Think fix and flip loans are the trendiest expensive hair do-up in the fashion world? Read on—this could help you out in ways far more permanent (pun intended) than a haircut.

Simply put, this type loan is dispensed when the buyer wants to purchase property with the intent of selling it once it is renovated—this is the flip. Most of such properties are in need of some repair and a good percentage of them need major work in order to command the best price. Once properly marketed and sold at a profit, the purchaser can then pay off their loan and still have cash in hand.

Defined as short-termers, fix and flip loansare taken by clientswho desire to buy, do the necessary repair work and sell their investment within a year following the purchase. Property appraisals are done both before buying and afterwards. It is advisable to deal with business people you already know or private investors that can determine your ability to complete the project following your receiving the needed funding.

There are considerable advantages in using this type funding, a major one being that private lenders are not forced to run your credit history through a sieve as are conventional ones, such as a bank or mortgage company. These groups are set up with rules that basically stop the entire loan application if one glitch or blot turns up. Time passes, the property could be sold to another buyer and your application may very well be turned down, which puts you back where you started.

Beginners to the field of investment generally have some if not a lot of difficulty getting needed funding. Escrow accounts or personal guarantees, perhaps both, may have to be completed and shown to a lender before money can change hands. Interest rates can on a yearly basis run as high as 20 percent.

Are there other advantages to fix and flip loans?

A real relief to investors is the time element involved in applying for this type of funding. Someone who has been in an established business and knows all the details involved can close a loan in less than two weeks, as opposed to banks that can take more than six months.

A second positive point is if the investor’s business is one with a good performance record, the less they will have to ‘pay’ for the loan—interest, fees and the like. Sometimes the borrower can have several projects in progress at once if they are allocated 100 percent of funding applied for.

Private lenders, however, are in the business of making money for themselves and looking to have you repair a property as soon as possible, get it on the market and pay off the loan quickly. One way they have of assuring this is to attach a lien for their security and as an instigator for the borrower, who will work harder in order to avoid losing whatever is attached to the loan.

Fix and flip loans are not the answer for every investor with an idea to make money—you need to know both advantages and disadvantages of this type funding. Know all the facts, take the time needed to learn all you can and then work on making your idea a reality.


Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis
Dennis Dahlberg Broker/RI/CEO

NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701

About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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