Fix and Flip is a real estate business that involves buying low-priced properties that typically need repair and renovation, and selling them for a higher price than what you paid. Property flipping can be a profitable business, but it comes with major financial risk, especially for beginners.
Successful fix-and-flip method depends upon buying the right property and setting up an economical budget for the remodel project. Another key point to remember when planning a successful real estate business is evaluating the property and pricing it correctly so that you can get your money back in a timely manner.
If the property takes too long to turnover to the right buyer, it can cost a lot of money to the investors in one of three ways:
1. Carry on Interest: If the investor has a loan on the property. This is the monthly cost of money rendered for the project.
2. Missing out on other opportunities: This is the disadvantage of not being able to touch your money when you need it. There are times that a more profitable investment can come unexpectedly. For example, if you find a rushed selling, inexpensive property, the investor might miss out on a great opportunity to buy another investment property.
3. Capital Cost: An investor should charge themselves for the capital financed in the project. The amount should be based on how much profit the real estate investor would get if they invested in a different project. A lot of people don’t realize there are different types of loan programs to help. One of the easiest ways to acquire capital is to get your property flipping project started with the help of a fix and flip loan.
What Is a Fix and Flip Loan?
A fix and flip loan is a type of loan that investors can use to shoulder the price of buying a property as well as the cost of fixing and remodeling. These types of loans are like bridge loans commonly used for short-term until a permanent financing solution has been acquired. One of the major keys of fix and flip loans is the use of collateral. Online lenders or small companies, like Sals Capital, secure these loans. The biggest benefit of using fix and flip loans is you can get an approval the same day and be able to receive funding within a week. That’s the difference to a traditional mortgage which takes from 45 to 60 days to fund.
They commonly consider the real property as collateral and don’t spend a lot of time looking at the borrower’s credit history to loan the capital. All the deciding factor is in the property itself. Want to learn more on how to secure a fix and flip loan? Better call Sal (332-334-1077).