Grow your real estate investing business with the most competitive and transparent private lender for bridge loans (hard money, fix & flip, rehab, ground up construction), DSCR rental loans.

Private Lender for DSCR Loans and Fix & Flip Loans | OfferMarket

Private Lender for DSCR Loans and Fix & Flip Loans

An individual training to become a licensed real estate appraiser who has completed at least 75 hours of education.

 

## Related terms
- [Certified General Appraiser](https://www.offermarket.us/real-estate-glossary/certified-general-appraiser)
- [Certified Residential Appraiser](https://www.offermarket.us/real-estate-glossary/certified-residential-appraiser)
- [Licensed Residential Appraiser](https://www.offermarket.us/real-estate-glossary/licensed-residential-appraiser)

A Trainee Appraiser is an individual training to become a licensed real estate appraiser who has completed at least 75 hours of education.

Trainee Appraiser - Real Estate Glossary - OfferMarket

What is a Trainee Appraiser in real estate?

A real estate appraisal is the process of developing an opinion of value for real property. Appraisals are performed by licensed real estate appraisers.

 

Appraisals differ from Broker Price Opinion (BPO) and Real Estate Valuation in that appraisals can only be performed by licensed real estate appraisers.

 

You can receive a [free real estate valuation estimate](https://www.offermarket.us/tools/free-real-estate-valuation), compliments of OfferMarket.

Real estate appraisal is the process of developing an opinion of value for real property. Appraisals are performed by licensed real estate appraisers.

Appraisal - Real Estate Glossary - OfferMarket

What is a real estate Appraisal?

An appraiser is a licensed real estate professional who has completed at least 150 hours of courses and accumulated 1,000 hours of experience. No college degree is required.


 

## Related terms
- [Certified General Appraiser](https://www.offermarket.us/real-estate-glossary/certified-general-appraiser)
- [Certified Residential Appraiser](https://www.offermarket.us/real-estate-glossary/certified-residential-appraiser)
- [Trainee Appraiser](https://www.offermarket.us/real-estate-glossary/trainee-appraiser)

A Licensed Residential Appraiser is a licensed real estate professional who has completed at least 150 hours of courses and accumulated 1,000 hours of experience. No college degree is required.

Licensed Residential Appraiser - Real Estate Glossary - OfferMarket

What is a Licensed Residential Appraiser?

#### What is a 203k loan?

 

A 203k loan is a rehabilitation loan issued by the Federal Housing Administration (FHA) that includes purchase price and construction budget for a property. 203k loans are issued by participating mortgage lenders to qualifying homebuyers who intend to live in the property once construction is completed. A licensed [general contractor](https://www.offermarket.us/real-estate-glossary/general-contractor) is required to ensure the construction is completed on time and on budget. The budget is determined by a 3rd party 203k inspector who issues a Specification Of Repairs ("SOR") which is reconciled with the general contractor's budget.

 

#### What is the down payment for a 203k loan?

 

203k loans require just a 3.5% down payment on the value of the purchase price plus the SOR budget.

 

#### How does a 203k loan work?

 

Let's say you buy a house that needs significant [rehab](https://www.offermarket.us/real-estate-glossary/rehab) before moving in. The [purchase price](https://www.offermarket.us/real-estate-glossary/purchase-price) is $100,000 and the rehab budget based the SOR is $100,000. You just need to put down 3.5% of the $200,000 value or $7,000 plus closing costs. That leaves a loan of $193,000. The bank issuing the loan has an [appraisal](https://www.offermarket.us/real-estate-glossary/appraisal) conducted to make sure the rehabbed property is worth at least as much as the investment price (purchase price plus rehab budget). 

 

An [appraisal](https://www.offermarket.us/real-estate-glossary/appraisal) is conducted and the appraiser determines, based on [comps](https://www.offermarket.us/real-estate-glossary/comps), that the complete house will be worth $250,000. The rehab is completed on budget, with the contractor being paid in 3 separate draws based on work performed against the SOR.

 

At the end of the project, you move into a house that is worth $250,000, with a $193,000 mortgage loan. That means you have 22.8% equity in the property worth $57,000. You went from 3.5% equity down payment to 22.8% equity, for a gain of $50,000 in equity. Not too shabby!

A 203k loan is a loan issued by the Federal Housing Administration (FHA) that includes purchase price and construction budget for a property.

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FHA 203k Loan - Real Estate Glossary - OfferMarket

What is FHA 203k Loan in real estate?

#### What is an assignment of contract?

 

An assignment of contract is when the Buyer in a real estate transaction assigns their role to another Buyer in exchange for a fee.

 

The act of one buyer selling a contract to another buyer is commonly referred to as real estate "wholesaling".

 

#### Let's review an example of an assignment of contract

 

Joe is a real estate wholesaler and he notices 123 Main St is badly in need of landscaping and renovation. He does some research and finds that the property was inherited by Greg who lives out of state and has no interest in dealing with the property. 

 

Joe knows several local [fix and flip](https://www.offermarket.us/real-estate-glossary/fix-and-flip) and rental property investors who would buy this property for the right price. He tours the property and conservatively estimates the rehab budget necessary to get 123 Main St to an [after-repair value (ARV)](https://www.offermarket.us/real-estate-glossary/arv-after-repair-value) of similar houses in good condition in the neighborhood. Joe runs some numbers to determine the range that his investors would be willing to pay and makes an offer to Greg for $25,000. 

 

Greg accepts the offer and Joe markets the contract to his buyer's list at $30,000 which is the $25,000 purchase price plus a $5,000 assignment fee. Sure enough Stan, one of Joe's most reliable buyers, offers to pay Joe's asking price. Stan signs Joe's Assignment Agreement where he promises to take over the role as Buyer of 123 Main St and pay Joe $5,000 at closing.

An assignment of contract is when the Buyer in a real estate transaction assigns their role to another Buyer in exchange for a fee. There's more to learn about assignable contracts at OfferMarket.

Assignment Of Contract - Real Estate Glossary

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Assignment Of Contract - Real Estate Glossary - OfferMarket

What is Assignment Of Contract in real estate?

**Step 1:** Buy 
**Step 2:** [Rehab](https://offermarket.us/real-estate-glossary/rehab) 
**Step 3:** Rent 
**Step 4:** Refinance

 

## BRRR Method

 

Buy, [Rehab](https://offermarket.us/real-estate-glossary/rehab), Rent, Refinance. This is a methodology of buying properties in cash or with a [fix and flip loan](), renovating them to increase their value, and then taking out a mortgage in hopes of recouping most, all or even more than your initial investment in the property.

 

## BRRR Meaning

Let's say you buy a property for $100,000 and [rehab](https://offermarket.us/real-estate-glossary/rehab) it for $50,000. Your investment is $150,000. You then rent it out for $1,500/month. You go to a bank or [private lender](https://offermarket.us/real-estate-glossary/private-lender) to refinance the property. The property appraises for $200,000 because of the comparable home sales in the area and the monthly rental income you were able to demonstrate. You refinance into a mortgage loan with a 75% loan-to-value ([LTV](https://offermarket.us/real-estate-glossary/ltv)) ratio. This means the lender gives you $150,000 back which you can use for your next deal. You now have $50,000 in equity remaining in the property. Your outstanding loan principal is $150,000 which you will be paying down with interest on a monthly basis.

 

Keep in mind, you were able to buy off-market for a discount, and renovate cost effectively. This is the primary contributing factor to the $50,000 spread between your investment of $150,000 and the appraised value of $200,000.

Buy, Rehab, Rent, Refinance.  This is a highly effective methodology for high ROI rental property investing.