Top Three Financing Options For Fix and Flip Investors

Top Three Financing Options For Fix and Flip Investors

Flipping a house is a form of real estate investment that involves purchasing a house or property, fixing it up and selling it quickly. To get started, you will need capital to purchase and renovate a house before you can flip the house for a profit. Here are the costs involved in flipping a house:

  • The purchase cost of the house.
  • Rehab costs.
  • Appraisals and inspections carried out on the property.
  • Holding costs, Realtor fees, and closing costs.
  • Loan interest and fees.
  • Down payments on loans.

Now you will have to look at how to cover these costs. Luckily, there are four fix and flip financing options available to flippers:

1. Traditional Bank Financing:
The first place you might look for a loan is your local bank. This is where the bank pays for the property and you pay the mortgage payments until the house is rehabbed and sold. You will need good credit and good track record of successfully flipping houses to qualify for a traditional loan. If you have bad credit or low credit score, there is no chance to get a traditional fix and flip loans for you. In this situation, you can consider the second financing option that is hard money loans.

2. Private Hard Money Loans:
A hard money loan is a specific type of asset-based loan financing through which a borrower receives funds secured by real estate property. Hard money lenders make loans for flippers and real estate developers on slightly different terms than banks. They provide hard money loans which are best for experienced or inexperienced flippers who need money quickly. These loans are designed for people who don’t necessarily have great credit but need money to complete their renovations.

3. Home Equity Loan or Line of Credit:
A home equity loan is basically a second mortgage and you are repaying the loan over a fixed term. A home equity line of credit usually comes with a variable rate, but you can draw against your credit line whenever you need extra money. So, if you have significant equity in an existing investment property or primary residence, you may consider tapping that to fund your house flipping project. The biggest issue with this financing option is that your house serves as the collateral and if you fall behind on the home equity loan or line of credit payments, the bank could decide to foreclose on your house.

The Bottom Line:
House flipping is not only for the rich but also for the resourceful! The key is finding the right solution for your unique needs. These are top three ways you can finance house flipping projects. Out of these three fix and flip funding options, the best one for you depends on the type and condition of the property, your experience with real estate investment, and your personal financial situation.

If you are a fix and flip investor with imperfect credit who is looking to buy discounted properties, fix them up, and sell/flip them within 12 months, then consider hard money loans for the capital you need. Magna Capital Group, Inc. is a reputable hard money lender in California. We offer financing options to real estate investors looking to renovate and resell residential and commercial properties. We provide the best loan programs to meet your financial goals. If you feel that a hard money loan is right for you or if you have any query, feel free to call us now at (310) 734 4044 or email at info@magnaloans.com.


Top 7 Advantages Of Using A Home Equity Loan Or Line Of Credit!

A home equity loan(also known as a second mortgage) is a secured loan where homeowners borrow money from a bank or lender using their home as collateral. They get a certain amount of credit based on the amount of equity in their homes and then use that to make purchase real estate properties, home improvements, debt consolidation, pay for major expenses and life events etc. If you trying to make a big life change but need a financial help, a home equity loan can help you reach your goals.

Home equity loans are attractive to both borrowers and lenders. Here are a few of the key benefits for borrowers:

1. Easier To Qualify:
With all the financing choices out there it can be challenging to find the right loan or credit option for your situation. Home equity loans may be easier to qualify for if you have bad credit. As your home securing the loan, lenders have a way to manage their risk.

2. Lower Interest Rates:
Home equity loans typically have a lower interest rate than unsecured loans such as credit cards and personal loans. This type of loan is considered “secured” by the collateral of your home, so lenders are more confident in your ability to pay your debt. Lower risk means lower rates.

3. Large Amounts:
If you have significant equity in the home, you can qualify for relatively large loans with home equity loans. For large expenses like home improvements, higher education, or starting a business, your home equity may be the only source of funding available.

4. Cash Payment:
A home equity loan provides a lump sum of money. This allows you to knock out medical bills, contractor costs or other major expenses with one check.

5. Potential Tax Deduction:
100% of your home equity loan interest payments may be tax deductible, which may not be the case with credit card debt. Consult your tax adviser to see if you qualify.

6. Flexibility:
Flexibility is the most attractive benefit of this type of loan. Home equity loans offer homeowners flexibility in how they spend their money. Homeowners can draw on their home equity line anytime or simply leave their home equity line of credit untapped. They only need to make payments on their home equity lines of credit when they use it, much like with a typical consumer credit card. This is the best choice for those who need ongoing access to their funds.

7. Stability:
One of the many appealing features of home equity loans is its stability. When you qualify for a home equity loan, the entire sum of the loan is available for you to use, and you’ll repay it at a fixed-interest rate. This makes it very convenient for you to manage your funds. Once homeowners take out a home equity loan, the money is theirs. They simply have to make their monthly payments on time to pay it back. However, lenders can cancel a home equity line of credit or reduce its size whenever they want, as long as they provide proper notice to their clients.

The Bottle Line:
If your home is worth more than you owe on it, a home equity loan can offer funds for anything you want. You don’t just have to use the money for home-related expenses but can also use any of your financial needs. If you’re planning to tap your home equity, please feel free to contact Magna Capital Group, Inc. today and speak with one of our expert representatives at (310) 734 4044 or email at info@magnaloans.com.


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    Although Magna Enterprises, LLC and Magna Capital Group, Inc. are referred to throughout the text of this website as Magna Group of companies, they are not affiliates, parent or subsidiary companies as both companies are separate and distinct entities. Any questions or issues regarding this disclaimer should be addressed in writing c/o Shawn Molem.