Rehabilitating residential real estate can be a profitable experience, whether you’re flipping single family homes, renovating multifamily property, or building a rental portfolio. In recent years, updating and selling residential property in a short timeframe, known as fixing and flipping, has become a popular venture. Choosing the best fix and flip lender for your real estate investment business is imperative for success. Here’s a comprehensive guide to finding the best fix and flip lender for your residential investment property business.
Plan Your Strategy
Before diving into the search for the best fix and flip lender, clearly define your short-term and long-term investment strategy. Determine which types of investment residential property you’re focused on fixing and flipping. Will you fix and flip single family homes, condominiums, multifamily property, or a selection of different properties? Keep in mind that it’s better to start with smaller properties and work your way up as you build experience and a strong financing relationship with a best fix and flip lender. Although fixing and flipping properties has become mainstream, each strategy may have unique financing needs, and understanding your goals and approach will help you narrow down the best fix and flip lender for you.
Research Lenders Specializing in Real Estate Lending
Not all lenders are created equal when it comes to residential investment properties and fixing and flipping. Research lenders that specialize in financing for fix and flips like KIAVI that has great reviews, and has funded in excess of $16 billion spread out over 65,000 investment residential projects. Look for institutions with a track record of success in funding fix and flips and understand the unique challenges and opportunities associated with these transactions. A best fix and flip lender like KIAVI, will also have specific programs designed for fix and flips like offering a high loan-to-cost (LTC) up to 95%, and financing up to 100% of your rehab budget.
Check Interest Rates and Terms
Interest rates and loan terms can vary significantly among lenders. Compare the rates and terms offered by different lenders to find the most favorable options for your fix and flip goals. Consider factors such as the interest rate, LTV and LTC, loan duration, and any associated fees. Some lenders only provide short-term fix and flip loans, while others will provide low-rate rental loans fixed for up to 30 years if you decide to keep your investment property after rehabbing it.
Review Lender Experience and Reputation
Experience matters in fix and flip financing. Look for best fix and flip lenders with a solid track record of successfully funding 1-to-4 unit residential investment properties and fix and flip projects. Seek recommendations from other investors, and assess the lender’s reputation in the industry by reading online reviews. A lender with experience in fix and flip financing is more likely to understand and cater to your unique investment strategy and borrowing needs.
Understand Loan-to-Value (LTV) Ratios
Loan-to-Value (LTV) and loan-to-cost (LTC) ratios play a crucial role in residential investment property financing. Different lenders may have varying LTV and LTC requirements, and understanding these ratios is essential for evaluating the amount of financing you can secure. Choose a best fix and flip lender with LTV and LTC ratios that align with your investment strategy and financial goals. Some lenders may offer high-LTV and LTC options up to 95% of the property’s purchase price or value, while others may focus on financing up to 100% of your renovation budget.
Seek Pre-Approval from a Lender
Before making an offer to purchase a property to be fixed and flipped, be sure to seek pre-approval from a lender. This process allows you to understand the amount you can borrow, the interest rate, and the terms of the loan. Having a pre-approval in hand strengthens your position when making offers on investment properties, especially if you are competing against cash buyers.
Consider Customer Service and Communication
Effective and fast communication and excellent customer service are vital when dealing with fix and flip financing because timelines move quickly. Choose a lender that is responsive, can close your loan in days, is transparent, and communicates clearly about the loan process, requirements, and timelines. A best fix and flip lender who understands the urgency of fix and flip projects and provides ongoing, and timely support can make a significant difference in the success of your venture.
Interested in accessing the best fix and flip financing? Contact our recommended best fix and flip lender KIAVI.