Actually, only a small number of lenders truly understands the complete concept 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 several types of lenders, you need to discover which lender will be suited to your real estate investment. Generally people start by investing into a single family home, that’s why they choose residential hard money lenders.
But the essential difference involving the lenders depends upon the foundation of funds. That’s why; they can be easily categorized into bank lenders and private hard money lenders.
Bank Type Lenders – If you’re working with a lender who is offering you funding with assistance from some financial institutions, where they will sell or leverage your paper to the Wall Street to be able to allow you to get money. These types of lenders is likely to be following some rules and regulations specified by the banks or Wall Street.
That’s why, in order to have the loan, you’ll need to check out these rules and regulations, which isn’t suited to a real-estate investor thinking about doing fix and flip investing.
Private hard money lenders – They are the lenders who work on private basis. They often work in a group of private lenders, who wants to lend money regularly. Their best quality is that they do not sell their paper to any financial institution or bank. They’ve particular rules and regulations, which are made to help a real-estate investor.
Private Lenders That Are into Fix and Flip – You can easily find residential hard money lenders, that are really into fix and flip loans. A lot of the real estate investors believe it is quite difficult to have 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 can get rejected on the basis of some neighborhood problems. Then the investor look for another property but the lender couldn’t fund them due to market depreciation.
In this manner, an investor is definitely trying to find properties. But some lenders don’t have sufficient money to fund their deal, whereas others are continuously increasing their interest rates, which can’t be afforded. Apart from every one of these issues, you will find lenders who are ready to lend money on fix and flip properties.
These lenders also provide certain rules and regulations like a typical bank or financial institution however they are designed to work in favor for the actual estate investor.