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What Is A Fix
and Flip Loan
Fix and flip loans are a short-term financing option used by real estate investors to purchase and renovate properties. These loans are designed specifically for investors who intend to buy distressed or undervalued properties, improve them, and sell or refinance them within 12 Months. The loan amount is based on a Loan-To-Value % and a Loan-To-Cost % set by the lender. Fix and flip loans are interest only loans which have a balloon payment where the sum of the unpaid balance and interest is paid when you sell the property. The benefit of using fix and flip loan is that real estate investors don’t have to rely on their personal income, can close in an entity, and can access leverage and closing timelines that banks will not match.
How Can I Increase The Leverage
Of My Fix and Flip Loan
It is common place for real estate investors to maximize their leverage to lower their cash commitment on a deal. The best ways to maximize your leverage are:
Improve your credit score to 720+
Invest locally and take advantage of Ridge Street’s Local Experience Boost Program.
Partner with another investor.
Start with smaller deals and scale your deal size as you get access to increased leverage from you lender.
What Other Costs Are Involved
With A Fix and Flip
You can use Ridge Street’s Fix and Flip Calculator to estimate your total project costs. This said, the additional costs of a fix and flip are:
Interest Payments
Loan Origination Fees
Title Fees
Real Estate Broker Sale Commission
Property Taxes
Insurance
How To Determine The Profit
Of a Fix and Flip?
The best way to estimate the profit of a fix and flip is with Ridge Street’s Fix and Flip Calculator or the with the Downloadable Version.
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