a couple of months for the selling season to come. Or perhaps you could sell ...read more

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One of the biggest worries of new house flippers is what happens when they can’t sell their flips. It’s a legitimate fear…but one you don’t need to have if you just take a few precautionary steps with your lenders ahead of time.  To do this though, it largely depends what KIND of loan you have on the house.  Here are two scenarios that you may come face to face with and how to deal with them.

1. Private Lender Lenders

When you’re working with a private money lender – this could be a family member, a friend or a business acquaintance, you’re the one who’s setting the terms.

So when you write that promissory note, you’re going to personally guarantee the loan. I do this on all my note holders; I personally guarantee them, depending on the situation.

If it’s an equity deal, then it’s a little different – but on a pure note we usually personally promise them. It’s really important to me to make sure my lenders are well protected.

I do this because I don’t want to be in a position where I can’t pay off that note only because it went beyond the 12 months. So what we typically add in a stipulation our promissory note that includes a “when the property sells” provision.

The idea is not to make you lazy or give you a false sense of security, but to protect you in case hings go wrong.

Never forget that in house flipping, time is money and you never want to be in a property longer than six months.

This provision just gives you a little extra layer of protection to know that you’re not going to be foreclosed on hard by your lender.

2. Hard Money Lenders

If you’re in a deal with a hard money lender, then the rules are completely different…so this section is a bit more lengthy.

When you borrow hard money, the hard money lender creates the rules, they’re professional lenders just like bank and most of them really know their stuff.

Some house flippers, eager to get their first deal funded with a hard money lender, get too aggressive and set their terms for six months.

Big mistake…

Never, ever, ever get into a six-month loan with a hard money lender. I don’t recommend them…its just not enough time, especially when you’re first starting out flipping.

Its completely plausible that you could buy a property and it could take you 60-plus days just to rehab it. Not that you want to take that long on a rehab, but it can happen.

If the rehab takes 60 days, thats two full months into it and only after that, you can list it and start the selling process.

But lets say its towards the end of the year and it took a couple of months for the selling season to come. Or perhaps you could sell …read more

Timothy Real Estate Group is a locally-owned and operated real estate brokerage with a strategic location in the Romantic Zone of Puerto Vallarta in the Colonia Emiliano Zapata. Because the Puerto Vallarta area has varying neighborhood personalities, we practice localized real estate. We believe neighborhood knowledge is a top factor in solid sales, and we know our communities well.

We enable our clients to realize their vision for the future.  We understand and plan for their concerns and are dedicated to transforming those concerns to peace of mind and joy.

Our philosophy of transparency, integrity, and professionalism imbues our culture with a tangible sense of purpose and results in the length and depth of the quality relationships we enjoy.  We believe buying or selling a home is first and foremost about people. Of course we have the latest technology, marketing tools, statistics and research, but a successful real estate transaction really comes down to people. Connecting the right buyers to sellers or investors our professional agents structure solid transactions with successful solid outcomes.  We believe in collaboration by connecting people in ways that bring satisfaction and success.

When you combine extensive local knowledge and our long standing reputation for honesty and sound judgment, you have an unbeatable resource at your disposal.  You have Timothy Real Estate Group, a constant leader in Puerto Vallarta real estate.

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