Many people who look at the housing market see opportunity. They see that they can step in, buy a fixer-upper, fix it, and sell it for a profit. This is a great route to go for many people who want to make some money renovating a house that desperately needs it.
But how do you get funding for a project like this? There are actually many ways you can fund your fix-and-flip needs. It may come down to getting a special loan to do exactly that.
The first thing you need to know about fix-and-flip loans is that they are designed for short-term situations. The plan is this: you buy a home, you fix the home, you sell it for a profit. This allows you to pay back the original loan and still have a profit for yourself. These loans are typically paid off within a couple of years.
Designed for Homes
You also need to keep in mind that fix-and-flip loans are used only for residential homes. You cannot obtain this kind of funding in order to renovate a business, for example. The loan will cover home renovations as well as the purchase of the home.
Homes Are Collateral
It is also important to keep in mind that the homes and properties you purchase with these loans are used as collateral. If you fail to pay back the fix-and-flip loan, the lender can take ownership of the property. It is a secured loan.
Of course, this does not mean that your credit history is not taken into account. Your credit history is a major consideration when it comes to securing a fix-and-flip loan.
Used for Auction Purchases
In many cases, a fix-and-flip loan is designed for use at an auction. These homes are often available at very cheap prices because they are in need of many renovations. Some need very serious rebuilds and fixes. Buyers improve the property and sell it to another buyer at a higher price in a more traditional manner.
May Cover New Construction
Fix-and-flip loans may cover entirely new constructions. For instance, you may purchase a home, knock it down, and then rebuild a new home.
Contact a Loan Professional
A loan professional can help you determine your next steps. A fix-and-flip loan may be the key to helping you through the process, allowing you to get the money you need to turn a house around. Make an appointment today to discuss your next steps.
When was the last time you realized you were in the red financially? Although most people don't think about their finances on a day to day basis, it can be easy to find yourself living paycheck to paycheck if you aren't careful. I began thinking carefully about the financial implications of some life decisions I was making, and I knew I had to make a difference. I talked with a loan officer about getting things together, and he was instrumental in helping me to work things out. Read more about my financial successes and failures on this little website. You might be able to avoid some of my previous mistakes.