FIX AND FLIP
A Fix and Flip Loan, also referred to as a hard money or bridge loan, is a specialized form of asset-based financing where a borrower secures funds based on the value of a real estate property.
At Rockmoore Properties, we collaborate with lenders who specialize in providing loans tailored to fix-and-flip property opportunities. Reach out to us via phone or email today! We can assist you in obtaining the most competitive rate quotes from our preferred lenders.
Fix and Flip loans typically come with higher interest rates when compared to traditional commercial or residential property loans and are seldom offered by commercial banks or deposit institutions. Hard money loans share similarities with bridge loans, including lending criteria and costs for borrowers.
The key distinction lies in the fact that a bridge loan often pertains to a commercial or investment property in a transitional phase, not yet eligible for traditional financing. In contrast, hard money loans are often associated with asset-based lending at higher interest rates and may involve distressed financial situations, such as mortgage arrears, bankruptcy, or ongoing foreclosure proceedings.
Many Fix and Flip mortgages are extended by private investors, primarily within their local areas. Borrower credit scores are usually of less importance, as the loan is secured by the property’s collateral value. Typically, the maximum loan-to-value (LTV) ratio ranges from 65% to 70%. In other words, if a property is valued at $100,000, the lender would provide a loan of $65,000 to $70,000 against it. This lower LTV ratio enhances the lender’s security in case the borrower defaults and foreclosure becomes necessary.