fix and flip loans

Flipping a property can be a profitable business if you set goals and stick to them. Popular shows on HGTV makes it look simple. In reality, there is a lot more to the process.

Once you find a property, you have to secure it quickly. Next, you’ll need to calculate how much it’s going to cost to rehab the house. Getting the work done is another aspect. The hardest part comes when it’s time to sell. You may find home valuations, at

Rarely will a house sell within the first 10 days after being placed on the market. Fix and flip loans make it possible for the house flipper to move on to the next project.

How do people secure financing for house flipping? They use personal funds, money from a previous flip, bank loans or they find hard money or private investors.

Are you thinking about getting into the house flipping business and need a way to finance your projects? Keep reading to learn more about the benefits of using hard money lenders.

What are Fix and Flip Loans?

Fix and flip loans are lending opportunities geared towards rehab properties. There are several types of loans a borrower can apply for to rehab a home. Unfortunately, most are designed for people wanting to make the home their primary residence.

These include:

  • FHA 203(k) Loan (for a primary residence)
  • Fannie Mae HomeStyle Renovation Mortgage
  • Home Equity Loan

When it comes to rehabbing a home to sell for profit, these are the options:

  • Investor Line of Credit
  • Hard Money Rehab Loan

What is a Hard Money Lender?

The most common house flipping loans are Hard Money Loans. They are easier to qualify for because they are not issued through traditional banks.

In its simplest terms, a hard money lender is anyone outside of traditional banking that can loan money. This can be a family member, colleague, or a group of friends.

The term hard money typically applies to the terms of the loan which are less favorable than borrowing from a bank or someone you know. The benefit is, you’ll have access to people that can back a multi-million dollar project.

These loans are funded by private investors looking for a quick return. Unlike traditional lending institutions, the lender sets the requirements. They also do not require the same documents and can close on a loan in days, not months.

Locating a Lender

The process of connecting with a lender is easier than you think. Do an online search for a private investor or real estate investor. The search will return a list of companies that connect individuals with people looking to finance projects.

You’ll complete a basic online application requesting standard information such as who you are, the project type, and how much money you need to fund the project. After looking over the information, they’ll determine which investors are best suited for your needs.

If someone is interested in becoming your financial backer, the loan process will move to the next steps.

Terms and Conditions are Simple

The terms and conditions of the loan are set by the private investor. He or she has to assess the level of risk associated with each applicant seeking money for flipping houses.

Unlike FHA government-backed loans, the interest rates will be higher. Borrowers can expect to pay interest at a rate of 10% or higher. These loans do not have 30-year repayment plans.

Hard money lenders want to see a return in about six to 12 months. Depending on the scope of the project, you can secure a loan for up to 48 months.

If you are running into delays or the home doesn’t sell as quickly as you planned, hard money loans can be refinanced. Some restrictions place time limits on how soon a refinance can occur.

You Do Not Need Perfect Credit

Fix and flip loans using private investors are growing in popularity because you do not need perfect credit to secure a loan. The investors are more concerned with your ability to repay the money in the specified time frame.

Although credit scores are a factor they aren’t to the extent that a traditional bank will use it to deny a loan. Is it possible to get financing for flipping houses with a credit score below 600? Chances are you could.

The investor will look at past project successes, how long you’ve been in business and the current status of unpaid debts.

The Property is the Collateral

Private investors are not in the business of selling properties to recoup their money. Sometimes it is the only way to be made whole after a borrower reneges on a fix and flip loan.

One condition of a hard money loan is the property is used as collateral. If the terms of the loan are not met, the lender will secure the property and sell it.

For people relying on this type of financing, this can kill future financing opportunities.

Easy to Build a Business Relationship

Abiding by the terms of the loan is a great way to build a business relationship. Although you may never meet the person financing the project, you’ll be in good standing with the company that negotiated the loan.

When the lender sees you are looking for financing on a new project, it will be easy to get a yes.

No Need to Tie-up Your Personal Funds

This is the best part of using a private investor for your project. You’re not tying up your own money until the project is complete. You also don’t have to secure the loan with personal property. Your home and investments are safe.

Are You Ready to Locate Your First Property?

Fix and flip loans get you immediate access to money. Utilize the system to your advantage. Leave with a good reputation and the opportunity to take advantage of future lending.

Do you need money to get into the game? Click here to reach out to us with your questions about securing a hard money loan.

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