Hard Money Loans to Fix and Flip Real Estate Investments
One of the most innovative new techniques to finance your real estate investment deal is called “Fix and flip”. The fix comes out from the first action of the real estate investor. He finds a particular property, which is put way below its real market value, because of different reasons. The seller might be rushing and in need of a fast financial injection, or he simply wants to get rid of the property without any hassle. Those are obviously good news for the entrepreneur, who buys the property, does any repairs or design changes if they are required with the minimum possible investment.
Such types of repairs and styles changes generally come in the form of turning some room into a bedroom or revamping the kitchen as a whole. The idea is to make the property much more appealing to the end customer or in other words, to increase the value of the property.
Flipping the property is the real challenge for the real estate investor. Obviously, the idea is to sell the property with a profit; however, such a deal should be done in the least possible amount of time so that the real estate investor will maximize his profits. This type of technique has been around for decades; however, it managed to gain huge popularity due to a variety of different TV shows.
The Advantages of Hard Money Loans
The main problem with such type of investment is the ability to find a large amount of cash in a small period of time. Generally, the traditional options in the face of a mortgage or a bank loan do not work in such kind of activity. To acquire funding for mortgage or a bank loan, you would have to go through a variety of different procedures. Your credit score should meet certain requirements. The bank will have to do a variety of different background checks and so on. All of that is necessary in order to prove that you are a legitimate person so that the bank won’t be handing out money to an individual who might not be able to return it.
The procedures are quite standard, however, the main issue with that is that it takes a really long amount of time. When it comes to Fixing and Flipping, time is of the essence. Other real estate investors are also looking for potential opportunities, meaning that undervalued properties would not stay on the market for a long time. If you would want to profit out of them, you would need to act immediately.
The only way to do that is not by using the services of hard money lenders, which don’t care about your credit score, nor will they conduct thorough background checks. They will simply ask for real asset reinsurance in the contract and will charge you a higher interest rate. Their loans are more expensive in absolute values; however, give you the opportunity to make profit out of your potential real estate deal.