The strategy of property acquisition, then renovating, and quick selling “fix-and-flip” is gaining momentum in real estate investment. The approach requires purchasing distressed properties, doing some repairs and renovations and reselling them at a higher price. These kinds of projects can realize significant profits, but they also need heavy capital investments and, most of the time, fast turnaround. Here, short-term financing solves the problem, giving the investor the money and the opportunity to take advantage of such opportunities.
What is Fix-and-Flip with Short-Term Financing?
To fix and flip with short-term financing means to do property renovation either by purchasing a property or performing its reparations with short-term loans, that is, loans with a duration of between 3-12 months. Usually, these loans are amenable to be short-term in nature; object sold is put on sale to enable the rapid repayment of the loan taken.
Benefits of Short-Term Financing for Fix-and-Flip Projects
Short-term financing presents a lot of benefits for the fix and flip investors:
- Fast Approval and Funding: These loans have quite a short duration, wherein a borrower’s capability to borrow has a fast turnaround, unlike conventional mortgages. Therefore, investors can swiftly take advantage of time-pressing deals.
- Flexible Loan Terms: Short-term loan lenders allow fewer politics concerning repayment of their loans, and issues are advanced concerning the scope and nature of projects to be tackled, such as fix-and-flip.
- Obtain Enhanced Leverage: Investors find that short-term loans often have a greater LTV since short-term loans are granted easily.
- What is Prepayment Penalties? Most short-term lenders do not charge a prepayment penalty; therefore investors are free to pay back their loan without incurring extra costs.
Looking at the Costs and Risks
As has been seen, short-term financing can be credited to investors. However, one has to appreciate the costs and risks that come with it.
- Higher Interest Rates: Generally, short-term loans tend to command the highest interest rates in comparison to a lawsuit, as such loans are risk prone for the lending firm.
- Deadlines: Repayment of these loans within a short period leaves some pressure to be done with the repairs and sell the house.
- Threat of Foreclosure: In case an individual falls behind a specified timeline to repay a loan, such an individual is likely to face foreclosure, which comes with a cost and loss.
Looking for the Right Lender for Your Fix-and-Flip Goes Well
Identifying a good lender is key to the success of your fix-and-flip project. Take into account the following aspects when selecting a lender:
- Knowledge about Fix-and-Flip Loans: Seek lenders who are conversant with giving out funds for fix-and-flip projects and have experience in that field.
- Reasonable interest rates and charges: Apply for rates and charges from numerous lenders and select the most competitive.
- Flexible Loan Options: Select a lender who provides flexibility with the loan terms, including, among others, interest-only payments or adjustable rates.
- Reliable Customer Support: Choose a lender with good customer support who can help with issues and questions that may occur during the loan.
Partner with Thick AF Credit for Your Fix-and-Flip Financing Needs
Here at Thick AF Credit, we know the problems and advantages of fix-and-flip investments. We have loan officers who understand that time is of the essence and offer only short-term products to investors in real estate. Cost and terms are reasonable and loans can be processed quickly for you to meet your investment objectives.
Call Thick AF credit right now and make your removal financing requests so that you can commence with your fix and flip real estate investments as per your dreams.
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