There’s a saying that explains how money doesn’t buy happiness. This is certainly true. However, there’s another saying. That one sounds a little something like “money makes the world go ‘round”. This is also a true statement. Just about anything in life requires money or some form of payment to enjoy. When it comes to fixing and flipping a home, things are no different. Fixing up a home takes a financial investment which often requires a loan. You need to purchase a property, complete the necessary repairs, deal with listing costs and a plethora of other fees and expenses. 

Many simply do not have immediate access to the necessary finances it takes to properly fix and flip. The problem is, getting a loan to do home repairs is not always the easiest to do. Lenders are often wary of handing these out because of the risks associated with trying to flip a house. Losses often occur, making lenders hesitant to engage these mortgage loans. 

Risk Factor

Again, the risks associated with flipping houses is a huge reason many traditional lenders don’t interest themselves in financing these projects. This quote from a article can help give you a better understanding of why, as many fix and flip projects don’t go according to plan.

“An recent analysis appearing in MONEY MAGAZINE showed that 12% of flips sold at break-even or at a loss before all expenses. In 28% of flips, the gross profit was less than 20% of the purchase price. Twenty percent is typically the minimum that would at least cover rehab costs, carrying costs, and other expenses incurred by the flipper – according to many industry experts.

As you can see, a large profit on fix and flips are not a guarantee.  It can take a few years of experience to achieve large profits on fix and flip investments. From the perspective of traditional lending institutions, it’s clear why they tend to stay away from hard money loans. Of course, your credit plays a vital role in whether a loan can be obtained or not. Trying to take out a loan for a fix and flip project with a bad line of credit is next to impossible if you are trying to get your financing from a traditional bank. 

So, what exactly are your options at this point?

Hard Money

A large percentage of fix and flip projects that need financial assistance use hard money loans. They can be particularly helpful for those with a bad line of credit. They are a great solution for this situation.

Hard money lenders have earned a reputation for having unreasonably high interest rates and difficult terms.  We have seen this ourselves across the industry.  Fortunately at Brass, we have created a very attractive fix and flip loan program with low interest rates and 12 month interest only loans – to help real estate investors maximize their profits from fix and flip investments. 

Borrowing From Friends And Family

It isn’t always the best idea to try and mix money and relationships. Borrowing money from your friends and/or family doesn’t come with any kind of set restrictions unless the parties involved developing a contract of sorts. This added level of flexibility is what entices many to choose this financing route. 

Be careful! 

Paying off a loan is one thing, but paying the money back to a friend or family member is another thing entirely. Because of the feelings and friendships that are involved, things can get complicated and sometimes ugly. Make sure that if you opt to go this route that you communicate with whoever your lender is. This prevents secrets from being kept and feelings from being hurt at any point. 

Another option is to do a formal loan with your family or friends and even report the status to credit bureaus. This can help ensure that payments are made while also allowing the lendees credit to continue to build. Regardless of what route you choose to go, only proceed if the expectations of everybody involved can be met. 

Choosing Brass Financial Group

We are a family-owned business funding fix and flip investments for over 30 years.  During that time we have provided over $1 billion in funding to our clients. Our goal is to ensure that our fix and flip loans are closed in a quick and convenient manner so that you can quickly obtain funding for your project. 

There is no minimum income required to take out a loan and you can get pre-approved in minutes!

Interest rates start at 6.99% with an exceptional LTV of up to 100%.  Our terms are amazing … it’s a program designed to help you be successful!  When you need cash, call Brass.

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