Actually, just a small number of lenders truly understands the complete concept of fix and flip investing and these private hard money lenders are categorized into the next five basic types:
1. Residential lenders
2. Commercial lenders
3. Bridge lenders
4. Top quality lenders
5. Development lenders
Amongst these five several types of lenders, you need to learn which lender will probably be suitable for your real-estate investment. Generally people begin by investing into a single family home, this is exactly why they choose residential hard money lenders.
But the basic difference between the lenders is determined by the origin of funds. This is exactly why; they could be easily categorized into bank lenders and private hard money lenders.
Bank Type Lenders – If you are working with a lender who’s offering you funding with assistance from some financial institutions, where they’ll sell or leverage your paper to the Wall Street to be able to enable you to get money. These kinds of lenders will undoubtedly be following some rules and regulations specified by the banks or Wall Street.
That’s why, in order to have the loan, you need to follow these rules and regulations, which isn’t ideal for a real estate investor interested in doing fix and flip investing.
Private hard money lenders – They are the lenders who work on private basis. They often work in several private lenders, who likes to lend money regularly. Their utmost quality is that they do not sell their paper to any financial institution or bank. They have particular rules and regulations, which are created to help a real-estate investor.
Private Lenders That Are into Fix and Flip – It is possible to find residential hard money lenders, who are really into fix and flip loans. All of the property investors believe it is quite difficult to get financing for buying a house, which they’ve taken under contract.
And once they finally an excellent property and contact a lender for funding, their loans could possibly get rejected on the cornerstone of some neighborhood problems. Then your investor look for another property however the lender couldn’t fund them because of market depreciation.
This way, an investor is obviously looking for properties. However, many lenders don’t have enough money to fund their deal, whereas others are continuously increasing their interest rates, which can’t be afforded. Apart from all these issues, you’ll find lenders who are prepared to lend money on fix and flip properties.
These lenders also provide certain rules and regulations just like a typical bank or financial institution nevertheless they are made to work in favor for the actual estate investor.