Fix And Flip Loans
Fix and Flip Loans
Fix and flip loans (also called hard money rehab loans, investment property rehab loans and house flipping loans) are short term loans usually used to purchase a property needing improvement and to do the necessary improvement with the goal of selling the property in a few months for a profit. This types of loans are not available from traditional lending institutions.
Because these construction loans are offered by hard money lenders, qualification requirements are usually more flexible and can be tailored to the project to be financed. Things that may be considered when assessing a project for financing approval include:
- experience of the borrower in purchasing real estate and fix and flip projects
- credit of borrower and amount of capital available
- merits of the subject investment property including price, location, condition and work needed for improvement
- estimated after improvement value (taking into consideration other similar property in the area that has already been improved)
- estimated cost of rehab work needed
- end goal of borrower – is property going to be improved and then sold (fix and flip) or improved and then rented (fix and hold)
Fix and Flip loans are risky and thus lenders will charge higher interest rates and fees and will ask for at least 30% down-payment to show that borrower is willing to take on some of the risk. So fix and flip loans or rehab loans can be expensive. But because it is a short term loan the actual cost of financing as compared to amount of profit that is made make good business sense.
Fix And Flip Loans – Terms
These loans are offered by hard money lenders so there is some flexibility in qualification requirements – here are some typical terms:
- loan term: 6-12 months
- max loan to project (LTP): 70%
- minimum loan amount: $50,000
- maximum loan amount: $1,000,000 (higher on case by case)
- rates start from 7.99%*
- no prepayment penalty
The above information is general, for more specific information please contact us.