If you are a property investor, you know that even a second can make the difference between a successful profit-rich result or a missed opportunity. This is why you always need a quick option to get your hand on funds.
This is where fix-and-flip loans enter the picture. This type of loan bridges the gap between the property’s sticker and your investment funds, allowing you to make fast decisions and potentially reap great benefits. If you are wondering how great those benefits are, the answer is that you can enjoy a profit of around $30.000 once all the repairs are done, and the house is sold to the lucky owner.
Furthermore, fix and flip loans are not just a great choice for beginners getting into real estate investing, but also for seasoned investors who are looking for new projects. Read on to learn about the advantages of these loans.
Why Do You Need Loans?
It’s a fact that you won’t always have sufficient funds to make a purchase. Even if that’s the case, that does not mean that the opportunity is gone and someone else will make a huge ROI on that property.
If your credit score is good, for instance, above 620, you can easily qualify for a fix-and-flip loan and obtain the needed funds. The main “selling point” of these loans is that the lenders will approve them much faster than conventional loans and have better interest rates.
However, some lenders will require the borrower to provide them with an SOW (Scope of Work) plan to ensure that they give funds to a person who knows what they are doing.
The Main Benefit Of Fix-And-Flip Loans
Above, we discussed some of the most significant benefits of obtaining fix-and-flip loans, but we only scratched the surface. Below we explore this type of loan in depth.
You Can Get One Instantly
Fix-and-flip loans were created to cater to the needs of real estate investors and offer them an option for obtaining funds whenever an investment opportunity that cannot be missed presents itself. Besides that, real estate investors prefer fix-and-flip loans because they have better interest rates, and the loanee enjoys bigger freedom with the funds.
Generally speaking, you can expect to receive a fix-and-flip loan as soon as your request is reviewed by the lender, or in simple terms, around one to two weeks. This will give you a massive advantage over other competitors in the real estate field as you can make investments much faster than most investors.
If you go the traditional route and obtain a conventional loan, you must adhere to a million rules and regulations. That’s not the case with fix-and-flip loans, as fewer stipulations are attached to the loan contract. The loanee can use the funds to renovate, fix, and demolish certain parts of that property, or in other words, whatever they believe will raise the value of that property.
On that note, if you ask a bank for a loan, besides reviewing your request for months, they will outline what you can do and what you can’t do with your loan. So, it’s best to opt for private loans and enjoy complete freedom of how you spend your obtained funds.
It Will Help You Earn a Profit
Once you obtain the right funds for the property, purchase it, and start working on it, keep in mind that you should do everything in your capability to raise the value of the property as much as you can. Adding just a slash of new paint won’t suffice. Focus on aspects of the property that need fixing rather than equipping it with high-tech electronics.
Given that fix-and-flip loans are much easier to obtain, it’s evident why many investors favor them over conventional loans. It’s worth noting that even if you have a bad credit score but a good business plan, the lender might consider your request and grant you the funds.
Other than that, if you are planning an investment in the booming real estate market, go over the benefits of fix-and-flip loans we outlined for you above and only make informed decisions to minimize the inherent risks that come with property investments.