Fix and Flip Loans for Beginners


Fixing up a home and flipping it for a profit is a great way to generate income. But how does someone new to real estate investing get started? The reality television shows make it look so easy, but a major part is missing from their 30-minute airtime: financing. Since you probably don’t have hundreds of thousands of dollars just sitting around for a rainy day, how can you get the starting capital you need? Simply put, you should look at a fix and flip loan from a hard money lender. For beginners, it’s easier and quicker to get than you might think.


What is a Fix and Flip Loan?
 
Sometimes referred to as a rehab loan, a fix and flip loan can help you purchase, refinance or renovatean investment property. It is a type of hard money loan, meaning the lender focuses on the value of the property you wish to acquire (or have already acquired), rather than focusing on your credit score and income.


What are the Advantages of a Fix and Flip Loan?
The conventional mortgage processis long and cumbersome, and it doesn’t make sense to someone looking to finance a fix and flip property. They can take 30–45 days to close, they come with a lot of banking regulations/checklists, credit scores are heavily taken into account, they’re incredibly inflexible with payment schedules, and they often require a significant down payment. That’s a lot of hassle and capital.

Fix and flip loans, on the other hand, are designed by lenders who understand what you’re trying to achieve. These lenders know that you’re working to increase the property value through renovations. And they’ve built some advantages into their loans for you:
·         Speed: There’s no need to wait up to 45 days for a loan to close on your investment property. A fix and flip loan is designed to close within days, allowing you to get moving on your project.
·         Flexible Payment Schedules: A fix and flip loan is designed so that the lender has the freedom to adjust the payment schedule (and other terms) to help you out when necessary.
·         Minimal Upfront Capital: With a fix and flip loan, you’ll only have to come up with a down payment, making securing it that much easier. Value-added lenders will finance all closing costs and set up an interest reserve that covers your interest payments for the first six months.
·         Easier Approval: Though credit history is taken into account by a hard money lender, their main focus will fall on the value of the property itself.

Getting a Fix and Flip Loan is Easy.
You can get your fix and flip loanwith just a few simple steps:
1.      Identify the property you want to flip
2.      Submit your information to apply, including:
a.       Personal financial statement
b.      Proof of income
c.       Property information
3.      The loan goes through the underwriting process
4.      The loan gets approved (often in just a few minutes)
5.      Loan closing

And just like that, you can be on your way to starting your first fix and flip project. It’s not as easy as the reality shows make it out to be, but it’s not impossible either. With proper planning, getting your fix and flip loan can be simple. Good luck!

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