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What Is Fix and Flip Funding?

What Is Fix and Flip Funding?

  • April 15, 2021
  • Written by : Carl Eschenburg

So, you’re a house hunter, home seller, or a mix of the two?

Allow us to paint a picture.

The housing market comes naturally to you; you might read the real estate column of the newspaper religiously or have emails sent to you with new and old home listings.

You’re always asking around your local area, “do you know of any houses up for sale or a home that is a bit of a fixer-upper?”

Lastly, you consider yourself to be more of a real estate agent, than a property investor.

If this sounds like you, then you must be a successful, or soon-to-be, home flipper. You’ve come to the right place.

If you are in business to flip houses, then fix and flip funding is the best option for you.

What Does it Mean to Flip Houses?

Flipping houses simply means purchasing a home with the intention of fixing it up, and then selling it for a profit.

By definition, our financial specialists explain that “fixing and flipping real estate is essentially buying properties at a lower rate, rehabilitating the property, and selling it for a higher dollar amount.”

What is Fix and Flip Funding?

Fix and flip funding was created solely to support the ability, both financially and mentally, to buy a house, renovate it, and then sell for profit.

When a homeowner or home buyer does not have the funds to purchase the home, the capital to make repairs, or the potential to maximize their earnings, then the individual seeks out a lender to help fund the investment.

How Does Fix and Flip Funding Work?

Our financial specialists explain that “in order to properly assess whether or not a flip is a good fit, lenders require a write up on each property, a listing address of the property, an analysis of the neighborhood in which you’re buying the property, and sale prices for comparable homes in the neighborhood.”

In addition to this, your fix and flip lender will need to know the strategy and timeline of the project, background information on anyone who will assist you with the project, and a backup plan in case the renovation doesn’t work.

After all information has been gathered, an estimation is made based on the value of the property and the intended renovations, plus the costs associated. An offer will then be posed by your lender stating the amount of capital that can be borrowed (as a percentage of the total). From here, you will discuss terms, rates, repayment expectations, and turnaround time with your lender.

Why Use Fix and Flip Funding

Fixing up a home to sell is quite a monstrous task, especially if and when you are focused on more than one home at a time. No matter what part of the process you find yourself in when it comes to the housing industry, you will find that it requires a bit more effort than expected.

For example, moving is thought of as a somewhat simple task until packing turns into a three-day weekend. The same is true for flipping houses; you will never know how much capital is required until you get into the mess itself.

As our experts say, “while profitable, the process is sometimes expensive, and the upfront costs keep a lot of experienced flippers from maximizing the potential of their business.” Our goal is to take away the stress from home buying and renovating, and that’s why we offer fix and flip financing options for entrepreneurs like you.

FAQ About Fix and Flips Funding

Do I have to be a real estate agent to get fix and flip funding?

Absolutely not! There are no regulations stating that an individual cannot invest in the housing market with the intention of flipping a home. If you have the capital to invest or choose to get funding through a lender to be able to invest, then you are a viable contender for fix and flip funding.

How is fix and flip funding different from traditional funding?

The two differ greatly and it is important to know the difference. Our experts explain that because of seasonal and irregular incomes, banks are often not the most favorable for issuing funding for even the most experienced fix and flippers. With that being said, traditional bank funding is usually not chosen by individuals or agents.

To help with this expensive and time-consuming process, we’ve made it simple for real estate agents or other individuals in the fix and flip industry by offering very agreeable, transparent terms that won’t break the bank (or scare you away from investing).

How much money can I expect to get from fix and flip funding?

The amount given varies between lenders and varies due to the value of the property at hand.

Typically, the funding amount is based on the value of the property, including the future renovations. The funding should provide you with two things: the first is funding to buy the property, and the second is additional funds to afford repairs.

If you have an outstanding property and a high potential return on investment, then you are much more likely to receive a higher funding amount.

The average industry standard by lenders is generally 70-90% of the property value and the cost of renovations. With us, we try to provide 90% every time.

The housing market is currently a buyers market, meaning more people are interested in buying versus selling. With a demand like this, fix and flip funding can only help your initiatives.

Stay on top of this busy industry by having the funds you need on hand. We can help you fix and flip, and then do it all again, with ease. Contact us today and get fix and flip funding tomorrow

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