When you are in the business of property investment, you have options when it comes to hard money lenders and investment property loans. Even when you have the cash to purchase a property that's in rough shape and can be flipped to make a profit, you don't have to tie up your assets if you don't want to. Short term fix and flip loans allow you to purchase a property, regardless of the condition. You are able to close on the property much faster than if you were using a traditional mortgage loan to purchase the home. There are a number of types of fix and flip loans, and your lender will work with you determine what loan is best for your needs.
Hard Money Lenders and Your Loan
Hard money loans are also called rehab loans, and you can use a hard money loan when you are looking to fix and flip a property within a year. You can use the loan to buy a property in poor condition. Lenders are looking at the potential value of the property being purchased, and are not as concerned about the credit of the buyer. If the investor has already flipped two properties or more, getting a hard money loan is simple. If the investor is new, it's important to work with a contractor in order to fix and flip the property with a hard money loan.
Cashing Out Equity On an Existing Property
When you already own one investment property, you can get a quick fix and flip loan that uses your current property as collateral. It's a refinance loan, and allows you to access the equity in one property to purchase another one and fix and flip it. The loan is considered a first lien, and it is the first money that must be paid back regarding the property. Once the money is received, there are no restrictions on how the money can be used.
Other fix and flip financing options can include a home equity line of credit loan, or HELOC, which allows you to use your own home's equity as long as you have more than 30% equity in your home. If you own rental properties and have equity, an investment property line of credit can be accessed and used to purchase a new property. When it comes to fix and flip loans, you have choices that will allow you to get the money you need quickly.