Step 1: Get Pre-approved
One way to close your rehab deal quickly is to obtain a proof of funds letter from your lender. A proof of funds letter states the amount your lender has officially agreed to lend you based on what you have qualified for. Your lender will take a look at your credit, verify that you have the liquidity necessary for your “skin in the game,” and review your track record and your plan for the project. Once you are prequalified, your lender will provide you with a proof of funds letter which you can submit with your offer.
Step 2: Know Your Numbers
One of biggest mistakes you can make is being overly optimistic in your estimations on how much the renovation will cost, how long it will take you to complete, or what the property will sell for when you sell. If you underestimate the cost of the renovation, you may run out of money before the project is completed. If you don’t have a workflow plan prepared, you may take to long to complete the project and lose any potential profit due to holding costs. If you overestimate how much the property will sell for once you complete the renovations. Choosing to work with conservative estimates for your project will benefit you in the long run.
Step 3: Make Sure Your Capital Partner Can Move Fast
Once your offer on the property is accepted, you will want to close as fast as you can so you can get started with the renovation. Having a lender who can move fast and get your deal across the table as soon as possible is the most important step. Competition is fierce in the bidding process for good investment houses, so you will need to be prepared to move fast, show proof of funds quickly, and be able to close on time.
Want to find out how you can close your next deal in a hurry when you’re under the gun? Join us for our free webinar on December 12 and learn how you can close your deals in under 10 days!