A fix and flip loan is different than a traditional mortgage when you want to buy a property for the purpose of renovating and selling it for a profit. If you're trying to get into investment properties, this type of loan can be your best shot at getting the money you need to buy a property that can be rehabilitated. When you want to fix and flip a home, you have to get the funds quickly. A traditional mortgage lender is not going to move fast enough, and may not fund your purchase because of the risk it involves. A hard money lender will provide you with fix and flip financing in about a week if the deal is a good.
Your Down Payment When Doing Your First Flip
As a real estate investor, you have to start somewhere. Fix and flip loans will give you the cash you need fast, but you will have to come up with a down payment. Most loans require a 20% down payment, and some require even more. If you have good credit, or experience flipping homes, your lender may be willing to negotiate for a smaller down payment. You can get your down payment if you have equity in your home, or if you have been saving cash to get started in the business of flipping homes.
The Length of Your Loan
When it comes to fix and flip financing, it pays to have a partner who has experience flipping houses. Your loan may come due within six months or a year, and you want to be able to pay off the loan with the proceeds from selling the home you purchased through a hard money lender. Your profit will depend on how fast you can sell the property, and how much it costs to renovate the property in the first place.
Documentation for Hard Money Loans
There is minimal documentation needed when you want a hard money loan and are using a property to secure the loan. As long as the hard money lender sees that this is a good deal, you may receive 60-75% of the purchase price from the lender in order to purchase the fix and flip property. If you don't meet your loan obligations, the lender can take over the property and complete the renovation, selling the property at a profit anyway.
If you're looking to get into flipping houses, start saving for your down payment. With short term fix and flip loans, your future in property investing can become a reality.
Share30 December 2019
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