Are you a real estate investor or an individual interested in diversifying your income streams with property investments? If so, the world of fix and flip loans might just be the profitable endeavor you’ve been looking for.
With the current market, fix and flip investors are projected to see a 25% growth, and a recent report suggests that 2024 is the ideal time to dive into this investment approach.
First, let’s take a closer look at what exactly fix and flip loans are and how they work, so you can see if this strategy might work for you.
What Are Fix And Flip Loans?
A fix and flip loan, or a property rehab loan, holds a unique place in the real estate industry. It’s a short-term business loan that provides the necessary capital for purchasing and renovating a property before reselling it.
How Does The Fix And Flip Strategy Work?
The nuts and bolts of the fix and flip strategy are relatively straightforward but require careful planning and execution. The process begins with the purchase of a distressed property or an undervalued home, often acquired below market value. After the purchase, the property undergoes renovations to improve its appeal and value. The goal is not just to repair the property but to transform it, increasing its market worth significantly.
Once the renovations are complete, the property is then sold at a higher price. The difference between the purchase (plus renovation costs) and the selling price aims to turn a healthy profit.
Because renovation costs and timelines directly impact profitability, understanding how to finance your next investment property renovation is critical for fix and flip investors who want to control budgets, avoid cash flow gaps, and complete projects on schedule.
Pro Tip! To showcase the potential financial gain from this investment strategy, note that the average income for individuals in the fix-and-flip business ranges from $33,500 to $123,000 per year.
For investors ready to move beyond the basics and structure more profitable deals, our Investor Playbook: Financing Your Next Fix and Flip offers practical guidance on funding strategies, budgeting renovations, and scaling your fix-and-flip business with confidence.
Investors who want to see real-world strategies and lender insights in action can also benefit from attending a dedicated fix-and-flip training. LendSure regularly shares practical guidance, market tips, and funding insights through its educational sessions, including this Fix and Flip Webinar designed for both new and experienced investors. It’s a helpful resource for understanding how successful flippers structure and finance their projects.
Pros & Cons Of A Fix & Flip Loan Strategy
The Pros
- Profit Potential: The most obvious advantage is the potential for substantial profits. Renovating properties bought below market value and reselling them can lead to significant profit.
- Quick Returns: Compared to other types of real estate investments, the fix and flip strategy can provide quicker returns, given that the goal is to sell the property as soon as the renovations are complete (which typically take 6 months).
- Market Knowledge: Getting involved in fix and flip projects often leads to gaining a deep understanding of the real estate market. This knowledge can be beneficial for future investments.
The Cons
- Unexpected Costs: Renovating a property can sometimes reveal unforeseen issues that need fixing, leading to increased costs. These unexpected expenses could include repair costs or delays in construction.
- Market Fluctuations: The market can be unpredictable. A downturn can affect the property’s resale value, impacting the project’s profitability.
- Time Management: Renovations often take longer than initially planned, which can delay the sale of the property. It’s crucial for investors to accurately estimate the time it might take to sell the property post-renovation.
LendSure Fix And Flip Loans
Not every lender is equipped to provide funding for these types of properties. But LendSure specializes in fix and flip loans, providing more opportunities for today’s entrepreneurs.
LendSure Fix And Flip Loan Program Highlights
- Loan amounts up to $3,000,000
- Minimum FICO Score: 660
- Purchase loan amount – up to 90% of cost
- Construction loan amount – up to 100% of cost
- Total loan amount is up to 90% of the total cost (maximum after repair Loan-to-Value 70%)
- 12-month loan term with interest-only payments
- Open for any level of flipper/investor experience
- Get decisions and term sheets delivered typically in hours, not days
- Finance more property types, single-family and multifamily–up to 4 units
LendSure As Your Solution
It’s simple. We make loans that make sense. We’re not in-the-box lenders. Of course, there are numbers, ratios, and data to consider, but we know that behind every file, there’s an individual with unique circumstances seeking a loan.
We’re redefining the mortgage experience one loan at a time. Thanks to our common-sense approach and dedicated lending team, we say ‘yes’ more often to today’s homeowners and investors.
