If you’re a real estate investor and contractor, don’t let the current higher interest rates and the end of rapidly rising real estate prices discourage you from fix and flip projects! You can profit even in the current market with the right mindset and strategies. Don’t miss out on the opportunity to make a substantial return on your investment. If you have an eye for finding homes in attractive areas that need updating or repairs, fix and flip loans can be the key to your success. RBI Private Lending’s flip loans can help you purchase investment properties for flipping houses. Contact us to learn more.
The fix and flip market remains strong in the U.S., despite the surge in mortgage rates, record inflation, and overall economic uncertainty. The country’s housing market has slowed considerably this year, with some analysts expecting home prices to level off or decline over the next 12 months, and others expecting prices to rise only slightly because of limited inventory.
However, regardless of this change in home price appreciation trends, fix and flip real estate investors are still able to realize a profit. Nearly every community has an inventory of homes that have not been updated for decade. These homes make great investment opportunities for our flip loan programs, which are designed to cover the cost of purchasing and rehabbing these properties. Successful real estate investors usually understand the associated risks and have a well-thought-out strategy in place, which includes having a lending partner that can provide quick funding and fast closings. Investors who are not successful forgo the requisite proper planning and work with a lending partner that is not the best fit.
If you are a fix and flip investor who is looking to grow your business, you should fully understand what you are getting into, and that includes doing your homework when it comes to securing financing. Here are some tips to help you expand your fix and flip business and ensure its profitability going forward.
Factors That Affect the Growth of Flip and Fix Businesses
First, it is important to be aware of the things that can impact the success of fix and flip businesses – not the least of which is the property itself. What constitutes a property that can be flipped profitably? The key is to buy a property at a low enough price so that you realize a significant profit when you sell. Overspending at the front end can make it extremely hard to earn back as much, or ideally more than, you put into the house.
Assuming you are good at identifying profitable flips, you must then put a strong team together – one that can manage every aspect of the fix and flip process. Members of this team should include a seasoned real estate agent, experienced contractors, a talented remodeling team, and a trustworthy private or hard money lender. As a real estate investor, your best lending partner will likely be a private lender. A funding partner like RBI Private Lending has the experience to evaluate your property and renovation costs and quickly close your loan at competitive rates.
How Much Money Will I Need for My Fix and Flip Loan?
When it comes to accessing capital for a project, you must first determine how much money you need. Flipping a house could require several hundred thousand dollars or little or no upfront money of your own. Everything from your credit score to the property’s location and its condition can affect how much money you will need to flip a house. And no two flips are exactly the same, which means the cost will change from one project to the next.
A number of factors affect the total project cost and amount of profit. Among them are:
- Purchase price
- Renovation costs including materials and labor
- The anticipated time to sale or availability for rental
- Permit and inspection costs
- Commissions
Once you have determined how much money you will need, do your due diligence. Finding the right lending partner to finance your fix and flip investments is a huge factor that can impact your profitability. Remember, not all fix-and-flip loan programs are the same. It is important to find a private lender that understands your goals and is on board with your strategies.
The Speed You Need for Fix and Flip Investments
Fix and flip investors know that the market doesn’t wait. That is one of the reasons they often partner with a private or hard money lender. Conventional mortgages are not well suited nor, in fact, designed to support fix and flip projects. When the perfect fix and flip opportunity presents itself and you are ready to start rehabbing, a private or hard money loan can provide you with the cash quickly. And in a competitive real estate market, unless you have a lot of cash on hand, you will need a loan that can fund as quickly as cash. In fact, many sellers of fix and flip properties will only consider all-cash offers. And because hard money lenders like RBI are experts in flip lending, our loans can be funded as quickly as cash; they are perfect for financing property purchases in a competitive market.
Private and hard money lenders approve, close, and fund fix and flip loans in a matter of days or a couple of weeks on average. So, if you have the intention of buying a specific property, you could purchase it within a shorter period of time. Fast funding also enables you to capitalize on current property prices in your local market, as lenders are typically interested in whether the property will be easy to sell after renovation.
What Types of Properties Can Benefit from Fast Funding?
- Distressed properties
- Properties with multiple offers
- Short sales
- Foreclosure auctions
In addition, fix and flip businesses that lack capital are able to grow because they can secure properties for a significant discount by paying cash which, in turn, allows flippers to complete renovations and sell properties for a quick profit in a short amount of time. And with a private or hard money lender by your side, you are also in a better position to overcome unexpected repairs and the expense that comes with them.
What Information Will I Need for My Fix and Flip Loan Application?
- A full, detailed scope of work for your project
- Know your credit score – and ensure it is at least 620
- Have a proper exit strategy in place to pay off the loan
- Provide samples of previous projects
- Know your desired loan amount
- Have closing costs ready for closing
Working with Private and Hard Money Lenders
Local banks do not offer hard money loans. Generally speaking, private, and hard money lenders are private companies or investors that are not subjected to the same regulations as traditional lenders. As such, these lenders can, for the most part, determine on their own what they will and will not require from borrowers. Flip lenders like RBI understand the needs of those seeking flip loans to purchase residential properties. Whether you will purchase a single-family residence or a multifamily property, our fix flip loans offer the flexible terms you need to build your business.
Remember, not all private and hard money lenders are the same. Take time to do some research, ask other investors for referrals, and review the rates and terms offered by lenders in your area. The right private or hard money lender will be interested in building a relationship with you that is grounded in transparency and trust. They should also have the industry expertise necessary for your real estate deal to be successful.With the help of a private or hard money lender, you can get the financing necessary to buy a property, make the required repairs, and then sell it for a profit.
For more information about RBI Private Lending and how we can help you grow your fix and flip business, visit our contact page or call us at 800-668-1004.
