Los Angeles Mortgage Broker Offers 3 Insights About Fix and Flip Loans
Most people think that the work of a realtor is as easy as taking the keys to a home and touring it around strangers to get a potential buyer. On the contrary, a lot of work is needed to bring a home to a satisfactory deal.
Not all properties are handed to realtors in a marketable state. Besides selling a previously owned home, most properties are abandoned and uncared for, lying in wait for the opportunity to be a sellable property in the market since there’s no point in making it look good when its value isn’t high enough. Finding a damaged but one-of-a-kind property that’s placed in the right location makes for a narrow window of opportunity for you to sell as fast as you can.
Bank loans are usually the solution to having a quick source of money to deal with the refurbishing costs of your property. However, traditional plans require you to gather a considerable down payment before you can be approved for a loan. This is where fix and flip loans can be useful.
Fix and flip loans are an alternative that you can choose to secure as it will not only pay for buying the home at a reasonable price but also in covering renovation costs that you’ll have to spend. In this article, we’ll share with you three reasons that securing a fix and flip loan is an excellent investment as a realtor.
Understanding Fix and Flip Loans
Hard money lenders offer different types of fix and flip loan packages compared to the ones that banks and other lenders provide. This type of loan has a relatively shorter time for settling a debt compared to typical mortgages.
Shannon Christenot shares, "Hard money lenders have a much higher interest rate, but they balance them out by having a shorter repayment window. The tradeoff with the short-duration loan with a high-interest rate is the freedom to qualify for a higher percentage of the purchase price on the property, together with the necessary renovation costs, leading to a faster approval for a loan."
Seeing the Time-Bound Advantage
The rates and terms vary vastly from lender to lender. Companies that offer hard loans, such as these, are typically real estate investors as well. However, there are universal conditions that you can get yourself acquainted with before you strike a deal.
One of the things you should expect is that your loan can last one to three years at most, providing you with just enough time to make the necessary renovations on a property. Rates under this short timeframe usually range around 7.5–12 percent. Closing fees are typical to any transaction and range to around 2–5 percent.
Qualifying For a Fix and Flip Loan
Fix and flip loans follow a different approach when it comes to doing a background check on loaning hard money. Traditional lenders would take a deep dive into your financial standing, your credit scores, and your budget.
In most cases, hard money lenders won’t even ask for your credit score or financial information, besides the value of the property you wish to buy and the quotation of the renovations. When it comes to these private investors, it’s the marketability of the property and the opportunity of a sale that matters more to them.
Shannon Christenot for Los Angeles Mortgages
Investing in real estate can be a tricky matter, especially when you’re starting with a below-than-average budget in giving a home a much-needed boost in appeal. Repairs and renovations are just one step of the process, as there’s also the matter of getting it in the official listing for sale, finding the time to schedule open house visits, and finally choosing the right set of would-be buyers.
Real estate investment isn’t for everyone, but it does get easier the more you start learning about the different strategies in marketing and the knowledge of handling the budget and paperwork necessary for the trade.
If you’re looking for a fix and flip loan in Los Angeles, Shannon Christenot is the place. Also, here is an article on the benefits you can find on the blog. To help you in securing a property, contact Shannon Christenot today at (818) 601-2231. She is ready to help you with her in-depth expertise!