The Most Important Do’s and Don’ts of Financing your First Flip
Financing your first flip can be a headache, but it doesn’t have to be! The first step is weighing your options. Consider what will best align with your exit strategy. A fix and flip should typically only take about 7-9 months, so it is vital that you have a lender that can close your loan quickly and efficiently. If you don’t know where to start when it comes to finding the right lender that specializes in fix and flips, don’t worry! In this blog, we will outline the DO’s and DON’TS of fix and flip financing to help you stick to your exit strategy and have a successful first flip.
- Look for a private lender- Private money lenders, such as ZINC, can close a deal within 7-10 days and loan on distressed properties. Private money lenders in this industry can also help investors along the way. For example, ZINC loans solely on distressed single-family residences and properties with up to 4 units. Private lenders with a specific niche tend to be very knowledgeable and have extensive experience that can generate success for the borrower.
- Make sure your lender is quick and reliable- The last thing you want is to be waiting on your deal to fund. Investors want to be in and out of a flip and it is vital that you find a lender that aligns with your exit strategy.
- Make sure your lender has control over their own funds- This will alleviate stress from the borrower. Lenders, such as ZINC, that have control over their own funds offer the benefits of speed, ease, and reliability. We can close deals quickly and our borrowers do not have to stress because they do not have to wait on a third-party funding source. Lenders that control their own funds also tend to have lower rates and fees.
- Try to get a bank loan- Banks report to the FDIC. This means that they have certain collateral requirements that they must follow in order to make loans. Most banks are prohibited from loaning money for distressed assets. Banks also take months to close a loan and would not align with a quick fix and flip exit strategy.
- Rush into making a decision on a lender- Weigh your options by paying attention to how much and how quickly they can lend. Many borrowers rush into choosing a lender and end up unknowingly choosing a broker that relies on a third party to fund their deals. It is extremely important to confirm that you are using a lender, not a broker, that is licensed by the state.
- Put all your focus on trying to find the lowest rates- You will only use a lender’s money for 7-10 months. Therefore, trying to get the lowest rate possible for such a short-term loan steers your focus away from what is really important; the lender and their ability to close your loan quickly and efficiently.
ZINC is here to help! We lend regardless of experience. So if you are ready to take on your first flip, ZINC is here to guide you every step of the way. Our team members are always available to answer any questions you may have and are always willing to tell you more about our amazing loan programs. For more information, click here and one of our team members will reach out to you.