Did you know that some people make a living completely from flipping houses? Having a good eye for a property that can be flipped and the ability to renovate it properly is obviously important in this line of business. Another important part of ensuring that this is a profitable business is the financing to move quickly and cover costs.
Fix and flip loans are designed just for this type of business. Here’s what you should know about fix and flip loans for your next property flip.
What is a fix and flip loan?
A fix and flip loan is a short-term loan that provides quick funding for the purpose of purchasing a property and renovating it to then flip it for a profit. These loans are typically interest-only with terms ranging from 6 to 18 months.
What does a fix and flip loan cover?
Fix and flip loans usually cover:
- The purchase price of the property
- Renovation and construction costs
- Carrying costs like insurance, utilities, and taxes during the project
- Some lenders may also finance a portion of the closing costs.
Benefits of a Flix and Flip Loan:
- Quick funding – Lenders usually will provide money within the week since many fix and flips are on foreclosures or auctioned properties.
- Flexibility – The terms of a fix and flip loan are not subject to the same standards, processes, and requirements of banks, so there is flexibility with the qualifications of the borrower.
- Less risk – There is less risk because the loan is backed by the property you are flipping rather than your own personal credit and property.
As you consider a fix and flip loan, you should also consider:
- A reliable lender
- Renovation costs
- Timeline
- Construction draws
If you’re planning your next property flip, let us help you understand your loan options, so you can take the first step to making it successful.