When you first begin to plan a fix and flip investment strategy, it is likely that you will be looking for a lender to help with financing. While more traditional banking institutions may be an option, it is often the case that a better fit for fix and flips is a hard money lender. Because hard money lenders fund loans faster and base their lending decisions on the merits of the property more than your own credit-worthiness, they have more flexibility than do traditional lenders.
If you are looking for this type of financing, you want to partner with a lender whose lending strategy dovetails nicely with your buying strategy. To that end, it is good to consider these 4 fix and flip financing goals for your hard money lender.
1) Understanding the real property value
The amount your lender will finance is a percentage of the value of the property. Competitive lenders may even finance as much as 80 percent of your purchase price. Though some hard money lenders do take into consideration the ARV of your investment property, it is important to note that there must be a meeting of the minds as to the actual value of the property. A lender who understands the real value of your property will more readily provide the funding needed for your investment.
2) Providing a quick response
As a fix and flip investor, you know your profitability is largely determined by how quickly you can make an offer and get started with the necessary renovations. A hard money lender who can respond quickly with funding is an invaluable tool for the fix and flip investor. So, when you are shopping for a lender, make certain that he/she is capable of moving quickly to fund a loan.
3) Providing options regarding rates and terms as needed
A fix and flip investor is attuned to subtle changes in the housing market. Your lender should have this same laser-like focus on market trends. When searching for a lending partner, you may need to find a lender who can potentially offer a certain amount of flexibility regarding rates and terms of repayment if market situations dictate. Since it is sometimes advantageous to hold onto a property longer than originally anticipated, a hard money lender who takes market fluctuations into account or who offers possible term changes for a reasonable fee can be helpful to the profitability of your investment project.
4) Building a continuing relationship
If you are beginning a fix and flip career, you will profit from working with a lender who is interested in more than just one deal with you. Thinking of your lender as a trusted partner will help you find the lender who is the right fit for you. In this way, you will not be constantly concerned with whether funding will be available for each separate investment because you will quickly learn what your lender expects from you. In turn, your lender will see that funding your projects is financially profitable for him/her as well, making the relationship a win-win proposition for everyone involved.
When you find a lender who meets these essential goals, your relationship with that lender will be satisfying and profitable both now and in the future. If you would welcome more information about how hard money lenders can help you reach your financial objectives, please contact us. With years of experience with fix and flip investors, we know how best to provide the kind of service you need, and we are ready to work with you today.