An Arizona fix and flip loan is a loan that investors use to purchase and renovate a property. A fix and flip is a distressed house that needs to be “fixed” and then after is quickly “flipped” making the investor a profit. Usually, the loans used for these projects are of relatively short-duration.
There are numerous types of loans available for fix and flips. Finding the loan that will work best for you depends on your experience and financial situation. Arizona hard money loans are the most popular.
Arizona hard money loans are best for an investor who has been successful in fix and flips. Arizona hard money loans are also known as rehab loans— due to the rehabilitation of the distressed house. These loans have lower qualifications for approval. Loan terms are short— usually between 6 months to 2 years. Approval usually takes less than 2 days. A borrower will only have to wait 10-15 days for funding. However, interest rates will be higher— typically between 9%-15%. Although, a borrowers credit does not have to be impeccable they will still need at least a 550.
Another way to finance a fix and flip is through a Home Equity Line of Credit (HELOC). A HELOC works like a credit card versus a traditional loan. Investors are granted a line of credit, from their bank, based on the value of their current property. With a line of credit, interest rates are only charged on the amount borrowed. A HELOC term is typically 25-30 years and approval time can take upwards of a month and a half. Interest rates are lower than a hard money loan—around 5%.
A bridge loan is a loan that is used temporarily during the time between real estate transactions. It gives the investor funds to purchase a fix and flip without a contingency to sell their other property first. Investors use these types of loans to purchase property before flipping the property to pay the loan off. These loans are extremely short term — typically between 3 weeks and one year. Interest rates on bridge loans are usually between 6% and 9%. A lender will look more at financial ability than credit and financial history.
There are many factors that must be addressed to determine which Arizona fix and flip loan is right for you.
Hard Money Loan: If you are a novice, but willing to work with a contractor or you are an experienced investor that has a good track record of flipping homes a hard money loan could work for you. You will be approved and receive funds quickly. There are high interest rates and shorter loan terms.
HELOC: A HELOC may be a good choice if you are an investor with an owner-occupied residence and a large amount in existing home equity. The repayment is only interest for the first 5-10 years; interest and principal for the remaining years.
Bridge Loan: This loan works if you know you will close quickly. You will need to be able to pay two mortgages simultaneously. The loan terms are a couple of weeks to a year.
Whichever loan you choose be sure to do your homework. Speak to a lender; they will gladly help you through the process.
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
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.