Fix and flip is really a slang term to describe a type of real estate investment deal. The real estate investors purchase an undesirable single family home at below market value and do some repairs to the property in order to make it more appealing. The idea is to significantly increase the market value of the property with the minimal expense possible so that the home can be resold for profit.
While buying, fixing and quickly reselling properties can be lucrative, it takes much more money to flip a house than it does to simply buy a house that you want to live in. Not only do you need the cash to become the property’s owner, you also need renovation funds plus money to pay for property taxes, utilities, insurance and loan interest from the day the sale closes through the rehab work and until the day it sells.
Unfortunately, many people struggle to find financing to buy fix and flips. Hard money loans are the best financing source for them. Hard money lenders provide loans to experienced or inexperienced flippers who need money quickly. Hard money lenders do not require the same amount of time and paperwork as traditional banks. Instead, they evaluate the property itself (both before and after improvements) and your ability to successfully complete the project.
Here are some important reasons that house flippers use a hard money loan instead of a bank loan. Compared to a bank, hard money lenders typically:
- Can give you a quicker loan quote
- Can fund a loan much faster
- Don’t always require third party appraisals
- Make loans on distressed homes that need rehab. Many banks won’t touch this type of property
- Rely heavily on the value of the property. Banks typically rely heavily on the borrower’s credit
- Have much shorter approval process, less red tape, and less paperwork
- Don’t have maximum exposure limits to one borrower
The Bottom Line:
Hard money lenders play a vital role in the financing of all kinds of real estate investments and especially for flipping houses. A hard money loan is good for the experienced and inexperienced fix and flippers. The use of hard money in your house flipping business can be a tremendous benefit, increase your margins, help you grow your business, and allow you to diversify your risk. However, you just need to do your homework, ask questions and minimize the risks that come along with the use of outside capital.
If you are an investor who is ready to make an offer on a property and you need financing or just want to get pre-approved loans, then you have come to the right place! Magna Capital Group, Inc is one of the most trusted hard money lenders that can help you achieve your house-flipping dreams. We provide fix and flip loans across California. Our interest rates start as low as 7% and monthly payments are interest-only. Further, pre-qualification takes few minutes and funding happen in 10-15 days.
For more information about our fix and flip loans program, please feel free to call us today at (310) 734 4044 or email at firstname.lastname@example.org.