A Fix and Flip Loan, also known as a hard money or bridge loan, is a specialized form of asset-based financing where a borrower secures funds based on the value of a real estate parcel. At Investment Capital Innovators LLC, we collaborate with lenders specializing in fix-and-flip property opportunities. Reach out to us via phone or email today to secure the best rate quote from our preferred lenders.
Typically, Fix and Flip loans come with higher interest rates compared to conventional commercial or residential property loans and are seldom offered by traditional banks or deposit institutions. Hard money, akin to a bridge loan, shares similar lending criteria and costs for borrowers. The key distinction lies in a bridge loan often relating to commercial or investment properties in transition, not yet eligible for traditional financing. In contrast, hard money may encompass an asset-based loan with a high interest rate and may involve a distressed financial situation, such as existing mortgage arrears or ongoing bankruptcy and foreclosure proceedings.
Fix and Flip mortgages are commonly extended by private investors, often within their local communities. The borrower’s credit score is usually of minimal importance, given that the loan is secured by the value of the collateral property. Typically, the maximum loan-to-value ratio hovers around 65-70%. In practical terms, if a property is valued at $100,000, the lender might advance $65,000-70,000 against it. This conservative loan-to-value ratio provides an additional layer of security for the lender in case the borrower defaults, necessitating foreclosure on the property.
