For those interested in making a lot of money in property handling, then one of the best ways to do that would be fixing and flipping property. While the idea sounds absolutely attractive, the only challenge would be getting the right amount of capital needed in order to pursue the project. For that, there are three main fix and flip real estate funding options that one can try out.
The very first and probably most popular option for financing fixing and flipping projects would be the hard money loan. This happens to be the most popular simply because it is the easiest to acquire. It is a short term type of debt that is ideal for condo flipping wherein the holding period is only a year or less.
For those interested in taking up this sort of loan, he or she will notice that the approval time would only take about two weeks. After one gets the money in his or her palm, then the holding period will be only about one or three years, which is more than enough time to do up a piece of property. One of the cons is the high interest rate, but if the ROI of the endeavor is high, this should not be a problem.
Some of the requirements include a good credit score, good debt to income ratio, and experience. For credit score, usually lenders would require a credit score of five hundred fifty and above with a debt to income ratio of around thirty five percent. As for experience, lenders usually require around two years experience in property projects.
The other choice would be the equity credit line consisting of the home credit and the property credit lines. The home equity line is a long term debt that has a fixed number of years depending on the agreement between the borrower and the lender. The other type is a more short term kind of loan wherein the term depends on the loan amount.
For the home credit line, the approval does take longer than the hard money loans with approval times reaching up to a month. As for the interest, it is not so high ranging from four to five percent. As for the requirements, credit rating of six hundred and above, an income to debt ratio of five percent, and a property equity of thirty percent is needed.
For the property credit line, the term loan would be around two years with a thirty days approval. As for the interest, it can be five percent up to eight percent. The requirements are similar to the home credit line except the figures are a little bit higher since this short term loan would be a little more high risk than the home credit.
Before engaging in this money making activity, take note of these three options that can be used for financing. The best one will depend on the preference one has for taking loans. As long as the options are here on the table, one will at least have a choice that he or she can consider for his or her budgeting.
The very first and probably most popular option for financing fixing and flipping projects would be the hard money loan. This happens to be the most popular simply because it is the easiest to acquire. It is a short term type of debt that is ideal for condo flipping wherein the holding period is only a year or less.
For those interested in taking up this sort of loan, he or she will notice that the approval time would only take about two weeks. After one gets the money in his or her palm, then the holding period will be only about one or three years, which is more than enough time to do up a piece of property. One of the cons is the high interest rate, but if the ROI of the endeavor is high, this should not be a problem.
Some of the requirements include a good credit score, good debt to income ratio, and experience. For credit score, usually lenders would require a credit score of five hundred fifty and above with a debt to income ratio of around thirty five percent. As for experience, lenders usually require around two years experience in property projects.
The other choice would be the equity credit line consisting of the home credit and the property credit lines. The home equity line is a long term debt that has a fixed number of years depending on the agreement between the borrower and the lender. The other type is a more short term kind of loan wherein the term depends on the loan amount.
For the home credit line, the approval does take longer than the hard money loans with approval times reaching up to a month. As for the interest, it is not so high ranging from four to five percent. As for the requirements, credit rating of six hundred and above, an income to debt ratio of five percent, and a property equity of thirty percent is needed.
For the property credit line, the term loan would be around two years with a thirty days approval. As for the interest, it can be five percent up to eight percent. The requirements are similar to the home credit line except the figures are a little bit higher since this short term loan would be a little more high risk than the home credit.
Before engaging in this money making activity, take note of these three options that can be used for financing. The best one will depend on the preference one has for taking loans. As long as the options are here on the table, one will at least have a choice that he or she can consider for his or her budgeting.
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