Fix and Flip Loans

My wife watches quite a bit of rehab and flip shows on the television. It’s her dream to do a flip. You know, buy a cheap, run down house and fix it up and sell it for a humongous profit. Honestly, I’m on the fence about it. I mean I love the idea of a humongous profit but, being a very busy person, the added work doesn’t appeal to me. However, making a big fat paycheck at the end is still tempting. I’m sure there will come a day when I find the right deal and try it out for myself. Who knows, maybe I’ll like it. One thing I know for sure, I'll be using a fix and flip investor loan to make the process work.

Fix and flip investor loans are specifically designed for real estate investors who buy properties with the intention of fixing them up and quickly selling them for a profit. These loans are typically short-term and have higher interest rates and fees compared to traditional mortgage loans. Fix and flip loans can be structured in different ways. Some lenders may provide the entire loan amount upfront, while others may disburse funds in stages and renovations progress. It really depends on the loan.

Typically, these loans are available to investors with some experience and a track record of success. However, there are lenders that have less stringent requirements on experience, and some require no experience at all. If you are someone that is new to flipping, you may want to partner with a more experienced person on the project. Doing this might make things smoother for you and you can use your partners’ experience for the loan if needed. This would keep you from making new flipper mistakes that could be costly to you. After all, you probably want to live to flip again if you know what I mean.

Whichever lender you choose they will require that you have proof of capital, experience, and a solid business plan. FICO scores are considered but usually go down as low as 600 FICO.  A down payment of 20-30% will be required depending on the lender.

The loans are typically short-term, ranging from a few months to a year. Repayment can be done in a few different ways depending on the loan.

• Lump sum payment: Once the property is sold, the loan amount along with the interest and fees is repaid in a lump sum.
• Interests only: Some lenders may allow interest only payment during the term of the loan, with the principal amount payable at the end.
• Monthly payment: In some cases, monthly payment of both principal and interest may be required until the loan is repaid in full.

Make sure you have a clear exit plan. Having a clear and realistic exit strategy is essential. If you are unable to sell the property within the expected time frame, you may need to refinance or find alternative sources of repayment. It’s good to have a contingency plan in place…even in a hot market.

Remember, fix and flip investments can be profitable, but they also carry risks. Proper due diligence, careful planning, and a thorough understanding of the market and financing terms are crucial for success. It's always a good idea to consult with your real estate professional and loan officers to ensure you make informed decisions.

If you want to know more feel free to reach out, You can schedule a consultation by clicking here.

Tony Hamblin

NMLS#2232049

407-902-5206