Understanding Fix And Flip Loans

If you are looking to purchase a fixer upper and renovate it before selling it for a profit, you may be looking into fix and flip loans. As a type of bridge loan, fix and flip loans allow borrowers to get the cash they need to finance their initial purchase. In this article, we share with you more about this type of loan and the advantages of getting one.

What Is a Fix and Flip Loan?

Although fix and flip loans are a type of real estate loan just like a traditional mortgage, there are major differences between the two. While a mortgage typically has a term of up to 30 years or even longer, a fix and flip loan is relatively short-term in comparison, and they are usually between 6 to 24 months. You can expect the interest rates to be much higher with the latter as it is designed for short-term investment rather than long-term residence.

The Process of Getting a Loan

You may be wondering: How exactly do fix and flip loans work? Just like with any other type of loan, you will fill in the necessary forms and submit the necessary paperwork in order to get approved. From there, the lender will decide on the total loan amount based on the after-repair value and total cost of the project.

Once the loan has been approved, you can start renovation work. This is typically paid by the borrower; however, the lender may extend a construction draw to you. Once a phase of the renovations has been completed, you can submit a claim for reimbursement to the lender, and they will take some time to release the funds. Keep in mind that during the interim, you will have to fund the cost of materials and contractor payments out of pocket.

Should I Get a Fix and Flip Loan?

If you are considering investing in property, a fix and flip loan may be of interest to you. Below are some reasons you may decide to get one:

• Quick Approval Process: Unlike traditional mortgages, fix and flip loans have a quicker approval process and you can receive funding within a week.
• Lower Risk: The collateral for a fix and flip loan is simply the property involved. You may not end up losing your home if, in the worst-case scenario, the project doesn’t turn out as envisioned.
• More Flexibility: When you go to a private investor or lender for fix and flip loans, you won’t be subjected to the same rigid requirements as banking institutions.

Come to InstaLend for the Fix and Flip Loans You Need

If you are looking for a private lending partner who can provide you with a fix and flip loan, you have come to the right place at InstaLend. Our aim is to provide real estate operators access to funds at a much faster rate than alternative lenders. With minimal paperwork and no income requirements, please feel free to get in touch with us to apply for a loan today!