Whether you are just getting into Fix and Flips, or if you’re a real estate investment veteran, it is natural to be thinking about the first or next flip property. No doubt, the property is the focus of the project. However, there are many benefits to cover funding before the flip by putting “Pre-Approval for a Fix and Flip Loan” at the top of your priority list.
Pre-approval for your fix-and-flip funding is a matter of securing not only your rate and terms, but securing your ticket to play in a competitive real estate investment market. Here are 3 reasons to put funding first.
- Pre-Approval for a Fix and Flip Loan is Fast, Easy and FreePre-Approval for your flip loans with a private lender (often called “hard money” in the real estate investment industry), is usually fast, easy and free. The Pre-Approval Request for MM Lending is HERE, takes about 2 minutes to send, and then the pre-approval with rate quoting (if approved) is done in less than 24 hours.Once you are pre-approved, you have the interest rate and lending limits you need to define your potential flip budget. Plus, when you find that ideal property, you are approved for the funding, so you can quickly close on your investment property. If you haven’t already secured funding, you could encounter road blocks in the approval process which cause delay and more risk of losing the deal, which leads us to the next reason to “fund first” …
- Shopping the Loan is Securing Certainty and Optimal Profit Margin
If you are concerned about your credit score or any other issue that might result in a loan denial or a high interest rate … all the more reason to get pre-approved now. If you encounter any finance issues preventing loan approval, you want to take care of those and then work toward pre-approval before you spend time finding a flip that you wouldn’t be able to fund.On that note, you will likely find that you don’t need a high credit score to get pre-approval for a fix and flip loan. The property is the security against the loan, so that covers most of the risk. You may also find with private lenders, as you would with MM Lending, that more experience in flipping houses will secure lower rates, as the lack of experience is increased risk (in the eyes of the lender) in managing the flip on schedule and on budget.Even after you are pre-approved, or if you’re the veteran who already has funding, you will always benefit from securing more pre-approvals and shopping your options for rates. With multiple pre-approvals, you can be assured you have the lowest rate for your flip, and therefore your greatest profit potential. Plus, you have back-up funding in case something falls through with one lending source at the time you want to quickly close on a deal. Private, self-funded lenders could simply have exhausted their funding at the time you want to move on a property, so you need multiple lending options pre-approved and ready to close.
- Pre-Approval Isn’t Just for the Next Flip. It’s Your Ticket to Play in a Competitive Market.
Once you’re pre-approved with a rate and terms for fix and flip loans, you can pursue one flip after the next, after the next, with the assurance of funding. This can be a matter of survival — your ticket to play — in a competitive flip market, as you will find that the experienced investors have funding ready to close on the property as soon as they find it. Also, as previously stated, you not only have the benefit of funding with pre-approval, but you have your numbers as well. So, as soon as you find that property and have estimated the rehab project, you can do your numbers and estimate your profit.
There you have it. There are at least three solid reasons to get pre-approved for a fix-and-flip loan if you are planning to start flipping, or looking for that next project. So the next question is … what are the reasons to not get pre-approved?
MM Lending is your local, experienced and highly rated private lender for fix-and-flip lending in Louisville, Indianapolis and Cincinnati. We take pride in making our processes fast and simple … with pre-approval within 24 hours, funding 90% of the purchase of the property and 100% of the rehab costs, and closing within 7 to 10 days.