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Fireside Lending fix and flip loan programs are tailored to provide real estate investors with quick access to funding. Like all our direct private money lending programs we ensure a hassle free and reliable loan process.
Fix and Flip loans are acquired by real estate investors to purchase a cheap or rundown house and fix it up to sell it again for a profit. House flipping investors interested in renovation buy low and sell high, on a fast and furious timeline and budget.
Throughout the underwriting stage of the fix and flip loan process, Fireside Lending helps investors borrow up to 110% of the project costs. Our average closing time for the underwriting stage is an average of 14-18 days.
To acquire a Fix and Flip Loan, an investor must prove that the subject property is profitable. Generally, there is no penalty for paying off a Fix and Flip Loan early, so investors can move on to other dreams and other properties in which to invest.
What are Fix & Flip loans?
Fix & Flip loans are short-term loans that investors can use to cover the cost of purchasing a property as well as the cost of repairs and renovations. These types of loans are like bridge loans generally used in the short-term until a more permanent financing solution is put in place.
These short-term loans, are a lot different than a regular mortgage loan – it’s designed to help the investor cover the upfront costs of buying and renovating a property. These improvements range from minor renovations to a complete reconstruction of an existing property.
One of the biggest key differences of the fix and flip loan is the use of collateral. Lenders generally consider the property itself as collateral and don’t spend a lot of time looking at the borrower’s creditworthiness to loan the funds. All the value is in the property itself.
Fix and flip loans are very short term. Most range from as short as six months up to three years. Flippers who intend to use these loans usually intend to pay off the loan with the profits from the sale of the property. The sooner they can improve the property and sell it, the sooner they can pay off the loan.
Advantages of a Fix & Flip loan:
The demand for fix-and-flip loans generally stems from capital inefficiencies in the current lending marketplace. These relatively short-term loans create opportunities for investments that potentially provide attractive yields for investors. In addition to this, fix-and-flip loans have other benefits:
Comprehensiveness: House-flipping loans include funds for the purchase price of the investment property and for the anticipated repairs and related expenses. This is a far more streamlined arrangement than having to take out separate loans for the purchase of the property and for improvement projects.
Speed: The loan process can be completed in under a week, especially if borrowers have all the documentation ready and know what they need to close on the property. This helps house flippers quickly entice sellers with an offer and start remodeling projects quickly instead of having to wait through lengthy approval periods and face competition from traditional buyers.
Cash Flow: Real estate investors who are flipping multiple properties over the course of a year or who manage several different types of real estate investing rely on ample cash flow to make repairs, pay property management companies, and more. Even house flippers with potential access to their own funds to make a cash offer on a house or pay for improvements themselves need that cash to remain liquid for other projects. A house-flipping loan allows established or profitable house-flipping entities to acquire new properties without tying down their own assets.
How to get a Fix & Flip loan:
Through Fireside Lending, the process of obtaining a fix and flip loan is a thorough but quick process. After finding the desired property, a prospective borrower will speak with a member of our team and pre-qualify for financing. Once the underwriting criterion has been met, Fireside Lending will design an outline of the terms and overview of the loan.
There are several easy steps to acquire a Fix and Flip Loan with our dedicated team have experience working with house flipping investors.
In the beginning pre-approval stage, we will evaluate whether the real estate flipping loan scenario fits our lending criteria, assessing where the flip property is located, what the prospective price is, the rehab, and proof of funds.
During the loan processing and underwriting stage, We analyzes the deal and see if it fits our critia, unlike other lenders we don't look at the borrower’s banking and credit history. If the numbers work, the prospective house flipping investors will move on to the funding stage.
When the borrower reaches the funding stage, it consists of paperwork and promissory notes to sign before the funds are released. After all elements are completed to the underwriter and closing agent’s satisfaction, the allocation of funds will be disbursed to the seller of the property or directly to the borrower.
3 Steps to Processing a Fix & Flip Loan
1. Pre-Approval:
When a potential borrower applies for the pre-approval process at Fireside Lending, they go through a series of steps ensuring they receive the financing that best fits their investment needs. After evaluating whether the real estate flipping project fits our lending criteria, we move forward to helping you get the money your project needs.
All prospective borrowers should be prepared with their documentation of both their project needs and location, acquisition price, rehab, and proof of purchase. Our Application and Pre-Approval process can easily be determined after a quick conversation with a leading Fireside Lending member.
2. Processing & Underwriting
When a prospective borrower’s application goes through the underwriting & loan process, it goes through a review of the borrower’s documentation as well as the proposed scope of the project plan.
Once the application has met our underwriting criteria we will schedule a follow up to talk about what we have found.
3. Funding
After all the prospective borrower’s application and documents have been approved, we move on to the closing and funding process.
During this process we require all of our borrowers to complete and sign paperwork to make the deal go forward.
Once everything is completed to the satisfaction of the underwriter and closing agent, the allocation of funds will be disbursed to the seller of the property or directly to the borrower.