Hard Money Loans for Fix and Flip Real Estate Investments
Investing in fix and flip business requires a quick capital so that you fix the house or property quickly and flip it to earn profits. Many investors encounter financial constraints from the big banks and lending institutions because they require a high credit score and security to give out loans. Hard Money loans are private loans given to real estate investors without difficult requirements. They are epitomized by a high-interest rate, quick approval, and low credit score requirement. It is easy to obtain a hard money loan if you have a security or shares. Whether you have an existing property or you don’t have any property at all, these loans are offered to all who need them and have the zeal to invest.
What to Know About the Fix and Flip Business
Fix and flip business might appear like a cheap and easy task to do but it requires a lot of money because of the charges imposed on the investor. Besides paying for the home, fix and flip investors should pay for repair costs, contractor fees and holding cost until the house is sold to the new owner. Broker fees are also paid by the flipper. Below are some of the loans that fix and flip investors can take?
- Hard Money Loan, this is a quick loan that is processed in less than 72 hours, and it will be credited into the account for the borrower to carry out his or her investments. To get this loan, you must be an experienced investor who has accomplished several businesses of the same kind.
- Cash Out Refinance. This is for those who have shares or equity in a certain property. You can use the shares are a security to get the money so that you buy, renovate and flip the house at a profit. Looks the same like home equity line of credit but the latter is for owner-occupied home.
Benefits of Hard Money Loan
It might appear so simple but it provides up to 90 percent of the whole price of the property which eases the purchase process. Even though many people say it is a short term loan, borrowers can be given up to three years to repay the loan. The approval takes less than 24 hours but the funding can take up to 15 days which is better compared to the other mortgage loans. Most of them require a credit score of only 550 and a debt-income ratio of 35 percent. You must be a licensed contractor if you are not experienced in this business to be considered for the loan.
The bottom line is that private loans for fix and flip business are an easy way to start your investment in the real estate industry. It is advised that investors refurbish houses, install premium features and remodel it so as to make it appreciate in value and reap maximum profits. Flippers who have experience in the business are given high amounts and quickly because they are trusted to repay the loan within the agreed period.