Fix and Flip
A Fix and Flip Loan, also known as a hard money or bridge loan, is a specific type of asset-based loan
At Star Rich Funding Group, we work with lenders who specialize in loans for fix-and-flip property opportunities. Call or email us today, and we can get you the best rate quote from one of these preferred lenders!
Fix-and-flip loans are typically issued at much higher interest rates than conventional commercial or residential property loans and are seldom issued by commercial banks. Hard money is similar to a bridge loan, which usually has similar lending criteria and costs to the borrowers.
The primary difference is that a bridge loan often refers to a commercial property or investment property that may be in transition and does not yet qualify for traditional financing. In contrast, hard money often refers to not only an asset-based loan with a high interest rate, but possibly a distressed financial situation, such as arrears on the existing mortgage, or where bankruptcy and foreclosure proceedings are occurring.
Many Fix and Flip mortgages are made by private investors, generally in their local areas. Usually, the credit score of the borrower is not as important, as the loan is secured by the value of the collateral property. Typically, the maximum loan-to-value ratio is 65-70%. That is if the property is worth $200,000 the lender would advance $130,000 to $140,000 against it This low LTV provides added security for the lender, in case the borrower does not pay and they have to foreclose on the property.
