Fix and Flip Loans: Adding A New Dimension in Real Estate Investment
Over the years, fix and flip loans have emerged as a great way to invest in a real estate property which has seen better days and is in need of some kind of repair.
When done right, fix and flip loans prove to be a solid way to generate income in the real estate investment industry. An added bonus is that everyone in the community benefits from fix and flips as it increases property values and improves the neighborhood.
In simple terms, a fix and flip is a real estate investment strategy that allows the investor to make a profit by finding an affordable, distressed property, repairing it and selling it at a profit. A good source of these real estate opportunities are the outlying areas of cities with a strong real estate market – such as Washington, DC. These loans have a number of distinct advantages over other forms of conventional financing. Real estate investors qualify for these loans based on the projections of the property and the strength of the real estate market, with less focus on credit rating or history of bankruptcy or foreclosure.
Read on to find out some of the major benefits of fix and flip loans.
1. Less Paperwork and Documentation- Considering the fact that a private lender doesn’t have to conform to the same stringent rules and regulations of a bank, obtaining these types loans entails a fraction of the paperwork and less rigid legal formalities.
2. Flexibility- When it comes to obtaining a fix and flip loan, the investor enjoys the benefits of flexibility. Less emphasis is placed on credit score and borrowers are able to finance properties in very poor condition which would otherwise be turned down by the banks.
3. Quick approval and closing- Without a doubt, one of the major benefits of this type of loan is the fact that the investors can secure the pre-approval within one or two days, given they have submitted the handful of documents that the lender has requested. Add to that, the real estate investor can close the loan sometimes in as short as a week, which can help win the bid in a competitive real estate market. When you compare the quick closing of a fix and flip loan to the 30-45 days it can take to be approved by a bank, the benefits of speed are very obvious.
4. Repair funds- Another major advantage with a fix and flip loan is that it provides an opportunity for the borrower to repair all of the issues that need to be addressed in order maximize the profit potential of the real estate investment. This would not be possible if home-improvement costs had to be covered solely using the borrower’s own money.
5. Property flexibility- In addition to offering flexible rates and terms, these loans also provide flexibility in terms of the types of property that are funded. Borrowers use these loans to finance a broad range of real estate investment opportunities, such as duplexes, multi-unit buildings, condos, townhouses, and of course, single family homes.
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ABOUT THE AUTHOR
Walnut Street Finance, specialize in funding fix and flip loans, which require speed, flexibility and dependability.