10 MOST FREQUENT QUESTIONS ABOUT FIX AND FLIP LOANS

In relation to property purchase, renovation, and resale for profit purposes; fix-and-flip loans have become the favorite financing option among real estate investors today. Here are top 10 questions asked by real estate investors when it comes to this particular type of loan:

What is a fix and flip loan?

The phrase “fix and flip loan” refers to a short-term loan designed specifically for real estate investors who buy, renovate, and resell homes to make a profit. Such hard money loans usually mature in six months to one year and are supposed to serve as the financing necessary for purchasing and repairing a house.

How can I qualify for a fix and flip loan?

Some key factors come into play when lenders are assessing eligibility:

• Credit score: While good credit is certainly beneficial, many lenders work with investors who have lower scores but have the track record and have done the financial planning to ensure a successful project.
• Experience: Some lending institutions prefer those who have already flipped properties before but others can serve beginners. RBI Private Lending evaluates each project and business plan and will work with those new to house flipping.
• Down payment: Before purchasing a dwelling, you should be ready to pay at least 10-20% upfront. Down payment:
• Appraised property’s value: The potential after-repair value (ARV) of the property is critical as it determines the loan amount involved.

What is the interest rate for a fix and flip loan?

Interest rates can change from 8% up to 15%, depending on one’s credit worthiness, investment history and property’s potential AVR.

How soon can I get a fix and flip loan?

In some cases, we can approve and fund fix and flip loans within one to two weeks which allows investors to jump on attractive real estate opportunities quickly.

What expenses are associated with fix and flip loans?

Expect the following fees and costs in addition to interest cost:

• Origination Fee: these are normally 1-5% of the loan amount. RBI Private Lending is generally at the lower range of this rate.
• Underwriting Fees: such as evaluation fees, title policy, among others.
• Rehab costs: all repairs are contained in this spending plan.
• Holding outlays: insurance, taxes, utilities during rebuilding period.

Can I make use of a fix and flip loan for any type of property?

Typically, single-family homes, multi-family units (duplexes etc.), or occasionally smaller commercial properties are financed using these loans; however, it depends on specific lenders’ guidelines regarding allowable property types. RBI Private Lending focuses on residential properties, see here for more information.

What if I don’t sell the property before my loan ends?

This is what may happen if you fail to sell your home by the time you have repaid your mortgage:

• Extending the term – some creditors allow that but require extra charges.
• Higher interest – when repaying this sum later than originally planned expect higher rates;
• Refinance– You may choose to refinance the property through a bridge or bank loan.
• Foreclosure – worst case scenario is losing your house if your lender decides not to wait anymore until you pay off everything you owe them completely!

How much money can I borrow with a fix and flip loan?

Loan amounts usually depend on after repair value (ARV) of the property ranging between 65% to 70%. The down payment details and scope of remodel are also taken into account by lenders.

Do I need renovation experience to be eligible for a fix and flip loan?

Though renovation experience might enhance your chances of getting approved faster and with better terms, it is not always a necessary requirement. Some lenders work with novice investors especially if they can present well-drawn business proposals featuring seasoned contractors.

What are the risks involved in fix-and-flip loans?

Here are some of the risks associated with fix and flip financing:

• Market swings – this makes it difficult to estimate possible profits as real estate prices vary over time;
• Unexpected repair expenses – sometimes unexpected costs for fixing up the property’s condition arise while working on its rehab project;
• Tight deadlines – the period of your financing is so short that you have no alternative but to stick to a strict timetable;
• Selling challenges – inability to find buyers leads to financial distress.

Getting started on your next fix and flip? Fill out an application now or contact RBI Private Lending to see what options are available to you and how much money we can lend!

WHY RBI Private Lending FIX AND FLIP LOAN PROGRAM IS YOUR BEST BET

We at RBI Private Lending take great pride in our contributions to real estate investors’ success stories. We think there are some areas that separate us from other private lenders and make RBI Private Lending’s fix-and-flip loan program a particularly attractive option:

Bilingual—In Florida, Texas, or any of our licensed states, we do a lot of business with many Spanish-speaking clients, which makes RBI Private Lending different from other private lenders. This aspect helps smooth communication throughout the process, from when you submit your application to the closing date.

Open to foreign investors – We have been working closely with overseas buyers who want to buy rehab properties without being subjected to too many requirements.

Great customer support – We do everything we can to close real estate deals on behalf of our customers. Expect nothing but exceptional results from us.

Flexible terms – Every deal and investor is unique according to what they need. That’s why we customize our terms based on your specifics.

 Low interest rates – We make concerted efforts to ensure that we provide consistently competitive rates across all our loan programs.

Fast approval – Our streamlined system allows real estate investors to move quickly, sometimes even within seven days, so as not to miss an opportunity to fix and flip a house.

Getting started on your next fix and flip? Fill out an application now or contact RBI Private Lending to see what options are available to you and how much money we can lend!