Rehabbing a Home? Consider Fix and Flip Loans
If you are considering a career in the real estate business as a house flipper, you should know that this challenging and unique entrepreneurial business is increasing in popularity and has much to offer those who choose it. However, if you cannot secure the finances you need through traditional means, then you may want to consider looking into fix and flip loans. These loans, which offer such advantages as reduced interest, a swift application process and funds for those who have average to poor credit, may be the answer to your financial requirements as you rehab a home.
Fix and flip loans are typically available from real estate investment groups, crowdsourcing, or from a single investor who is interested in funding a smaller rehab project. While these loans can give you a head start when it comes to flipping a home, it is important to remember that most lenders typically fund no more than 65 percent of the home’s total value after it is renovated. As a result, you will have to have the home and property appraised by a professional who can properly estimate what it will be worth in the future before you know exactly how much money you can receive.
One of the greatest advantages of these loans is that they tend to close quickly once all of the paperwork is submitted. In most cases, a loan of this type can be processed within two to three weeks, which means you can begin repairs on your rehab home almost right away. Bank loans can take months to process, which can cause a delay in launching your project and cost you time and money. Keep in mind that you will need to submit a property appraisal and a repair estimate before a fix and flip loan can be granted.
Fix and flip loans are ideal if you are trying to flip a home for the first time because groups and individuals who offer them usually do not require that you have prior experience in the real estate business. In order to qualify, you need a credit score in or above the 620 range and your credit history must be free of recent bankruptcies. While each lender is different, these terms makes it easier for inexperienced flippers to successfully make a profit on their first rehab home.
Fix and flip loans can be a highly viable resource for rehabbing a home. Remember to plan carefully and compare lender interest rates and terms so you can find one that best suits your needs and budget.