Flipping real estate can be a lucrative undertaking if structured properly. A significant challenge facing investors is obtaining the necessary funding for their ventures. Given that real estate flips often require swift action and significant amounts of money, determining the best source for your loan is pivotal. So, should you approach traditional banks or consider a private lender like Malve Capital? Let’s explore where to find the best terms for fix and flip loans.
What Is a Real Estate Flip?
A real estate flip is a process by which an investor purchases a property at a relatively lower price, often in a distressed or undervalued state, to sell it at a higher price after making necessary renovations and improvements. The ultimate goal is to generate a profit from the difference between the acquisition cost, renovation expenses, and the resale price.
Funding Options for Flips
Obtaining funding for a flip is challenging, in part, because banks consider a wide range of factors such as credit score, and income, and can’t close as quickly as private lenders. As such, the range of loan products suitable for property flipping can be limited. At Malve Capital, we offer developers and investors financing options such as such as:
Acquisition Loans
Traditional banks may offer acquisition loans to investors based on the property’s current value and the investor’s creditworthiness. These loans typically come with a more extended application process and rigorous documentation. However, they might offer lower interest rates for those with excellent credit scores.
By contrast, private and hard money lenders base their loan amounts on the after-repair value (ARV) of the property. Loan terms are negotiable, and approval times can be swift, depending on the relationship between the lender and the borrower.
Construction Loans
Banks also offer construction loans, but they usually require a detailed breakdown of the renovation costs. This might mean frequent inspections, and disbursements are generally in stages, post-inspection. You can trust our construction loan specialists to tailor a funding solution to your objectives.
Bridge Loans
Bridge loans, often offered by private lenders, help bridge the gap between purchasing the property and securing long-term financing. They’re excellent for flippers who need funds for both acquisition and construction.
The lending professionals at Malve Capital know the ins and outs of the fix-and-flip business and understand the need for flexible terms and swift fund disbursement for timely renovations.
Pros and Cons of Fix and Flip Loans
Like most funding products, fix and flip loans offer advantages and disadvantages:
Pros:
- Swift approval and fund disbursement, especially with private lenders
- Can be tailored to the specific needs of the flip, including renovation costs
- Potentially higher return on investment (ROI) when the flip is successful
Cons:
- Interest rates can be high, depending on the lender
- If the market downturns, investors risk losing their investment
- Investors must understand the local real estate market to ensure success
When you work with us, we will help you balance the risks and rewards of flipping real estate and secure the financing you need.
Why Choose Malve Capital Over a Bank?
While banks have their merits, private lenders often prove to be more advantageous for investors in the fix-and-flip space. At Malve Capital, we pride ourselves on being more than just lenders; we are partners in your venture. Being a private lender, we offer better loan terms that cater specifically to the needs of flippers. We understand the urgency in the fix and flip business, and our streamlined approval process ensures you get the funding when you need it.
Unlike traditional banks, our focus isn’t solely on credit scores but on the potential of the property and the investor’s vision. Our deep understanding of the industry, flexibility in loan terms, and swift processes cater precisely to what a real estate flip requires. When considering your next fix and flip loan, Malve Capital is your ideal partner for turning your vision into a profitable reality.
The Takeaway
Fix and flip loans offer first-time and seasoned flippers essential funding for their real estate ventures. By understanding your objectives, Malve Capital will work to help you engage in successful real estate flips. Call us today to get started.