The Most Efficient Way to Finance a Fix and Flip

Set yourself up for success by learning about the most efficient way to finance a fix and flip!

We all know that in order to make money, you must spend money, and that is exactly the case with fix and flip investments. Fix and flips are a very profitable type of investment because investors are often able to buy homes for a discounted price, fix them up and quickly sell them for profit. Funds are needed upfront not only to buy the house, but also for the repairs. Fortunately, there are quick and easy options when it comes to obtaining the capital to make it happen. Let’s take a closer look at what a fix and flip is, why you might want to consider investing in one, and how to go about financing your next project!

What is a fix and flip?

A fix and flip starts with purchasing a low-priced, discounted property due to its condition, rehabbing the property, and then selling it at a higher rate than the total money invested in order to make a profit. You can have a very lucrative fix and flip as long as you buy low and sell high.

Why should I invest in a fix and flip?

As we’ve already pointed out, fix and flips can be very profitable investments. This is the main reason many investors are drawn to these types of investments. Another benefit of investing in a fix and flip is infinite opportunity, meaning the market is continuously being replenished with properties waiting to be bought, renovated and sold. In case you’re still looking for another reason why you should invest in a fix and flip, they offer equity upside, historically speaking.

How do I finance a fix and flip?

Now that you know what a fix and flip is and understand the benefits, you’re ready to find the funding needed in order to get started! Lucky for fix and flip investors, there are lenders out there who specialize in renovation loans, referred to as private money, or hard money lenders.

Efficiency is the main reason you will want to seek out a private money loan over a conventional loan. Fix and flips may not allow for the time it takes to obtain a conventional loan, which can often be 30-45 days, and that is if you are able to pass the various requirements needed for approval. Hard money loans are usually processed in 7-14 days, making the seller and buyer aligned on the urgency to close quickly.

The catch with private/hard money loans is that they are more expensive than conventional loans and the loan terms are much shorter. Private/hard money lenders take on risk when they loan with such loose terms, therefore the house must be flipped right away and the loan must be paid off within 6-12 months. Due to the urgent nature and high profitability of this type of investment, most investors understand the value in paying more to get the job done as quickly and easily as possible.

If you’re ready to fund a fix and flip, reach out to the experts at CALCAP Lending 

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About CALCAP Lending

A division of CALCAP Advisors, CALCAP Lending benefits from the expertise of a seasoned team of professionals with extensive, successful track-records covering a variety of disciplines and leading large, nationally-recognized institutions. A private money direct lender, CALCAP Lending provides short to mid-term financing for property investors and businesses looking to purchase, refinance, renovate, and construct residential or commercial properties.

Lending FAQs

You've got questions, we've got answers.

What is private money lending?

Private money lending is a collateral-based lending strategy that is often associated with shorter terms and more attractive features. A private money loan offers more flexibility than a conventional mortgage or bank loan.

How does a private money loan work?

Private money lenders provide financing using money from private entities. Private money loans often work as bridges to help investors gather funds to achieve their short term real estate goals, but long term, permanent options may also provide.

Why would I choose a private money lender?

There are many advantages to using a private money lender for your real estate investments! Private money lenders can be more lenient when it comes to borrower credit issues, often there are no prepayment penalties, you can leverage your cash to buy multiple properties, and private money loans are quicker when compared with institutional loans.

Can I get prequalified for a loan?

CALCAP has a responsive loan team who are able to prequalify you. Contact a loan specialist at 833.816.5580 to get started.

How long does the lending process take?

Private money lending can be a quick and painless process. From start to finish, 30 days is common, however, turn around times can be as short as 10 business days.

Can I still be approved for a loan if I have bad credit?

Generally yes, we understand that people have temporary financial issues that come up, and we want to work with you to help you rise up financially to a better place. Offsets to credit concerns may include experience as a real estate investor, good cash reserves, and/or larger down payments.

I am a broker or investor, how can I work with CALCAP?

Business is built on relationships. Ours is no different. CALCAP Value and Preferred Partners receive exclusive rates and services. For more details and to submit your application, visit our partners page.

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