Fix and flip loans are great ways for real estate investors to acquire and remodel properties for profits. They often operate through fast closing and hard money loans. However, if you don’t know the different options you are getting, you can walk into debt pitfalls and end up losing your financial assets. To ensure you make informed decisions, use this article as your guide as we delve deeper into the three best ventures you can consider.
Best Fix and Flip Financing Ventures to Consider
- Cash-out refinance. If you want to refinance a house, cover the existing loan, and utilize the cash to acquire a new property, then a fix and flip cash-out refinance is for you. You can use the equity from a property by getting a new loan, meeting the mortgage payments, and claiming the equity for other financing options. However, take note that the money borrowed should be paid through the liens before borrowers can utilize the balance remaining. Just ensure you work with the right mortgage broker for more details and to avoid losses.
- Home equity line of credit. Having a home equity line (HELOC) of credit is like having a credit card. The lender issues a fix and flip investor like you a line of credit, depending on the home’s value and some significant equity present between 30-40 percent. You can withdraw from your line of credit over the HELOC term just as you would when you have a credit card. In other words, you only need to pay the interest on the amount you borrowed until it’s repaid. In effect, the HELOC is different from the cash-out refinancing option because you cannot refinance the whole loan and simply just another lien based on a mortgage that’s already there. Additionally, a HELOC can only be acquired when it’s an owner-occupied primary residence. Luckily, there are no restrictions on what you can use the money for but you do have to be smart with it to be profitable. As such, weigh your options and consult with a mortgage broker.
- Property line of credit. Going for a property line of credit (LOC) is much like a home equity line of credit (HELOC), but the only significant difference is you borrow from an investment property and not your primary residence. You are only paying for the interest of the cash you borrowed, and short-term cash essentials can be used for both renovations and purchases for your fix and flip loans. Since an investment property LOC can only be taken from non-owner occupied properties, you may have limited options and might have to forego your offer. Fortunately, you can get either a single asset investment property LOC or a portfolio investment property line of credit. In other words, you have the liberty to use whatever you get for whatever purpose provided that you detail it in your application. If you need further assistance in this regard and to find a favorable rate for your property, coordinate with a professional mortgage broker.
Los Angeles Mortgage Broker: Shannon Christenot
As a smart investor, you must know where to access investment-forward fix and flip loaning options. Luckily, you now have a better understanding of what they are. All you have to do is look for reliable providers in your area. This way, you can keep up with the local market and get the professional assistance you need!
Are you looking for the best fix and flip loans in Los Angeles for your next financing venture? Consider working with me, Shannon Christenot. I have two decades of experience working in the real estate industry, ensuring you can get cost-effective construction and property loans to turn a profit on your fixer-upper. Contact me today through (818) 601-2231 and claim a free quote!