The Benefits of Fix and Flip Loans
So you’re interested in joining in on the fix and flip market? Not sure how to get a head start? You may want to look into taking out fix and flip loans to help you get an edge on the market. One of the many benefits of these loans is that there is something out there for everyone; no matter your experience with home flipping, there will be a loan option available for you to consider.
For example, if you are new to flipping houses for profit, you may qualify for a hard money loan, or a private money loan. These don’t require previous experience or great credit, but they do have higher interest rates and can be costly. If you have flipped homes before, you may qualify for a bank loan—these are very cost-effective, yet processing and approval times may take longer than other loans would. There are also some great real estate crowd-funding loans you might consider, if you have previous house-flipping experience, and these can only take a few days to process. It can be a good option if you find you are short on time, and it may also provide a little more money than the other types of loans can typically approve.
Other benefits of fix and flip loans include the life span of the loan itself—these loans typically last up to one year tops, and you settle the loan transaction when your house sells with the money you have received from the buyer. In the meantime, while you are actually fixing up the home, you only need to pay interest on the loan. Additionally, the loans themselves can fund the majority of your project; typically around 65%-85% After Repair Value, depending on the loan type you selected.
Loan funds don’t have to be limited to purchasing the home itself, however. These loans can be utilized for all kinds of necessities that rehabbing requires, such as supplies, contracting services and staging costs. It’s true that you can also use personal resources to cover rehab costs, like a personal loan or credit card; it all really comes down to planning wisely. The benefit of fix and flip loans is that they are designed specifically for the task at hand, with terms that stretch just the right length of time and generous funding to accommodate exactly what your home needs, when it needs it. By learning more about these loans and finding out whether it’s right for you, you may be doing yourself a big favor in getting into the house flipping market.