Fix and flip loans have become much more well known in recent years as people have watched multiple tv series documenting the potential gains on “flipping” properties. This refers to someone buying a rundown property at a low cost, fixing it up, and then “flipping” it for a profit. Even though this can be a risky venture in the commercial world, it can also have a very large payoff when done well.
Fix and flip loans tend to finance from anywhere as low as $50,000 all the way up to around $2.5 million. The loan money must be specifically used for the renovation process, and nothing else. Similar to a bridge loan, fix and flip loans are typically very short in their terms, usually only about one year long. Those that go into the commercial flipping business learn to move quickly through properties so as to capitalize on the loans they have and the profits to be made. Interest rates vary per property and investor’s credit score.
Using Fix & Flip Loans
While many people think that you have to be an experienced property flipper in order to be qualified for a fix and flip loan – but the reality is that isn’t always the case. Lenders typically look for credit scores above 600 and a certain amount in down payment (this number depends on the amount of loan you are asking for).
Investors are able to choose a wide range of properties and still use a fix and flip loan like single family homes, condos, or even commercial buildings. Many banks try to go through the underwriting process as quickly as possible for fix and flip loans because of their fast nature.
Finding the Right Fix & Flip Loan Lender
Using a lender that is experienced with this type of loan is a great way for beginners to feel more comfortable with the process. While some people might push investors to go to private lenders, traditional banks can serve as a fantastic resource for not only your current financing needs, but also future loan inquiries. By establishing a relationship with a bank, you set the groundwork for larger loans with lower interest rates down the road.
Whether you’ve found the first property you’d like to flip, or it’s your 100th, we’re here to find you the right commercial loan. Not only do we have experience with commercial investors, but we can help you through the process! Give us a call to get started on your fix and flip loan today.