In the world of fix-and-flip investing, time wasted is money wasted, so every successful house flipper’s business plan should include strategies for speeding up their turnaround times as much as possible.
For many professional house flippers, one of the strategies to speed things up is the use of hard money loans to leverage their cash on hand—giving them the flexibility to quickly close on multiple distressed properties and complete renovations on schedule without maxing out their own capital reserves.
Hard Money Lender vs. Conventional Bank Funding
Hard money fix-and-flip loans are fast and flexible. They typically feature 6 to 24 month term lengths and can be approved and funded in as little as 5 to 10 days, whereas a traditional bank loan is typically amortized over 15 to 30 years and takes 30 to 60 days to close.
The traditional bank’s slower turnaround includes an extensive borrower application, strict rules about property condition and a microscopic look at your finances and credit history. If anything at all sets off a red flag, a bank will ask for more documentation, further prolonging the approval process.
How Can Hard Money Lenders Fund Fix-and-Flip Loans So Fast?
Not every hard money lender will have the financial technology or “fintech” to provide fast funding, so it is important to carefully vet prospective hard money lenders before you choose one to work with.
Hard money lenders using advanced fintech can fund fix-and-flip loans quickly because all of the parameters that are considered during borrower approval, property valuation and loan funding can be quickly analyzed and automated.
Also, with hard money financing, the fix-and-flip property serves as collateral on the loan and the requirements to approve and fund the loan are far less complex and strict than a conventional bank’s.
Choosing a Hard Money Lender for Your Fix-and-Flip Loan
Before partnering with a hard money lender, write a list of questions and expectations to help you better understand if they can meet your specific needs. Here are a few things to consider:
- How many days will it take from application to funding?
- Will you work with one account executive dedicated to your projects?
- What type of fintech supports the lender’s processing and how does it benefit the borrower?
- Will there be a penalty if you pay the loan off early?
- Does the lender offer a “close as cash” option to help you compete with cash buyers?
Most important to keep in mind is that anything that delays your project will end up costing you money. A lender’s commitment to prompt customer service is a must. Time you spend waiting to hear back from your lender is time you could spend moving your project toward completion.
Anchor Loans is the Nation’s Leading Fix-and-Flip Lender
If you’re interested in taking the next step to grow your house flipping business, Anchor Loans is happy to help you get started. We know that this process can feel overwhelming, but it doesn’t have to be. Feel free to contact us with any questions you may have, and we’ll do all that we can to help you every step of the way.
At Anchor, your success is our success. Over 85% of our borrowers are repeat customers who rely on our fast, dependable funding to grow their business.