A Fix and Flip Loan, also known as a hard money or bridge loan, is a specialized form of asset-based loan financing. In this arrangement, a borrower secures funds based on the value of a real estate parcel.
At Rowe Capital & Investments, we collaborate with lenders specializing in financing for fix-and-flip property opportunities. Reach out to us via phone or email today! We can assist you in obtaining the most favorable rate quote from one of our preferred lenders.
Fix and Flip loans typically carry higher interest rates compared to conventional commercial or residential property loans. They are seldom offered by commercial banks or other deposit institutions. Hard money and bridge loans share similar lending criteria and costs, with the primary distinction being that a bridge loan often pertains to a commercial or investment property in transition, not yet eligible for traditional financing. On the other hand, hard money may encompass an asset-based loan with a high interest rate, potentially associated with a distressed financial situation such as mortgage arrears, bankruptcy, or foreclosure proceedings.
Private investors, often local, commonly provide Fix and Flip mortgages. The borrower’s credit score is usually of minimal importance, as the loan is secured by the collateral property’s value. Typically, the maximum loan-to-value ratio is 65-70%, meaning that if the property is valued at $100,000, the lender would advance $65,000-70,000 against it. This conservative LTV offers increased security for the lender, especially in the event of non-payment, leading to potential foreclosure on the property.
