Houses have become more than just a space to live. As the cost of living and interest rates begin to rise nearly everywhere in the country, residential properties are now, more than ever, a lucrative money-making route. Buying a fixer-upper, giving it a bit of TLC, and then flipping it for a profit is easier than ever with the simplicity of many cosmetic fixes and the affordability of many flooring and cabinetry materials. Our fix and flip lenders at GenWealth Capital Commercial add another layer of ease for hopeful house flippers.
What Are Fix & Flip Loans?
Fix and flip loans from hard money lenders are specifically designed for real estate investors who want to purchase, renovate, and quickly resell a property to make a profit.
Fix and flip loans are different than traditional home loans for several reasons:
- Short-Term Loans: Fix and flip loans are intended for brief periods, usually 12 to 24 months, in contrast to traditional mortgages that are typically for 30-year terms.
- Higher Interest Rates: Loans for fixing houses generally carry higher interest rates to reflect the increased risk for lenders.
- Funding for Renovations: These loans often include money for the renovations of the property, along with the purchase price.
- Focus on Investor Experience: Our fix and flip lenders specializing loans understand the unique needs and timelines of investors, granting various personalized solutions depending on your situation.
What to Expect When Flipping a House
While the house flipping industry is bigger than ever, taking on a fix and flip property without doing your research will likely cause you some unnecessary stress and headaches. Without proper industry knowledge, you may encounter:
- Unexpected Expenses: Even the most thorough pre-purchase inspection can’t reveal every hidden issue. You might uncover structural problems, mold, outdated wiring, or plumbing complications that balloon your budget.
- Market Fluctuations: Housing markets change, and what seems like a great deal today could be harder to sell tomorrow. Interest rate changes or economic downturns can affect buyer demand, impacting your potential profit.
- Time Commitment: House flipping is not a “get rich quick” scheme. Successful flips often take months between finding the right property, renovation, and the sales process. You’ll need to be prepared for delays and frustrations along the way.
- Carrying Costs: While you own the property, you’re responsible for taxes, insurance, utilities, and mortgage payments (if you financed it). These costs add up quickly, eating into your potential profit.
- Contractor Challenges: While most cosmetic issues can be fixed without prior experience, finding reliable, skilled contractors can be a challenge. Issues involving plumbing, electricity, and other important areas should be fixed by professionals. Delays or poor workmanship can set your project back and increase costs.
There is always risk involved in a fix-and-flip project. However, once you get in your groove and have a little experience under your belt, it can be a lucrative business venture.
Home Flippers’ Top Choice
There’s good reason so many house flippers choose GenWealth Capital Commercial for fix and flip loans for fixing houses. Our hard money lenders know that every flipper’s goals and timelines are different, so we offer personalized loans that help property investors succeed.
Contact GenWealth Capital Commercial today to learn more about how our fix and flip lenders can help you!