Fix and flip loans. You’ve heard the term a lot recently and you can’t help but think about it. It doesn’t help that HGTV has devoted many shows to flipping houses. But the more you hear about it the more you wonder if a fix and flip loan is a good idea.
“Are they really worth it?” you think, “Or are fix and flip loans a bad investment?”
If you want to know more about fix and flip loans and they’re a worthy investment, read on.
We’ve talked about fix and flip loans before, but in case you need a little refresher, fix and flip loans are quick money loans you get for renovating a house to sell. They are sometimes called hard money loans and usually last anywhere from 6 months to 3 years.
Below, we’re going to go over the many benefits of a fix and flip loan.
While there are many benefits to fix and flip loans, one of the biggest is speed. Let’s say you’ve found the perfect fix and flipper home. It’s in a good area that’s really gaining interesting could be the next “it” neighborhood to live in. There’s just one problem. The seller needs money in 15 days or less and your bank can’t even fit you in for an appointment by then.
So what do you do? Get a fix a flip loan from an alternative lender. A fix and flip loan can be funded in as little 15 days. That way, you get in and get started on making this investment property everything it could be.
Another benefit to fix and flip loans is property condition. Imagine this a moment. You’re looking for an investment property when you come across a home with a lot of character. It has a lot of wood accents but needs a lot more TLC. You know under that thick layer of neglect that this house could be really special. You see the potential.
But all your bank sees is work. No matter what you show them they can’t envision the great investment home you do. This is where fix and flip loans come in. Because fix and flip loans are tailored toward renovations, lenders know the house is in poor condition. They know you’re going to fix it up so they don’t count a home’s condition against you.
One of the main problems with banks and the traditional loans they offer is the length. They expect you to be in it the long haul. Who knows what will happen if you get the renovation work done early? Say you’re working on a property. The contractor told you it would take about 6 months to complete. But then, a few weeks into the work you find it might actually take about 4 months. Instead of the investment property being completed in six months, you could actually sell it AND pay it off in six months.
If you had a traditional loan from the bank they might penalize you for paying things off early. That’s because they’re banking on all those years of interest you’d be paying. That’s why fix and flip loans are better for real estate investors like yourself. Not only are they tailored to your needs, but they’re also flexible. Do you have a property that could be ready to sell within a year? Fix and flip loans can be crafted to last a year or less. Within a year you could buy a property, fix it up, and flip it for a profit!
“What if I have a property that needs more work?” A fix and flip loan can work with that too. Some fix and flip loan terms have been known to be 3 years after extensions. That way, you can really fix your investment property to be the lucrative flip you know it can be.
Okay, by now you might be thinking, “This all sounds nice, but is there really any money in it?” Yes, there could be. According to Fundera.com more than 200,000 homes were fixed and flipped in 2017. Of those 200,000 homes, the average profit was $68,143. That’s an extra $68K added to your income. So if you’re looking into getting into real estate investment, try a fix and flip loan today!
If you are looking for a fix and flip loan to finance your next real estate investment, look no farther than Gauntlet Funding. Gauntlet Funding offers the most competitive rates in the market for prime borrowers with no prepayments penalties. We are an organized and transparent system that will get you funded in little time after you have undergone the approval process! Contact Gauntlet Funding today at (631) 465-2161.
Are Fix and Flip Loans a Bad Investment?| Gauntlet Funding-Melville, NY