Flipping properties can make you a lot of money but getting started can be difficult financially. Traditional mortgages were created for long-term residences, making them unsuitable for investment property financing. A new financing strategy was required as more buyers joined the market to flip aging houses.

What Are Fix-and-Flip Loans and How Do They Work?

Fix-and-flip loans are meant to accomplish exactly what the name implies—to provide financing to renovate and resell a home in a small amount of time.

Fix-and-flip loans are short-term real estate loans intended to aid an investor in purchasing and renovating a property to resell it for a profit within 12-to-18 months. While some investors utilize more traditional loans to fund their initiatives, many fix-and-flip loans are made by private investors.

Fix-and-flip loans are commonly utilized to buy residential properties at auction or in foreclosure, fund renovations, and improvements, and pay other costs connected with property ownership.

What is the Difference Between Construction Loans and Fix-and-Flip Loans?

Most flips require some form of construction, and fix-and-flip loan funds can be utilized to cover all these expenses. A new construction loan, on the other hand, is typically used to construct new residential or commercial structures or to demolish an existing structure to make way for new development.

Despite the differences, many conditions and processes for repair and flip and construction loans are the same. That’s because a hard money loan is frequently the best solution for both. New building possibilities, like house flipping, benefit from the flexibility and speed of hard money financing.

The Benefits of a Fix-and-Flip Loan

Reduced Risk. Unlike a home loan, which is supported by your personal credit and your property, a fix-and-flip loan is solely backed by the property it was approved for. You will not lose your house if something goes wrong.

Fast Financing. Investors purchasing foreclosures or auctioned homes must have cash available as soon as possible. Traditional loans can take up to a month to complete; fix-and-flip loans can be funded in as little as a week.

Flexible Terms. Unlike traditional banking institutions, hard money repair and flip loans from lenders are not bound by the same criteria. Borrowers who do not meet the requirements for standard loans can often apply with a private lender and get better results.

Contact POM Capital & Funding Services for Fix-and-flip Financing

Fix-and-flip loans serve as a bridge between a buyer’s funds and a property’s purchase and remodeling costs. If you’re searching for funding for your property flip and haven’t worked with a fix-and-flip lender before, you might be amazed at the ease of the process.

If you would like to discuss your fix-and-flip loan options with an experienced broker, call POM Capital & Funding Group at 631-354-9290 or write to us at [email protected] to schedule a free consultation with our team.

POM Capital & Funding Group is a leading provider of alternative funding solutions for businesses of all types and sizes, offering commercial finance solutions and products to businesses in the Centerport, New York area and throughout the state of New York.