How to Leverage a Short-Term Fix and Flip Loan

Did you know you could stand to make more than $60,000 on average every time you flip a house?

There is no guarantee that you’ll be able to pull in that kind of profit on every home that you flip. But it isn’t uncommon for house flippers to make at least that much money on every fix and flip home, if not even more than that.

You will, however, usually need to secure a fix and flip loan before you’re able to begin flipping a property. A hard money loan will provide you with short-term financing so that you can purchase a home and put some money into fixing it up fast prior to flipping it.

Would you like to learn how to leverage a short-term loan and utilize fix and flip financing to the best of your ability? Check out the steps you’ll need to take to do it below.

Look For Lenders

Recent reports have revealed that about 10% of the homes sold each year are fix and flip properties. This has led to a big spike in the total number of lenders that specialize in fix and flip financing.

When you need to take out a fix and flip loan, you should shy away from working with a lender that provides traditional mortgage loans. Instead, you should set your sights on working with one that knows all about the ins and outs of providing short-term financing, like fix and flip loans.

Google “fix and flip loan near me” or “hard money loan near me” to see some of the options you have. There should be plenty of lenders out there ready to help you.

Research Lenders

Once you’ve compiled a long list of fix and flip loan lenders, you should spend some time researching each of them. It’ll help you narrow your available options.

As you’re doing your homework on fix and flip loan lenders, pay close attention to:

  • Which lenders have the most experience when it comes to fix and flip financing
  • Which lenders routinely work with those looking to obtain fix and flip financing in your specific area
  • Which lenders make it as easy as possible to apply for a fix and flip loan

Working with the wrong lender while trying to get approved for a fix and flip loan could result in your application getting denied. It could even lead to you failing to land a property that you’d really like to buy and flip.

Compare Fix and Flip Loan Terms

One thing you’ll notice as you look around at the different fix and flip financing lenders is that they’re not all going to provide the same loan terms to you. It’ll be extremely important for you to land a fix and flip loan that has the most favorable terms attached to it.

A great lender is going to give you access to a fix and flip loan without forcing you to put any money down. They’re also going to give you a competitive interest rate on a loan that’ll fall somewhere between 8.75% and 10.5%. Additionally, you’ll get other great terms like:

  • A 6- to 9-month loan repayment period
  • A low origination fee that lands between 0.25% and 2%
  • No prepayment penalties

The process of applying for a fix and flip loan should be just about as investor-friendly as it gets as you work with a lender. A lender like Merchants Mortgage & Trust Corporation will be able to provide you with all these terms and more.

Apply for Fix and Flip Financing

After you find a lender that you feel like you can count on for a fix and flip loan, you should start navigating your way through the application process. The best lenders in the short-term financing business will enable you to apply for a loan online.

All you’ll need to do to put yourself in a position to get approved for a fix and flip loan is fill out a quick application and provide a lender with the necessary documents. This will include things like:

  • A copy of your driver’s license
  • Recent pay stubs
  • A collection of recent financial statements

As long as everything checks out, you should be able to get approved for a fix and flip loan and close on a fixer-upper within a matter of just 3 to 5 days. When you’re all finished, your fix and flip loan will look something like this.

Flip a House

If everything goes according to plan as you apply for a fix and flip loan, you’ll be left with the money you need to purchase a home you want to flip. You’ll also have enough money to make the necessary improvements to a house so that you can flip it in the end.

You don’t necessarily want to rush through the process as you flip a house. But at the same time, you also don’t want to allow the process to drag out for months on end since this could cut into the profits you’re able to make on it eventually.

You should have a clear-cut plan for flipping a home from the start and strive to stick to it. You should also have a budget set in stone so that you don’t spend more than you can afford to as you flip a house.

Repay a Fix and Flip Loan

After everything else is said and done, you can list a fixed-up house on the open market and aim to sell it quickly. You should price it aggressively while also giving yourself enough room to turn a profit while selling it.

Once that’s all done, you can either repay a fix and flip loan all at one time or create a plan for paying it back over the course of several months. From there, you can move on to your next fix and flip project and repeat this process to continue to make money flipping houses.

Contact Us to Secure Short-Term Financing

Merchants Mortgage & Trust Corporation has been helping real estate investors to secure fix and flip financing for almost 60 years. You can rely on us to make the process of applying for a fix and flip loan quick and easy so that you can get your hands on the money you’ll need to fix and flip a house.

Contact us now to get more information on how our fix and flip financing works.

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