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Fix and Flip Funding in the Kansas City Metro Area

Flipping houses can be a profitable venture, provided it is done correctly. However, obtaining financial backing for this type of project can be challenging due to the fact that traditional mortgages are designed for people seeking to buy a primary residence, not an investment property. Fortunately, with the increasing popularity of flipping, a new loan option, known as the fix and flip loan, has emerged to meet the needs of these investors.

The Purpose of Fix and Flip Loans

Fix and flip loans are a type of real estate financing that allows an investor to buy and renovate a property and resell it for a profit, typically within a year or two. Fix and flip loans are generally hard money loans from private investors to cover the cost of an auctioned or foreclosed home, covering the remodeling and other expenses.

Fix and Flip Loans for Beginners

Here’s a general outline of how a fix and flip loan works:

  • The investor locates a property they believe can be bought at a lower price and then resold for a profit once renovated.
  • The investor applies for a fix and flip loan, providing information about the property, the intended renovations, and their finances.
  • The lender reviews the application, and if approved, provides the investor with the funds to purchase the property and complete renovations.
  • The investor completes the renovations and re-lists the home on the market.
  • Once the property is sold, the investor uses the proceeds to pay off the loan, including interest and fees.

The Advantages of Fix and Flip Loans

If you’re considering your first or next house flip endeavour, there are several benefits associated with opting for a fix and flip loan. These advantages include:

  • Speed. These loans are designed to be quick, with fast approval times and fewer requirements than a traditional mortgage. This allows investors to move quickly on a property they are interested in without missing out on a great opportunity.
  • Flexibility. Fix and flip loans are flexible and tailored to the specific needs of the investor. They can be used to purchase a property, pay for repairs and renovations, and cover closing costs and other expenses associated with the ownership of the property.
  • Higher Loan-to-Value Ratios. Fix and flip loans often have a higher loan-to-value ratio, which means these loans typically permit the investor to borrow more money against the property, allowing them to purchase a property with a higher price or complete more extensive renovations.
  • Minimal Risk. Fix and flip loans are low-risk opportunities. Unlike conventional home loans that use your personal credit and property, fix and flip loans are only backed by the investment property. Therefore, if things fall through, you will not find yourself homeless.
  • Lenient Credit Requirements. Fix and flip loans typically have less stringent credit requirements than traditional avenues to purchasing a home or investment property, making them more accessible to investors who may not qualify for the home they are interested in if they did not choose a fix and flip loan.
  • Potential for Higher Returns. By buying, renovating, and reselling properties, investors can potentially earn higher returns on their investment compared to traditional buy-and-hold investments.

Types of Fix and Flip Loans

There are six categories of fix and flip loans, including:

  • Hard money: a loan from a private investment group
  • Crowdfunding: a less-flexible variation of a hard money loan through specialized websites
  • Individual lenders: a loan from a person using their own capital
  • Home equity loans or home equity lines of credit: loans from conventional financial institutions
  • Acquisition line of credit: similar to home equity but with more security, not suitable for beginners

Fix and Flip vs. Construction Loans

While the loans are similar, the main difference is the intended use of the loan. A flix and flip loan is used to purchase and renovate a property with the intention of reselling it for a profit, while a construction loan is used to finance the construction or remodeling of a property that the owner intends on living in, in most cases.

Choose Kansas City’s Fix and Flip Loan Experts

At Wholesale Kansas City, we understand that fix and flip projects can be complex and time-sensitive, which is why we offer tailored loan solutions through local lenders to meet the specific needs of our customers. Our team of dedicated professionals is committed to providing fast and efficient service, streamlining your process with a quick turnaround on approvals, flexible terms, and full transparency and communication throughout.

Contact Wholesale Kansas City Today

With our extensive experience in the home flipping industry, we have the knowledge and expertise to guide you through the process and help you make informed decisions. Contact Wholesale Kansas City for your fix and flip loan needs, and let us help you turn your investment property dreams into a reality.

Contact Us to Find Your Next Fix & Flip Project