Fix and Flip Loans for Investors How to Choose the Best
The Best Fix and Flip Loans for Investors
A fix and flip loan is an ideal option for investors looking for a short-term mortgage to buy a property with the intention of repairing, upgrading or renovating it and then selling it to make a profit. Choosing the right hard money fix and flip loan can often make a huge difference to your bottom line and ensure the experience is as stress-free as possible. This comes down to choosing both the right loan and the right lender. A seasoned rehab loan lender will have the skills, expertise and insight to provide the most effective loan based on your needs and specific project. In looking at the timeline to invest vs how long to hold a private loan is crucial. Often in construction rehabilitation there are project delay unforeseen such are labor problems, weather issues or currently supply chain problems. If rehab supplies are held up you are left still paying the high interest rehab bridge loan or apartment renovation funding. To offset the chance of getting burned waiting for a renovation problem to fix, talk to your private lender first to establish what penalties ( if any) would exist in a longer term loan.
Looking at variables like non recourse bridge loans, commercial loans that preclude bank financing should all be evaluated for your specific needs. Talking to an experienced loan officer will expedite these issues as any experienced loan officer has encountered these concerns many times before. Another thing investors should look at is the potential volatility in a specific investing location. Is the area prone to foreclosures, rent defaults, hazardous new weather conditions? Typically the best investors will have a long term knowledge of his/her investment region. Many first time investors might not look at the ” what is the worst that could happen scenarios” buy, ” stuff happens”. Now more than ever investors must look at potential markets with a laser lens in order to make a short term high interest loan pay off,
Here’s what to focus on when looking for the best fix and flip loan for your next project.
1. The details of fix and flip loans for investors. It’s no surprise that it’s crucial to consider the details of the loan and how these compare amongst various competitors. Assess factors such as the upfront costs, any restrictions of the loan, whether any extra services are included with the loan and, of course, its rates and terms. Keep in mind that flip property loans usually attract interest rates that are much higher than traditional loans. However, fix and flip loans for Investors also offer much shorter term lengths than traditional loans, allowing you to borrow money only for a short period of time without any exit penalties. Additionally, hard money rehab loans can be finalized very quickly, which means you can move quickly on a fix and flip opportunity before it’s too late.
2. How much you can borrow. Not all fix and flip loans for Investors l will offer the same amount and when it comes to applying for real estate rehabing loans, the criteria is not necessarily the same. Hard money lenders for flipping houses consider the after-repair value of the property when determining how much you can borrow, and therefore choosing a lender who understands the market and potential of your project will increase your borrowing power. In the underwriting of the contract the LTV will look at the the true appraisal value of any real estate property to determine the loan structure. Typically the loan must lean in favor of the payoff of the loan with interest. Most short term bridge loans, fix and flip or renovation finance loans are a fixed percentage of LTV prescribed by the lender.
3. The application process. Look at what is involved and how arduous the application process is.You will obviously need the loan officer to go over the minutia of all the loan options. Also consider how long it takes to receive your financing. Generally, the best fix and flip loans for Investors offer the fastest, easiest and most efficient application processes.
4. The lender’s expertise. You want to be sure you are choosing a lender who is not just knowledgeable about fix and flip real estate loans, but also has first-hand insight and experience of the real estate market in the area you are looking to buy. Finding the best loan officer that understands the structure of your deal out of the gate is key. Obviously you will have many questions, the experienced loan agent will have funded many deals and probably has come across your scenario before.
5. Reputation. Also consider the reputation of the rehab loan lender. Do your research by talking to previous or existing customers if you can, asking people who work in the industry and reading through online reviews.
6. Flexibility. As no two fix and flip projects are the same, it pays to choose a lender who can adapt their loans to meet your needs. This will help to maximize the potential of your project.
As RehabLend, we pride ourselves on delivering the best fix and flip loans for Investors across the country, Nationwide. Our loan officers are experts in our fields and have firsthand knowledge, insight and expertise when it comes to fix and flip loans in almost every part of the country. To find out how we can help you with our premium quality fix and flip loans, get in touch today.