What you Need to Know About Fix and Flip Loans

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What you Need to Know About Fix and Flip Loans

A growing segment of today’s real estate investment strategies is the fix and flip model. There are several key factors to be aware of if you are looking to obtain your first Arizona fix and flip loan.

While today’s reality TV shows on fix and flipping homes may make flipping houses and making money seem like a done deal, it is not quite as easy as it appears in this thing called “real life.” There exists the real possibility that you can lose money as well as make it depending on how you manage your project and capital. Let’s take a look at the number one roadblock many just starting out in this field run into—the money to obtain their first property.

So, just what are Arizona fix and flip loans? It is a type of loan that many in this segment of real estate investing turn to in order to get into this sometimes-lucrative investment strategy. It is a short-term loan, made by non-conventional lenders. What is a non-conventional lender? These types of loans are typically made by private investors or investment groups and are considered hard money loans. The Arizona fix and flip loan is exactly what the term says it is—a loan used to purchase a property you plan to fix up and sell.

With a Arizona fix and flip loan, you can expect a term of six to twelve months, an interest rate in the range of 12% to 21% (if you have used Arizona fix and flip loans previously, then you may expect a lower rate), a no prepayment penalty (depending on the lender), and a loan https://applewoodfund.com/arizona-fix-and-flip-loans/amount that lies between 60% to 75% depending on the value of the property.

The Advantages of Arizona fix and flip loans

When you have located a property that you have an accepted bid on, speed is essential. These loans can be closed in as little as a few days to one week. This is an advantage for the real estate investor. This is compared to a conventional lender where it may take the conventional bank 30 to 60 days for an approval. In addition, the conventional lender will require mounds of paperwork. A fix and flip lender will care less about debt-to-income ratios, your credit score, and even your income. The property is not considered as current value but the after-renovation value. The fix and flip lender will also look at the market the property is located in, if the borrower seems trustworthy, and if the numbers in the business plan submitted by the borrower makes sense.

Unfortunately, there is also a downside to these loans. At Level 4 Funding, we can help you determine if this type of loan is right for your specific real estate investment.

Some of the downsides of Arizona fix and flip loans are the higher interest rates, shorter terms, and higher costs upfront such as points and origination fees which can make it harder to turn a profit on a project for the first time (inexperienced) investor. As an inexperienced investor, you make consider taking on a partner that is experienced in fixing and flipping homes. Taking on a partner will make it easier to secure funding. If you are considering venturing into becoming a real estate investor, you will need to develop a business plan and run the numbers on the target property to make sure the project makes sense. The ideal project entails obtaining a property that you can purchase well below the value, and quickly fix and flip the property in a short period of time for the increased market value.

Dennis Dahlber Broker Ri CEO Level 4 Funding LLC
Dennis Dahlberg


Level 4 Funding LLC 
Hard Money Lender

Hard Money Loans

Hard Money Loan

Arizona Tel:  (623) 582-4444

Texas Tel:      (512) 516-1177


Dennis Dahlberg Broker/RI/CEO

NMLS 1057378 | AZMB 0923961 | MLO 1057378

22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027

111 Congress Ave | Austin | Texas | 78701  

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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