There have proven to be a fair amount of profit of flipping a home. Flipping a home means the property will be purchased, complete renovations on the property, and sell the property with the hope of turning a profit. In 2017, the average profit from flipping home was over $60,000. With over 190,000 homes flipped in 2017, it shows there are many people who are taking advantage of the opportunities available. The industry greatly depends on lenders providing money to purchase and renovate homes for profit. The traditional bank is somewhat stringent about lending money to fund home flips; therefore, many people must find alternatives to obtain the financing needed. There are few benefits gained by participating in the industry.
Benefits of A Loan for Flipping Houses
With something like a fix and flip loans chicago il it provides a few advantages available. The greatest advantage is the speed of approval. The loan has a much quicker approval process than a traditional loan. A traditional loan can take over 30 days for approval. Speed is a desired element in the industry and sometimes waiting 30 days is never a good option. A quick approval process is not the only benefit gained by utilizing the loan to repair and sell the home. People can look forward to advantages such as:
• A person does not worry about the debt-to-income ratio
• Creditworthiness is not as influential
When obtaining the funding required to purchase and renovate the home, a person is not going to have worry if they have a poor debt-to-income ratio. The debt-income-ratio is used by traditional lenders to gauge a person’s ability to repay the loan. A traditional bank would check a person’ credit score to ensure their credit history is strong and the person is not a risk to default on the loan if approved. A person receiving a fix and flip loan does not have to worry their credit score. The lending sources are more concerned with the overall deal of flipping the home for profit. When the deal has good metrics and the lender trust the person or company completing the deal, it normally enough to for the loan to be approved.
Type of Funding Can Be Utilized For Flipping Homes
The person who is looking for funding can utilize family and friends as a source of funding. The terms of the loan should be completed in writing. The written terms of the loan will provide protection for all parties involved. A person or company gain experience in flipping homes, there will be more sources willing to providing funding for various projects. A person may utilize a partner who has the funding for various projects. There are many online lenders who will be willing to finance a flipping project. There are private lenders who may provide better loan terms than other lending sources. Private lenders are normally anyone who willing to lend money. There will be instances a private lender will forego interest payments for a portion of the profits made on the deal. A person should inquire about private lenders with other house flippers when possible to ensure the private lender is legitimate and can lend the money for the deal.