Live out your fixer-upper dreams! Fix and flip loans can fund the purchase and renovation of residential investment properties. This loan allows you to purchase a property under market value, rehab it, and resell it as quickly as possible. These loans are usually short-term and offer quick closing on non-owner occupied properties. Here are a few specs on fix and flip loans:
Up to 85%–92.5%* loan to cost and 75%–85% after repair value
Loans up to $3 million
Close in as few as 10 days**
Non-owner occupied, single-family, and multifamily up to 30 units
Any level of investor experience
There are different types of fix and flip loans. Hard money loans, 401(k) loans, personal loans, just to name a few. Lenders use the loan-to-value ratio (LTV) to determine how much money they will loan you. It compares your loan size to the property value, and it is typically 90%.
Ex: For a $100,000 property, a lender who provides 90% LTV will lend you $90,000. You have to provide the remaining $10,000 as a down payment.
Fix and flip loans can be hard to get, especially if you’re a beginner. More options will become available to you as you gain more experience. Here are three steps to help you secure the right fix and flip loan:
Know how much you need. Determine how much money you will need for everything for the entire length of the project. Try to be as detailed as possible so your numbers are accurate.
Know your qualifications. Once you know roughly how much your project will cost, it’s time for you to determine what fix and flip loans you qualify for. Annual revenue, personal credit, and how long you have been in business are the determining factors for how much you’ll qualify for. Beginners will need to rely on personal credit and financial history. More experienced flippers will be able to use their house-flipping portfolios and business financials to secure a loan.
Find the right lender. The right lender for you will vary depending on the type of financing you need, your specific project, and your qualifications, to name a few. Do your research, compare lenders, and consult with other house flippers to get their recommendations and advice. If your lender has experience in the house-flipping industry, that is ideal.
If you’re on step 3 of this process, give us a call! Our knowledgeable loan officers will help guide you every step of the way and answer all your questions!
*Based on borrower fix and flip history as determined by the lender
**Based on lender and type of rehab project