Are you ready to invest in an excellent property with the potential to make a great income? Fix and flip properties can come with risks, but are giving investors the opportunity to exponentially increase their investment. If you’re ready to take on investment in commercial real estate renovation, find out how you can receive the best financing to quickly purchase, renovate and sell your new property.
Not all flippers have years of experience. If you’re starting out, you don’t need to have a background in construction or investing to successfully purchase and flip a property. However, without a proven track record many lenders may be hesitant to provide you with the funding you need.
First, consider a hard money loan. Unlike a traditional mortgage or commercial loan, a hard money loan is flexible. Because it’s based on the property’s ARV or after-renovation value, you can receive the financing you need to not only purchase property but also make the necessary renovations to earn a profit. These loans don’t require as high of credit scores, down payments or lengthy applications. However, you may not receive the best rates. You’ll want to sell your property quickly to avoid paying the high-interest rates for months or years.
Just like a traditional mortgage, most hard money loans for fix and flip properties will be backed by the property itself. This means that, while you hold the title for your investment property, defaulting on the loan will cause you to lose the property.
Hard money loans are an attractive option because they are typically approved faster than a mortgage. When the perfect real estate is on the market, you need to be fast enough to put in a competitive offer. If you don’t have the financing available to self-finance your investment, a hard money loan is a flexible and responsive way to quickly make the offer you need, the renovations you want and secure the selling price that can make you a profit.
Another, the riskier option is crowdfunding. Crowdfunding allows you to receive small loans from a wide community. All these smaller loans are collected to create a loan large enough to purchase the property and finance your renovations. However, this option can take far longer than a hard money loan. It is also very difficult to receive if you have little or no experience flipping houses. While crowdfunding seems like an exciting and modern way to raise money, the risk makes it less attractive for many fix and flip investors.