If you love finding undervalued properties, fixing them up, and selling them for a profit, chances are you need fast funding. Every investor only has so much capital and even if you have it, do you want to tie it up in properties that might or might not sell fast?
Rehab loans are a great alternative. They give you the freedom to buy properties and fix them up while keeping your capital free.
Here are X reasons to consider a rehab loan for your next fix and flip.
1. You May be Able to Afford More
Cash isn’t infinite and when you’re buying a rehab property, you need money to fix the home up too. If you tie up all your cash in buying the property, you have to wait until you have more money or a loan to fix it up and sell it.
With a rehab loan, you get the funds to buy the property and fix it up all in one loan. You may be able to afford a slightly nicer property or more renovations to increase your profits by leveraging your investment.
2. You’ll Have Money for Emergencies
Emergencies happen when you least expect them, especially when you’re a real estate investor. If you tie up all of your cash in a home and then have an emergency, how will you pay for it?
Keeping your cash liquid while you work on your investment gives you the best of both worlds. You’ll work on making a profit on your property while keeping your cash liquid should the unexpected occur.
3. You can Get Funding Fast
Rehab loans from hard money lenders fund fast. You don’t have to wait weeks or months for underwriting and appraisals. Yes, the collateral matters in this situation, but hard money lenders are experienced enough to move fast and get you the cash you need to buy the property now before someone else does.
4. You can Make all Repairs at Once
If you’re paying cash for the repairs/renovations, you might take more time getting them done. This causes more holding costs because you can’t sell the home until you fix it up and its value appreciates so you earn a profit.
When you make all the repairs at once, you can turn the fix and flip around much faster, enabling you to turn a larger profit quicker.
Rehab Loans are Great for Fix and Flips
If you’re thinking of fixing and flipping properties, leverage your investment with a rehab loan. You’ll invest some of your capital, but not all of it, and still be able to fix and flip the home fast.
You’ll turn a faster profit when you have the funding to renovate the home all at once and can sell the property fast. Without the worry of what you’d do in an emergency, rehab loans also provide you with peace of mind as you enjoy your role as a real estate investor.