Finding the right fix and flip loan is an essential element for any successful fix and flip venture. In order to find the best lender to work with who will expand your opportunities, you will have to do some research.
How should you go about finding the right fix-and-flip loan? You have two options – private money lenders or a public bank. What’s right for you?
Private money lenders get you the money you need, fast. Sometimes called hard money lenders, they make asset-based loans on the value of the property you are planning to flip. This is a viable option compared to the offers from traditional banks, who offer loans based on credit.
Private lenders offer short-term rates aligned with an agile lending platform; this makes private lenders often an edge for buyers pressured with time when working with real estate.
A hard money loan is often the best option for a fix-and-flip project. It is much more flexible than a mortgage company, although there are still preliminary credit checks. Because hard money lenders are generally private, you still have a chance to obtain a loan if you don’t if your credit check does not pass (still requiring a down payment of 20%). The term of the loan is short; intended to be 9 months or less. Plus, there’s no need to pay large fees to terminate a loan that never worked for you. In addition to being able to grant a loan, private lenders will flex the terms to fit your needs. For example. You may temporarily not have enough cash and so cannot afford the down payment. A private lender would at least consider your offer even if a public bank would immediately reject you.
Often, hard money loans include some extra cash for renovations. So, with the exception of the down payment, you won’t need to track down spare cash to get started in the real estate fix-and-flip industry.
Are you considering using a hard money loan for your next fix-and-flip purchase? Contact Center Street Lending to get started.