Best Fix and Flip Loans & Financing Option

Real estate investment can be a lucrative avenue for making money, and an efficient way to build your portfolio. Hard money loan is used as a short-term lending tool for investing in real estate. If you can’t afford to purchase real estate, then a hard money loan is always there for you. 

In this category, fix and flip loans help the short-term real estate investors for purchasing or renovating the property before they flip it for a profit. There are total six types of these loans that can let you finance the properties even in distressed conditions. They comprise cash-out refinances, hard money loans, lines of credit, etc.

Following are the six types of fix/flips project:

Home Equity Line of Credit (HELOC)

It is a home equity loans which is similar to a credit card rather than a conventional loan type. In this case, fix and flip investors are given a line of credit, which is based on their existing home or property. They can use this credit over the HELOC terms. The interest rates will be charged over the amount that you borrowed until you repay that amount. Home equity lines of credit are only issued on an owner-occupied residence.

Online Mortgage & Permanent Bank Loan

These are characterized by 15-30 year terms, which you can use to purchase long-term non-owner-occupied investment properties or owner-occupied residences that are in excellent condition. For flix and flip investors, online mortgage or permanent bank loan are not good as they have to purchase distressed properties. But there are few online mortgages and permanent bank loans that are beneficial for long-term rehabbers. You can find the details about your local permanent bank loan provider on the Internet.

F&F Bridge Loans

It is a temporary loan, which covers the time only between 2 real estate transactions. Primarily, it is used to purchase a property before you sell your another property. You can easily buy a fix and flip property without having to sell your other property first. But unlike hard money loans, you will not be able to finance rehabs with F&F bridge loans.

Cash Out Refinance

It is a strategy in which, a fix and flip investor can refinance his/her existing property for financing the purchase of new property investment. Cash out refinance fix and flippers to acquire equity from their current property by issuing a new loan and paying an existing mortgage. The investor doesn’t have any restrictions on how he/she spend the cash they received from a fix and flip cash-out refinance.

Investment Property Line of Credit

An investment property LOC is similar to home equity LOC except, you can only use it on investment properties. Its functionality is same as that of a credit card in which, you only pay interest on the money that you will be using. You can use LOC for short-term cash needs, purchasing and renovations of fix and flips.

Hard Money Loan

It is a short-term loan, which is used by fix and flippers to renovate or purchase a property. Investors mainly use such loans to renovate, purchase, or renovate a property within a year. That’s why hard money loans are ideal for fix and flippers as they finance properties in the poor conditions. You can easily find the fix and flip lenders as they don’t need any proof from the borrower. They care more about the property and its value, not about borrower’s background.

Nowadays, flipper knows that for making money by flipping houses, you need to have the best flip funding for your fix and flip real estate project. The best option here is Hard Money Loan, both for a new and experienced fix and flippers.

Also Read: Why Take Residential Loans from Commercial Hard Money Lenders?