A Fix and Flip Loan, also referred to as a hard money or bridge loan, is a specialized form of asset-based financing where the borrower receives funds secured by the value of a real estate parcel.
At Sea Bay Funding, LLC, we collaborate with lenders who specialize in providing loans tailored for fix-and-flip property opportunities. Contact us today via phone or email, and we can secure the best rate quote from one of our preferred lenders!
Fix and Flip loans typically come with higher interest rates compared to traditional commercial or residential property loans and are seldom offered by commercial banks or other deposit institutions. Hard money shares similarities with a bridge loan, encompassing comparable lending criteria and costs for the borrowers.
The key distinction lies in the fact that a bridge loan often pertains to a commercial or investment property undergoing a transition, not yet qualifying for conventional financing. On the other hand, hard money is associated not only with an asset-based loan featuring a high-interest rate but may also involve a distressed financial situation, such as arrears on the existing mortgage or ongoing bankruptcy and foreclosure proceedings.
Private investors, often local, commonly extend many Fix and Flip mortgages. The borrower’s credit score is usually of lesser importance, given that the loan is secured by the value of the collateral property. Typically, the maximum loan-to-value ratio is 65-70%. For instance, if the property is valued at $100,000, the lender would advance $65,000-$70,000. This conservative LTV approach provides an additional layer of security for the lender, particularly in the event of non-payment, leading to potential foreclosure on the property.
