Flip That House! It’s Possible with Hard Money Rehab Loans

Flip That House! It's Possible with Hard Money Rehab Loans

Many areas of the country are experiencing rising housing prices that are creating opportunities for real estate investors. These investors are in search of purchasing, rehabbing, and “flipping” houses for relatively quick profits. House flipping can be profitable if investors find the right property and have the cash on hand to purchase and rehab it. The challenge is finding a property that has a promising upside and then getting the funds needed to turn that investment quickly. For many, hard money rehab loans are the answer to financing these investments.

Why Traditional Funding Inhibits House Flippers

Home rehab loans secured from a traditional bank can not only be difficult to secure; the process itself can inhibit an investor’s ability to make a profit.

The process can be lengthy. Flipping a home for maximum profits can be very time sensitive. Traditional funding can take weeks or even months to secure. For those interest in housing flipping, that time can be costly.

Banks are highly regulated. These regulations require a large amount of paperwork and documentation. Many times, a rehab loan for a property that will not serve as a primary home for the borrower will not qualify for funding through traditional means.

You may be required to put down a significant down payment. Investors may need every dollar possible to put into a rehab property. Being required to put down large down payments on home rehab loans can be counter-productive.

Traditional banks may not offer suitable loan programs. Rehab loans for house flipping are not necessarily in a traditional bank’s wheelhouse when it comes to home loans. They may not offer a suitable program that suits the needs of these investors.

House Flipping Made Possible with a Rehab Loan

More real estate investors are discovering the value of hard money rehab loans when it comes to house flipping. These rehab loans are offered by individuals and private companies who understand the goal of investing in real estate. They are designed to be simpler to acquire.

The advantages of a hard money loan for house flipping include:

  • Loans can be secured much faster. While traditional loans can take weeks or months to secure, hard money loans for investors can be facilitated in as little as five to ten days. This faster timeline creates better opportunities to flip that house quicker.
  • Loan qualifications are easier to meet. Private hard money lenders understand the mission and nature of real estate loans for investors rehabbing a property. Meeting their loan standards are easier to reach than those of highly regulated traditional loans.
  • Terms and repayment plans are easier to customize. Hard money rehab loans can be designed to suit the needs of individual investors. This makes them particularly appealing for those in search of rehab loans to flip a property.
  • Future value of the property can be used in determining the amount of the loan a borrower qualifies for. A private hard money lender will consider not only the current value of the property but the future value after the rehab has been completed. This often gives investors the financial resources needed to complete their project for maximum return.