Fixing and flipping property is one of the easiest ways for investor to make money. This strategy entails buying property such as a condominium unit or a house, fixing it up, then selling it again. Of course, one will be needing some fix and flip real estate funding to do that so here are some of the best options that one can consider if he or she plans to do this.
The first option would be to get a hard money loan. This is probably the most common option that most flippers would use in order to finance their endeavors. It is a type of short term loan that investors would use if they only plan to keep the property for at least a year and then sell it off quickly right after.
One of the best benefits about hard money loans is that they have a very fast processing time. In fact, it is completely possible to get the loan just right after fifteen days from the application date most likely since the term would be only one to three years. Take note though, that the interest rate is quite high being up to twelve percent depending on who lends.
Some of the requirements include a good credit score, good debt to income ratio, and experience. For credit score, usually lenders would require a credit score of five hundred fifty and above with a debt to income ratio of around thirty five percent. As for experience, lenders usually require around two years experience in property projects.
The other choice would be the equity credit line consisting of the home credit and the property credit lines. The home equity line is a long term debt that has a fixed number of years depending on the agreement between the borrower and the lender. The other type is a more short term kind of loan wherein the term depends on the loan amount.
For the home credit line, the approval does take longer than the hard money loans with approval times reaching up to a month. As for the interest, it is not so high ranging from four to five percent. As for the requirements, credit rating of six hundred and above, an income to debt ratio of five percent, and a property equity of thirty percent is needed.
As for the property line of credit, term would be twenty four months with thirty days approval time. The rates would reach up to eight percent but can be as low as five percent. For requirements, a credit score of six hundred sixty is needed, a debt to income ratio of forty five percent, and an existing equity of forty percent in property.
For those who are interesting in fixing and flipping property, it is always best to take up loans for the project instead of using ones own money. If one wants to take up a loan, then here are the options that one would have for this. Consider these three options when venturing into the fix and flip business.
The first option would be to get a hard money loan. This is probably the most common option that most flippers would use in order to finance their endeavors. It is a type of short term loan that investors would use if they only plan to keep the property for at least a year and then sell it off quickly right after.
One of the best benefits about hard money loans is that they have a very fast processing time. In fact, it is completely possible to get the loan just right after fifteen days from the application date most likely since the term would be only one to three years. Take note though, that the interest rate is quite high being up to twelve percent depending on who lends.
Some of the requirements include a good credit score, good debt to income ratio, and experience. For credit score, usually lenders would require a credit score of five hundred fifty and above with a debt to income ratio of around thirty five percent. As for experience, lenders usually require around two years experience in property projects.
The other choice would be the equity credit line consisting of the home credit and the property credit lines. The home equity line is a long term debt that has a fixed number of years depending on the agreement between the borrower and the lender. The other type is a more short term kind of loan wherein the term depends on the loan amount.
For the home credit line, the approval does take longer than the hard money loans with approval times reaching up to a month. As for the interest, it is not so high ranging from four to five percent. As for the requirements, credit rating of six hundred and above, an income to debt ratio of five percent, and a property equity of thirty percent is needed.
As for the property line of credit, term would be twenty four months with thirty days approval time. The rates would reach up to eight percent but can be as low as five percent. For requirements, a credit score of six hundred sixty is needed, a debt to income ratio of forty five percent, and an existing equity of forty percent in property.
For those who are interesting in fixing and flipping property, it is always best to take up loans for the project instead of using ones own money. If one wants to take up a loan, then here are the options that one would have for this. Consider these three options when venturing into the fix and flip business.
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