If you have been around in the real estate business, even for a little while, you are probably well acquainted with the term fixing and flipping. This method of investing in real estate is extremely profitable if done correctly. There’s a fortune to be made with just simple investing tactics.

However, getting the right funding for your real estate investment can be very difficult. Forking out large sums of cash out of pocket is never advisable even if there’s a 70% chance of a profit on that particular property. 

With the right plan and vision, you can obtain a fix and flip loan and earn a substantial amount of profit. You can expect at least $32.000 of profit from a fix-and-flip project after all the repairs and new paintwork.

The numbers are great and the stakes are high. Fix and flip loans bring a lot of benefits to investors and in order to help you understand what exactly they bring to the table, take a look below.

What’s a fix and flip loan

Fix and flip financing, also known as a fix and flip loan, is a private loan that comes directly from a private or a fund investor. Banks and credit unions do not provide this type of loan as they deem it too risky. However, you can apply for a loan and wait for it to be approved if time allows you to do so. Bear in mind that your credit score will play a huge role when applying for a bank loan.
 

To secure fix and flip loans, you will have to convince the investor that your ideas are worth investing in. Note that this type of loan can have much higher interest rates than regular loans. But if you have a personal working relationship with the investor, there might be a little wiggle room to bring the interest rate down. 

The main benefits

There are numerous benefits to obtaining a fix and flip loan and some of them include:

It’s extremely fast

The real estate business is always fast-paced. Just a fraction of a second can mean a loss of profit. For this reason, real estate investors are always on the lookout for the fastest financing method, and one such method is the fix and flip loan.
 

Generally speaking, you will get a loan in just one to two weeks and if you are well acquainted with the loaner, it might be even faster. This will give you a big advantage against your competitors in the real estate market.
 

Flexible terms

If you walk the traditional route and obtain a loan from a bank, you will have to adhere to certain terms and conditions. On the other hand, fix and flip loans allow the loanee to use the funds more freely as fewer stipulations are attached to the contract.

It will lead to a sure profit

The loaned amount will allow you to repair the property in question while also adding other features that will further increase its initial value. Basically, if you buy a house that’s not worth a lot and you invest a lot of funds into making it look as appealing as possible, its price will skyrocket on the market.
 

That increase in value will result in a personal profit and a timely returned loan. It’s worth mentioning that even people with bad credit scores can obtain a fix and flip loan if they outline their strategy clearly before the loaner.

You can invest in anything you want

If you ask a bank for a loan, they will require details and extensive information about the property in question. You will receive a loan after a long period of time only if the bank deems that your investment is sound.
 

With fix and flip loans, you can invest in commercial and residential properties without having to provide the loaner with more than enough detail.

Bottom line

The real estate industry is booming with no signs of slowing down. By now, you ought to have a clear image of how fix and flip loans work and what their main benefits are. So, if you can’t qualify for a bank loan, or if you don’t want to wait for a month to get a loan to secure that property, going for a fix and flip loan is never a bad idea.