Fix and Flip Loans for Real Estate Investors

Fix and flip is really a slang term to describe a type of real estate investment deal. The fix part is where a real estate investor purchases an undesirable single family home below market value and does some repairs to the property in order to make it more appealing. The idea is to significantly increase the market value of the property with the minimal expense possible so that the home can be resold for profit.

Typical repairs done are: adding bedrooms as needed, putting in a new kitchen, finishing a basement, replacing a roof or doing anything required to make a home have more curb appeal to buyers and of course, more valuable than when they started. It is part science and part art to know what repairs to do and how much to spend doing them.

The flip part refers to getting the property listed for sale in a short period of time and then locating a new person that will buy the home to live in it or rent it. This new buyer gets a loan and pays for the property. When the closing happens with the new buyer then the real estate investor, assuming they did the deal right, makes a profit.

Fix and flip investing has been around for quite some time, but it has become much more popular with the advent of TV shows such as Flip This House and Flip That House among others on cable stations.

If you are interested in becoming an investor who needs fix and flip loans, then you have come to the right place! Read on to discover how you can get the money you need to flip properties regardless of your credit, job history or income.

*Enrollment in any educational system or purchase of any products does not guarantee funding or that 100% financing will be an available option for any property. Do Hard Money does not guarantee that each or any particular deal funded will result in profit.

Most properties that an investor buys with the intention of flipping for profit do not meet FHA guidelines.

Why does that matter?

In order to qualify for “traditional” financing to buy a property, a home must meet these guidelines. Otherwise a lender can’t write a loan through Fannie Mae or Freddy Mac. Which means that you can’t walk down to your local bank or call up Wells Fargo to have them fund your deals.

The majority of fix and flip loans are financed by private money or hard money lenders, but what separates the traditional from private?

Private lenders will loan money based on an asset. In this case, the asset is a piece of real estate. The good ones are people who are (or have been) real estate investors themselves, so they really understand what it takes to fix a property and sell it for a profit.

What private and hard money lenders will do is look at the property you want to invest in. They’ll ask you for your purchase price and what repairs you want to do as well. If they can see by the data that an investor can buy a house, do the repair work and quickly sell the home for a profit, they will fund the deal.

The lending decision is based entirely off of the aspects of the property – not the borrower. This means that you can get financed if you have bad credit or no credit. You don’t have to show job history or prove you have any income or assets. Private and hard money companies can do this because they use capital from private investors to fund fix and flip projects without having to abide by traditional mortgage guidelines.

Something you need to understand about a fix and flip loan is that it is usually for a very short term. Five to twelve months is common in the industry. Because the loan is short term, many lenders will not ask for payments during the term of your loan. However, you need to make sure you know what you are doing so that you can get the property sold and thus pay off your note. If you fail to do this, you will be foreclosed on and the hard money lender will take control of the property you were trying to flip.

Below are a few resources for locating fix and flip lenders that can help you get going as an investor.

The first way to find a private or hard money lender is to use an aggregation website. The two I recommend: http://moolahlist.com and http://www.hardmoneylendersonline.com. They are both good and reputable sources to find a lender for fix and flip loans.

A word of caution: do not buy programs that sell a course on finding private money lenders. All of this information is free and readily available.

Another way that you can find people to fund your real estate investments is by networking. Go to your local REI club meeting and get to know other investors. Many of them will move on to funding loans after they’ve had their fill with doing flips themselves. Building these relationships can take time, but is well worth it.

Lastly, I have to mention Do Hard Money. We’ve been specializing in doing loans for real estate investors since 2005 and have attained the status of the nation’s leading fix and flip lender. The reason we’ve done so well is that I personally am a fix and flip investor, having been a part of 398 successful transactions (and counting)!

Our primary focus is delivering fast and easy access to the most fix and flip loan options available online. If you are an investor who is ready to make an offer on a property (or already have) and need financing or just want to get started in real estate investing, get started below.