Fix-And-Flip Financing FAQ – Your Top Four Questions Answered

If you are looking to scale up your volume, snap up quick deals and increase your ROI, short-term fix-and-flip financing may be the right choice for you.  At Anchor Loans, we get asked a lot of questions about flip financing projects, and below are four that we probably hear most often.

 

1) Borrowing money means more project overhead. Won’t that lower my ROI?

Fast, reliable funding opens new doors of opportunity and greater access to bargain properties. In an industry where “cash is king,” the savvy fix-and-flip investor will find that the cost of borrowed capital can be well worth the leverage benefits.

 

Flip Financing Example

2) What is fix-and-flip financing and how is it different from a standard bank loan?

Fix-and-flip or “private direct” financing is a short-term loan secured by real estate. Sometimes referred to as “hard money,” these loans are funded by private investors and typically feature higher interest rates (and lower qualifying restrictions) compared to bank loans. The borrower makes monthly interest-only payments followed by a balloon payment at the end of the term when the rehabbed property is sold.

 

3) Aren’t private loans expensive?

A private direct loan typically carries a higher interest rate than a conventional bank loan, but it also comes with benefits a bank loan doesn’tlike higher leverage, funding for renovations, easy qualifying and no red tape.  An experienced flipper with a successful track record who needs cash in hand in under two weeks can offset the cost of a private direct loan with the enhanced ability to compete for bargain properties—as well as faster project turn-around times.

 

4) I need funds right away. Can I really get a fix-and-flip loan in a matter of days?

Yes. While a conventional loan takes up to 45 days to fund, a reputable private lender can fund a qualified borrower’s loan in 5-10 days.

 

Interested in faster loan closings, lower risk, and growing your fix-and-flip business?  Get our free step by step Fix-and-Flip Borrowers Guide for driving ROI and growth.

 

Ready to finance your next fix and flip property?  Anchor Loans has funded more than 16,000 short-term loans totaling over $4.9 billion— the majority of them to borrowers with less than perfect credit and on properties in need of repair.  Click here to apply for a loan or get a quick estimate.