Whether you’re a first-time flipper or a seasoned real-estate investor, you’re looking for the best financing options. There are several types of fix-and-flip loans to consider. In this week’s blog, we’ll discuss a few financing options.
If you have more questions about these and other mortgage options, contact Associates Home Loan of Florida, Inc. We work with clients in Orlando, Tampa, Sarasota, and surrounding Florida. We have financed countless local fix-and-flip investments and can help guide you through the process.
Hard Money Loans
Hard money loans are an alternative to conventional mortgages. These short-term loans are secured by the real estate being purchased, rather than on a borrower’s financial status. Hard money loans help clients purchase, renovate, and sell the property for profit. Hard money loans have high interest rates and clients typically pay them off within 1-3 years (after the sale of the fix-and-flip investment property).
Cash-out refinance is a common loan option for clients who have existing investment or personal property with equity. Fix-and-flip investors use cash-out refinance to extract equity in an existing property and use it to purchase a new investment property. They Typically, you’ll need at least 30-40% equity in your existing property to get approved for this type of financing. Cash-out refinance typically have lower interest rates than hard money loans.
A home equity line of credit (HELOC) provides a stream of financing for a fix-and-flip investment. Like a cash-out refinance, HELOC is a loan in which existing equity is used for new financing. HELOC can only be issued on an owner-occupied property, as opposed to an investment property. It may be issued in addition to an existing mortgage if a client has at least 15% home equity. HELOC is a great fix-and-flip financing option because it provides a continuous stream of credit as different rehab costs come up.
Property Line of Credit
A property line of credit is like a HELOC in that it provides a consistent stream of funding for rehab projects. Unlike a HELOC, however, it is specifically designed for investment properties, and can only be used on non-owner-occupied properties. This is a favorite investment solution among our experienced fix-and-flip clients.
Find the Financing Solutions You Need for Fix-and-Flip Success
When you’re ready to learn more about fix-and-flip loans, the mortgage professionals at Associates Home Loans of Florida, Inc., have the answers you need. Our nonconventional mortgage solutions have helped hundreds of clients in Orlando, Tampa, Sarasota, and surrounding Florida earn great returns on their investment properties. Apply to refinance and get started today!