The Most Efficient Way to Finance a Fix and Flip

We all know that in order to make money, you must spend money, and that is exactly the case with fix and flip investments. Fix and flips are a very profitable type of investment because investors are often able to buy homes for a discounted price, fix them up and quickly sell them for profit. Funds are needed upfront not only to buy the house, but also for the repairs. Fortunately, there are quick and easy options when it comes to obtaining the capital to make it happen. Let’s take a closer look at what a fix and flip is, why you might want to consider investing in one, and how to go about financing your next project!

What is a fix and flip?

A fix and flip starts with purchasing a low-priced, discounted property due to its condition, rehabbing the property, and then selling it at a higher rate than the total money invested in order to make a profit. You can have a very lucrative fix and flip as long as you buy low and sell high.

Why should I invest in a fix and flip?

As we’ve already pointed out, fix and flips can be very profitable investments. This is the main reason many investors are drawn to these types of investments. Another benefit of investing in a fix and flip is infinite opportunity, meaning the market is continuously being replenished with properties waiting to be bought, renovated and sold. In case you’re still looking for another reason why you should invest in a fix and flip, they offer equity upside, historically speaking.

How do I finance a fix and flip?

Now that you know what a fix and flip is and understand the benefits, you’re ready to find the funding needed in order to get started! Lucky for fix and flip investors, there are lenders out there who specialize in renovation loans, referred to as private money, or hard money lenders.

Efficiency is the main reason you will want to seek out a private money loan over a conventional loan. Fix and flips may not allow for the time it takes to obtain a conventional loan, which can often be 30-45 days, and that is if you are able to pass the various requirements needed for approval. Hard money loans are usually processed in 7-14 days, making the seller and buyer aligned on the urgency to close quickly.

The catch with private/hard money loans is that they are more expensive than conventional loans and the loan terms are much shorter. Private/hard money lenders take on risk when they loan with such loose terms, therefore the house must be flipped right away and the loan must be paid off within 6-12 months. Due to the urgent nature and high profitability of this type of investment, most investors understand the value in paying more to get the job done as quickly and easily as possible.

If you’re ready to fund a fix and flip, reach out to the experts at CALCAP Lending!?

CALCAP Lending offers competitive terms on residential real estate investment loans, single family, and multifamily. In addition CALCAP Lending offers preferred equity investments. Find out how CALCAP Lending can efficiently help you fund your next project by contacting us at 833.816.5580 or visit us online.