If you’re interested in flipping real estate properties, then you’re on the right track. There is a lot of money to be found in flipping properties. There is a downside though. Every time you buy a new property you have to find a way to pay for it. Of course, if you already have the cash then that’s ideal, but it’s also pretty unlikely. Chances are pretty good that you’ll be getting a loan for your property purchase. But all loans are not equal. Here are a few things you should look for in your fix-and-flip loan.
Short-term
Most traditional loans will be for fifteen or twenty years at least. This does not work for a fix-and-flip property As soon as you buy it, you’ll want to get it fixed up as quickly as possible, and then sold in the same way. Ideally, you won’t need a loan for much longer than nine months or so. If you go ahead and take that twenty year loan, you’ll run into all sorts of problems when the property is sold. Instead, look for a short-term loan meant for fix-and-flip investors.
No penalty for paying off early
It is very possible that things will go even quicker than you expect, especially if you give yourself extra time to pay off the loan. If you sell the property four or five months earlier than you expect to, you don’t want to have to keep making payments on the loan for that entire period. Do your best to find a loan that only charges a very small fee, or better yet, nothing at all, to pay off the loan a few months early.
Extra cash included for repairs
If you borrow exactly enough to pay for the property, you’ll find yourself in a lot of trouble when it comes time to start making repairs, especially after you’ve made the down payment. A traditional loan will not provide extra cash for repairs, but there are lenders that specialize in fix-and-flip loans and understand that you will need some extra cash to complete repairs before you can sell the property. Find these places and ask for the extra cash so that you don’t run out of money before you even start.
Helpful and knowledgeable staff
Everybody needs someone on their side. Although it’s not a requirement for the loan, being able to work with staff that know what they are talking about and are willing to help with almost anything is a huge benefit. It may even be worth concessions in a few other areas if necessary, to be able to talk to the staff that granted your loan about anything related to the industry. You’ll definitely need something at some point. Have someone you can count on to help you with it.
Flexibility
One of the most important attributes to look for in a fix-and-flip lender is flexibility. You’re going to have a lot of requests. In addition to what you borrow for the property, you’ll need a specific amount for the repairs, and for a specific amount of time. You also may not have a perfect credit score or record. Half way through the loan period you may find that there’s something else you require. There’s no telling what will come up, so it’s very important to work with a lender that will be very flexible with all of your needs and requests.
Are you looking for a loan for a fix-and-flip property? Contact us. We can answer all of your questions, and we can even get you started on the right track whenever you’re ready.
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