When a person “flips” a house, they generally buy it at a low price and fix it up so it’s nice and ready to command a better purchase price. Then they sell it for a nice profit. For example, a flipper might buy an old house in a city for $40,000, make some repairs, give it a paint job, install new appliances, etc., and then “flip” it (sell it) for $80,000. This happens often these days.
Now the average person hasn’t heard of “fix-and-flip” loans/financing. Nevertheless, they might want to know about them because they’re a good deal. Flippers appreciate them.
What is a Fix-and-Flip Loan?
Fix-and-flip loans are short-term loans secured by real estate. Sometimes called “private money” loans, they come from either private investors or a fund of investors rather than banks or credit unions. Though they have higher interest rates compared to other loans, the rates are offset by their short-holding period. Plus, one can add leverage to the investment to increase ROI and scale for a fix-and-flip business.
Key benefits of fix-and-flip financing include a 7-10 day fast loan closing period to enable closing deals faster, an easy process to apply so you can get it approved quicker, and better leverage potential so you can do more deals per year to scale your business.
Say you like buying homes and fixing them up to sell at a profit… then the fix-and-flip loan might be perfect for you. Borrowers typically present a plan showing how they intend to pay off the loan after the property has been repaired or renovated.
This works well when a borrower wants to avoid slow funding times, red tape and strict borrower/property qualifications– often the kind put out by banks!
For those who compete at foreclosure auctions, do cash-only deals, fund construction and/or want to execute purchase contracts quickly, fix-and-flip financing works well.
How Mortgage Man Can Help
Mortgage Man Funding is a private lending firm in Louisville, Kentucky. Offering a variety of lending options, Mortgage Man Funding also deals with fix-and-flip loans if you’re interested. Please call 502-400-3011 for more information.
Note: Mortgage Man provides fix-and-flip loans to both experienced and first-time flippers. If you want to buy undervalued properties and need affordable financing to “make it so,” choose Mortgage Man Funding.