This BLOG On Fix And Flip Purchase And Rehab Loans With 100% Renovation Financing Was UPDATED On July 12th, 2019
Fix And Flip Purchase And Rehab Loans are investment loan programs for real estate investors who need financing for the acquisition of a fixer upper PLUS the cost of the construction.
- Fix And Flip Purchase And Rehab Loans are short term hard money loans for property flippers and real estate investors
- Gustan Cho Associates are experts in Fix and Flip Purchase and Rehab Loans with little down payment for real estate investors
- When it comes for real estate investors buying real estate that they plan on rehabbing and reselling, Fix And Flip Purchase And Rehab Loans is the loan program of choice
- Fix And Flip Purchase Rehab Loans work differently than conventional investment property loans
- Lenders are more concerned with the asset (property) rather than the borrower when processing and underwriting the loan
What Is Fix And Flip Purchase And Rehab Loans?
There are different types of Fix And Flip Loans.
- Fix And Flip Loans for rehab only where the property investor purchases the property cash and just needs construction financing
- The above can be done with a cash-out refinance and if the property owner needs more funding, then the lender will finance the shortage for construction
- Where the property is owned by the real estate investor with an existing mortgage:
- The fix and flip lender will pay off the first position and finance the first lien plus the rehab of the project
- Where a real estate investor needs Fix And Flip Purchase And Rehab Loans where the lender will finance the acquisition PLUS the rehab costs of the project
Benefits Of Fix And Flip Purchase And Rehab Loans
The main purpose for fix and flip loans is to help real estate investors finance purchase plus the construction of an investment property.
- Once the property is done with the renovation, then the property is either sold or it is refinanced with an end long term traditional investment and/or commercial mortgage
- Terms of Fix and Flip Loans are normally six months to two years
- Fix And Flip Loans are designed to be short term investment property bridge loans
- The property investor needs it very quickly with little paperwork to stabilize the property so the renovated property can either be sold or is bankable with traditional commercial lenders
- The main objective of fix and flip loans for real estate investors is to sell the property prior to the mortgage balance being due and using the funds of the sale to pay off the fix and flip loan
Benefits Of Fix And Flip Versus High-Interest Rates
Fix and Flip Loans are normally short term bridge financing used by real estate investors due to being able to close quickly and with little document and no income verification or tax returns of the borrower.
- Due to the ease and streamlined process of fix and flip loans
- Interest rates are higher than traditional investment property loans
- There are many cases where real estate investors can close on a property in less than a week with fix and flip and/or hard money financing where a bank may take 60 or more days
- The premium real estate investors pay with fix and flip and hard money loans are well worth the costs and fees these commercial lenders charge
- Time is money and there are many instances where real estate investors can get deals on properties with multiple purchase offers
- Other benefits are many lenders will not finance a property that is not habitable, vacant, or needs extensive work
- Investment property lenders love property flippers
- This holds true especially those with years of experience or who have a successful track record of flipping properties
Because they’re usually short-term loans, fix and flip loans tend to carry interest rates that are higher than the ones for conventional loans. There is an advantage to using this kind of loan to rehab a property. However, since it’s possible to get the funding within a few days or weeks rather than having to wait two months or more.
Fix And Flip Lenders Versus Banks
Gustan Cho Associates offers Fix and Flip and bridge financing nationwide.
- Most banks do not offer fix and flip purchase and rehab loans
- Banks and traditional investment property lenders usually offer to finance for investment properties that are already stabilized and cash flowing
- Banks and traditional investment property lenders normally want to see borrower’s financials that date back three or more years and the financials of the investment property with leases already in place
Borrowers of fix and flip loans can qualify with the following:
- No Income Verification
- No Tax Returns
- Little, No, or Bad Credit
- Asset Based Lending
- Experience is key for little to no down payment on renovation financing
Qualifying For Short Term Fix And Flip Loans With 100% Renovation Financing
Fix and Flip Rehab Lenders and private money lenders want to see that the real estate investor has skin in the game. They want to see that borrowers have their own money in the real estate purchase.
Here are typical qualification requirements:
- Up to 90% financing on the property purchase and 100% rehab cost financing as long as the After Repaired Value (ARV) is within 65% to 70%
- Closing in two to four weeks
- Income Verification or Tax Returns are not required
- No seasoning of fund requirements: No asset verification
- No pre-payment penalty
- 2nd position liens are allowed
- GAP Financing is allowed
Recent Case Scenarios Of Fix And Flip Purchase And Rehab Loans
Here are recent fix and flip purchase and rehab loans that closed and funded:
- Palm Harbor, Florida Single Family Home:
- $436,500, 85% of the purchase price and 100% cost of renovation financed
- Medford, Massachusetts Condo Conversion:
- $686,500, 86% of the purchase price and 100% of the renovation costs funded
- Oak Park, Illinois Single Family Home 2nd Floor Room Addition:
- $533,500, 80% of the purchase price and 100% of construction costs funded
- Tampa, Florida Single Family Home Renovation:
- $356,600, 83% of the purchase price and 54% of renovation costs funded
Real Estate Investors in need of Fix And Flip Purchase And Rehab Loans where they need 100% financing on renovation costs, please contact Gustan Cho Associates at 262-716-8151 or text us for faster response. or email us at firstname.lastname@example.org. We are available 7 days a week, evenings, weekends, and holidays.