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Flippers Love Fix and Flip Real Estate Loans

Property flipping has become a business nearly so popular that it has its own television shows and competitions. One of the many reasons that flippers are successful is the availability of fix and flip real estate loans from hard money lenders.

Usually professional flippers have a pretty good idea of how much a property will cost to purchase, repair and renovate. Occasionally, removing a bedroom wall to turn it into en suite reveals unpleasant surprises, requiring additional financing.

Fix and Sell Short-term Loans

Banks, credit unions and mortgage companies rarely approve short-term loans because the interest rate does not exceed the risk evaluation. Fix and sell loans were created to get you hard money fast, to do the necessary repairs or to make return on investment a viable option.

Private investor financing are more flexible and can custom design a rehab home loan that will allow you to take on more than one flipping project at a time. Other real estate loans can be created, allowing you to simultaneously renovate an office, repair a retail store and reroof an apartment complex at the same time.

Loan Flexibility for House Flipping

To the uninitiated, borrowing short-term money to flip a property—whether residential or commercial— would seem at odds with the potential for high profits at the sale. Experienced real estate brokers who have become flippers themselves will tell you that fluctuations in the housing market in any given area deteriorates when the window from purchase to closing extends beyond 30-days.

Yet, unless a buyer arrives at your showing with cash in hand, expect your profit margin to decrease approximately 5% per month.

Since the money you are using isn’t yours anyway, you leverage your returns. In short, you are actually making more money than you would if you financed your flip on your own dime.

Traditional personal loans are designed as non-negotiable terms based on the concept of “it’s my ball and we’ll play my game”. With hard money lenders, you can negotiate the terms and create new options. As long as the end contract holds benefits for you and your lender, the contract is legal.

Commercial Renovation Loans

Technically, a flipper is part of the property development industry rather than a renegade contractor. Yet, bankers attach that stigma to entrepreneurs who have a limited track record of success at rehab projects and fast turnover for profit.

Small specialty contractors that focus on home improvement projects find they are limited by the concept that they are hobbyists.

Hard money financing embraces these innovators and offer the following types of loans for them.

  • Lending for property repair
  • Renovating properties with asset backed loans
  • Loans to home improvement companies
  • Lending for a new roof

The ability for a young business with a limited record of credit to get the money needed to build his/her company and keep food on his family’s table in the interim is just one of the benefits of using a hard money lender.

Do you need a Hard Money Loan for your next real estate purchase or refinance fast?