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"ARV" stands for After Repair Value. It refers to the estimated value of a property after it has undergone repairs or renovations.
HML are short-term loans typically provided by private lenders or investors based on the value of a property rather than the borrower's creditworthiness. These loans are often used in real estate investing and offer quicker access to funding compared to traditional bank loans
The "HML Loan Amount" represents the total amount of the hard money loan provided by a lender for a real estate project.
"HML Points" refer to the upfront fees charged by the hard money lender, typically expressed as a percentage of the loan amount.
"HML Total Interest" represents the total interest paid over the life of the hard money loan.
"HML Admin Fees" are administrative fees charged by the hard money lender for loan processing and management.
The "GAP Loan Amount" refers to the additional loan obtained to cover the gap between the primary loan and the total project costs.
"GAP Points" represent the fees charged by the GAP lender, typically expressed as a percentage of the loan amount.
"GAP Interest" refers to the interest charged on the GAP loan amount.
"TPC stands for Total Project Costs plus the dollar amount as a percentage of the After Repair Value. It represents the overall expenses of the project relative to the expected value of the property after repairs.
"HML LTV (ARV)" represents the Loan-to-Value ratio for the hard money loan, calculated based on the After Repair Value of the property.
"HML Interest Rate" is the annual interest rate charged on the hard money loan.
"Interest Type" refers to the type of interest charged on the loan, such as fixed or variable.
"RE Commissions" represent the commissions paid to real estate agents or brokers involved in the sale or purchase of a property.
"Resale Closing Costs" refer to the expenses incurred during the transfer of ownership when selling a property.
"GAP" typically refers to the additional loan or financing obtained to bridge the gap between the primary loan and the total project costs.
"GAP Equity Share" represents the portion of equity in the property that the GAP lender may hold as part of the financing arrangement.
"GAP Equity %" represents the percentage of the property's equity retained by the GAP lender.
"GAP Return" indicates the return on investment or profitability associated with the GAP financing.
"GAP ROI" stands for Return on Investment on the GAP financing, representing the profitability relative to the investment made.
"Profit Min %" refers to the minimum desired percentage of profit that a real estate investor aims to achieve in a flipping project.
"Profit Min $" indicates the minimum desired amount of profit that a real estate investor aims to achieve in a flipping project.
"Projection" indicates the estimated financial outcome or forecast of a real estate project based on various factors and calculations.
Anticipating project duration is essential, even for quick flips. It is important to run calculations considering a timeline of six months from the day of property acquisition until the transfer of keys. This timeline encompasses different stages of the process. For example, if a house is purchased, it may take around three months for renovations by contractors. Following that, the property is listed on the market, which typically takes about 30 days to receive an offer. Then, there is an additional period of around 45 days for the closing process. Considering these factors, including renovation, market exposure, and closing time, the total duration is usually around five and a half months. To ensure accurate projections, it is advisable to account for a six-month timeframe in calculations
Monthly Holding Costs refers to the recurring expenses associated with holding a property during the flipping process. It includes various components such as taxes, insurance, utility bills, and other monthly expenses. These costs are incurred while the property is being renovated, marketed, and waiting for a buyer. Properly accounting for monthly holding costs is crucial for accurate financial projections and ensuring the overall profitability of the flipping project.