Actually, just a small number of lenders truly understands the whole concept of fix and flip investing and these private hard money lenders are categorized into the next five basic types:
1. Residential lenders
2. Commercial lenders
3. Bridge lenders
4. Top end lenders
5. Development lenders
Amongst these five several types of lenders, you’ll need to find out which lender will probably be suited to your property investment. Generally people start by investing right into a single family home, that’s why they choose residential hard money lenders.
But the basic difference between the lenders depends upon the origin of funds. That’s why; they may be easily categorized into bank lenders and private hard money lenders.
Bank Type Lenders – If you are dealing with a lender who’s offering you funding with the aid of some financial institutions, where they’ll sell or leverage your paper to the Wall Street to be able to get you money. These kind of lenders is likely to be following some rules and regulations specified by the banks or Wall Street.
This is exactly why, in order to have the loan, you will need to follow along with these rules and regulations, which isn’t suitable for a property 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 several private lenders, who loves to lend money regularly. Their utmost quality is that they cannot sell their paper to any financial institution or bank. They have particular rules and regulations, which are created to help a real-estate investor.
Private Lenders That Are into Fix and Flip – You can easily find residential hard money lenders, who are really into fix and flip loans. Most of the real estate investors find it very difficult to get financing for buying a property, which they’ve taken under contract.
And if they finally an excellent property and contact a lender for funding, their loans will get rejected on the basis of some neighborhood problems. Then the investor try to find another property however the lender couldn’t fund them as a result of market depreciation.
In this way, an investor is always searching for properties. However, many lenders don’t have sufficient money to fund their deal, whereas others are continuously increasing their interest rates, which can’t be afforded. Besides all these issues, you’ll find lenders that are ready to lend money on fix and flip properties.
These lenders also provide certain rules and regulations such as a typical bank or financial institution however they are made to work in favor for the real estate investor.