Fix and Flip Loans

Are you looking to invest in a property with the potential for high returns? Fix and flip properties can be an excellent investment opportunity. Fix and flip loans are designed specifically for real estate investors who want to purchase distressed or outdated properties, renovate them and sell them at a profit – also known as "rehabbing" or "flipping."

What is a Fix and Flip Loan?

A fix and flip loan is a type of short-term financing that enables real estate investors to purchase distressed properties, renovate them quickly, and sell them for a profit. These loans are designed specifically for house flippers who buy properties in need of significant repairs or upgrades that will add value. Unlike traditional mortgages, fix and flip loans have shorter terms (typically ranging from six months to two years) and higher interest rates. They are often provided by private lenders or alternative lending institutions rather than banks.

How do Fix and Flip Loans Work?

1. First, fix and flip lenders evaluate the property's After Repair Value (ARV) to determine its potential worth after renovations. They then offer a loan that covers the purchase price of the property as well as the cost of repairs.
2. Once approved, borrowers can use the funds to buy the property and begin renovating it. The lender will typically release funds in stages or draws based on project milestones. As interest rates on fix-and-flip loans tend to be higher than traditional mortgages, borrowers aim to complete their projects quickly so they can sell their home for a profit sooner rather than later.
3. When the renovated home is sold, any profits earned are used to repay back both principal borrowed amount plus interest to pay off your loan.

Example of a Rehab and Flip

•Buy single family home for $500,000

•cost to rehab/renovate is $100,000

•After rehab value(ARV) is $775,000

• loan offered will be up to 70 ARV, or $542,500.

The investor will need to put $157,500 into the deal to make 112% return ($175,000) in 3 to 6 months depending when the rehab is completed and sold.

What are the requirements to be eligible?

‐ property; must meet certain criteria such as location, condition, and market value after renovation.

‐borrower; must have a minimum credit score of 660 and documented experience of rehabbing and selling within the last 2 years.

‐rehab crew; requires licensed contractors to complete the project.

How fast can we close?

‐funding time:These renovate and flip loans can close within 10-14 days.