Actually, just a small number of lenders truly understands the whole idea of fix and flip investing and these private hard money lenders are categorized into the following five basic types:
1. Residential lenders
2. Commercial lenders
3. Bridge lenders
4. High end lenders
5. Development lenders
Amongst these five different types of lenders, you will need to find out which lender is going to be suited to your real-estate investment. Generally people begin by investing into a single family home, that’s why they choose residential hard money lenders.
But the essential difference involving the lenders is determined by the source of funds. That’s why; they may be easily categorized into bank lenders and private hard money lenders.
Bank Type Lenders – If you are working together with a lender who’s providing you with funding with the aid of some financial institutions, where they’ll sell or leverage your paper to the Wall Street in order to enable you to get money. These types of lenders will be following some rules and regulations specified by the banks or Wall Street.
That’s why, to be able to get the loan, you will need to follow these rules and regulations, which isn’t suited to a real estate investor enthusiastic about doing fix and flip investing.
Private hard money lenders – They’re the lenders who work with private basis. They often work in a small grouping of private lenders, who loves to lend money regularly. Their best quality is that they cannot sell their paper to any financial institution or bank. They’ve particular rules and regulations, which are created to help a property investor.
Private Lenders That Are into Fix and Flip – It is simple to find residential hard money lenders, who are really into fix and flip loans. All the property investors believe it is very difficult to obtain financing for buying a house, which they’ve taken under contract.
And when they finally an excellent property and contact a lender for funding, their loans can get rejected on the basis of some neighborhood problems. Then the investor look for another property but the lender couldn’t fund them as a result of market depreciation.
This way, an investor is obviously searching for properties. But some lenders don’t have enough money to fund their deal, whereas others are continuously increasing their interest rates, which can’t be afforded. Aside from all these issues, you can find lenders that are prepared to lend money on fix and flip properties.
These lenders also provide certain rules and regulations such as for instance a typical bank or financial institution but they are made to work in favor for the true estate investor.