Factors to Consider When Choosing a Fix and Flip Money Lender
Sometimes in life we need money in case we have had an emergency, for example you may have a medical emergency and require cash urgently. On the other hand, you may also need cash for investment purposes. Usually, the normal way to go would be to take a loan from a bank. The problem with these kinds of loans is that they usually have a lot of bureaucracies and procedures that need to be done before the loan is approved. Besides, sometimes the interest rates might not be favorable and it might eat into your investment. This is where fix and flip loans come in. These are types of loans that are offered to real estate investors usually in short term so that they can purchase a degraded property after which they renovate and sell it for a profit. These types of loans are good since they allow for fast closure for properties regardless of the condition they are in.
There are various types of fix and flip loans that are available for investors. The most common type is the hard money. Hard money type is given to investors that have more than two flips of houses that they have done before. Another is the bridge loan. This one is given to investors that want to close a property quickly and they plan on getting other financing options in future. These loans are advantageous in various ways. For instance, they are offered at competitive rates. Some can be given online within a period of about 15 days. This is much faster compared to other loan types given by banks. The rates at which these loans are offered is usually reasonable. There are numerous lenders for these types of loans. However, there are some key characteristics that will differentiate a good lender from one that is not.
One of them is trust. Ensure you get a lender that you can trust. Avoid a lender that is always trying to up sell you. Get an individual who is ready to sit down with you to help you analyze the viability of an investment before you make it. Approval time is also critical. Look for a Lender that approves loans faster. The normal period should be between 2-3 weeks. Fix and flip loans can be as short as 6 months to not more than 12 months. These types of loans are also beneficial when it comes to repayment. Usually the lender takes a certain percentage of the profit you get from the sale of the house. It is usually 1-8%.
When looking for a lender, you should do a background check on his reputation so that you can establish his credibility. Go for a lender that has been operational for a long time. Such a person will be reliable. You also need to think about the strength of the lender financially. You want a lender that will avail the cash you need in a short while. The flexibility of payment is also something to consider.