You’ve found the perfect residential investment property, a great fix-and-flip project that, with some work, will reward you financially. However, it requires more than just fresh paint. The floors need replacing, the kitchen cabinets are dated, and the appliances, well, they just can’t compete with the smart, energy efficient models on the market today. Before you can even think of reselling it, there’s work to be done. And you’ll need money to do it. That’s when Fix & Flip loans from Haus Lending can help you to rehab and resell the property in a smart way.
What is a fix-and-flip loan?
A fix-and-flip loan is a financial tool designed especially for residential real estate investors who plan to rehabilitate and resell—or flip—a property in a short period of time, most often 12 to 18 months. It’s a credit line that can be used to cover both the purchase price and the renovation costs on residential investment properties. With this type of loan, up to 90% of the purchase price and 100% of the rehab costs are covered, with the rehab funds normally disbursed in periodic draws to fund different stages of the house’s repairs as the project progresses.
How are fix-and-flip loans different from other loans?
One of the biggest differences between a fix-and-flip loan and a conventional mortgage is the duration: short term v. long term. Fix-and-flip loans are designed to offer financial assistance to an investor who will resell a house quickly; and therefore, they are short term, usually no more than 18 months. A conventional home loan, however, is a 15–30-year commitment and is used to purchase a home for long-term use. Simply put, fix-and-flip loans are designed for investors; conventional mortgages are for homeowners who will live in their home for a number of years.
The loans also differ in interest rates; a fix-and-flip loan generally has a higher interest rate because it is asset based (no debt-to-income underwriting) and has construction and execution risk. However, keep in mind that interest is generally only charged on the funds of the loan used for rehab costs ONLY as they are disbursed to the borrower (“as disbursed” loan). If you don’t need the money allocated for rehab immediately, then you won’t pay interest on it until you draw on it, which could be months later, resulting in a savings to the borrower.
Outside of duration and interest rates, the biggest difference between a fix-and-flip loan and a conventional mortgage is that a fix-and-flip loan has a construction
holdback component which funds the rehab/construction of the property. These
are strictly real estate investor loans to professional house flippers.
Benefits of a fix-and-flip loan
Easy access to funds for your project. The right fix-and-flip loan can help you close on your loan quickly, get your money, and start renovating. It’s a great benefit since your goal as an investor is to buy the property, rehab it, and resell it as quickly as possible to make the most profit. At Haus Lending, we’ve made the process of getting a fix-and-flip loan simpler, more efficient, and faster.
Flexible loan structure. Although interest rates on a fix-and-flip loan are higher, borrowers can take advantage of the “as disbursed” option, so interest accrues on the rehab funds only when they are dispersed, which over the life of the loan saves you money.
Designed for real estate investors. Investment properties are often in disrepair, a short sale, or a foreclosure—types of real estate opportunities that banks don’t necessarily welcome into their loan portfolios. However, lenders like Haus Lending specializing in fix-and-flip loans know the real estate investment market and understand the process of restoring and reselling residential properties for profit. We’re here to support your goals.
Talk to us – we’re here to help!
If you’re an investor looking for a transparent and fair loan that allows you to quickly acquire property and have access to funds for renovation costs, apply for a Haus Lending Fix & Flip loan now!
Or connect with the Haus Lending team at email@example.com or call us at 1-877-GO-4-HAUS to discuss your project and learn how our fix-and-flip loans can help get you on the fast track.
*Rates advertised are the lowest offered. Actual rates and offers may vary based on approval criteria, including but not limited to borrower FICO score, previous experience, period of ownership, etc.
**Leverage advertised is the highest offered. Actual leverage and offers may vary based on approval criteria, including but not limited to borrower FICO score, previous experience, period of ownership, etc.
***At this time, we are unable to lend in Minnesota, North Dakota, South Dakota, Utah, and Vermont.
Haus Lending is an affiliate of Loan Funder LLC, which is licensed as a California Finance Lender under Department of Business Oversight License 60DBO-69051. Arizona Commercial Mortgage Banker License 1002735. Florida Mortgage Lender Servicer License MLD1778. Nevada Mortgage Company (License #5100) (Loan Funder LLC) North Carolina Loan Broker Registration Filing 315. Oregon Mortgage Lending License ML-5855. NMLS Company ID 1804080. West Virginia State Tax Department, Account #2410-0931 (Loan Servicer LLC).
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