Brokers Love Working with Fix and Flip Investors – Here’s Why

The fix and flip market is experiencing something of a revival, with low inventory levels driving investors to creative ways to turn a profit with real estate. This asset class can deliver substantial returns in a short-time period, and savvy investors target specific audiences and use market research to take those returns even further. Brokers and lending partners also play a key role here, helping their clients conduct due diligence and identify lucrative investment opportunities. But did you know that fix and flip investors can be some of your best clients? Working with these investors can bring many benefits to your lending business. Continue reading to find out why.

Fast Closing Mean Fast Commissions

The greatest advantage home flips provide over rental investments is that they can close and be completed much faster. While rental property loans might take up to 30 or even 45 days to close, a fix and flip loan is designed to close quickly, with funds often delivered in as little as two weeks. For investors, this means getting to work sooner and seeing returns earlier. For brokers, this means faster commission cycles. You can close more loans in the same time period, and receive more in commissions as a result. To maximize your efficiency, be sure to work with a wholesale lending partner that specializes in fix and flip loans, as they will understand the value of speed and responsiveness when funding these deals.

High Volume = Repeat Business

Fix and flip investors turn projects around very quickly, often completing them in 3-6 months to avoid excessive holding costs. Many of them also perform multiple flips per year. From a broker’s standpoint, it means that one fix and flip client can generate multiple commissions annually, with some experienced investors managing up to five flips a year. Contrast this with a typical homebuyer, who spends a median length of 13.2 years in the same home, and you can see how fix and flip loans are a massive commission opportunity for brokers and lending partners.

Be sure to focus on delivering a stellar lending experience for new fix and flip clients, as it can be a great opportunity to establish repeat business relationships with them. These investors might also want to reinvest their returns with more long-term projects, such as rental properties, so it’s important to have a variety of loans products on offer to meet these clients’ needs.

Brokers as Strategic Partners, Not Just Loan Finders

Building lasting relationships with clients relies on you providing value beyond just being a financing provider. Brokers who position themselves as strategic partners become trusted advisors to their clients, and fix and flip investors are some of the best clients you can find. You have the opportunity to help these clients with market research, deal analysis, and planning viable exit strategies, as well as giving financial advice. Your clients will come to value the expertise you can provide to them, and this means they will return to you for guidance with new projects and you will benefit from the financing opportunities that come with them.

Niche Financing is a Competitive Advantage

Fix and flip investors often require creative and flexible loan products which not every financing provider can offer to them. By adding these programs to your loan offerings, you can give your business a competitive edge by funding deals when traditional lenders cannot. Working with a private lender gives you access to flexible programs like bridge loans which are designed for short-term projects like home flips. These lenders are more willing to customize loan terms to meet the borrower’s needs, and they even offer tailored repayment structures like interest-only options. Their loans are also typically asset-based, which means that a borrower’s personal credit is less of a factor in approval. That lets you stand out from the competition, since you can fund projects even when a borrower might have gotten turned down somewhere else.

Growing Your Network Through Fix and Flip Lending

There’s a hidden benefit to working with fix and flip lenders, and that’s the ability to expand your network. Most home flippers know other investors in the space, and a great experience is almost sure to lead to a referral. Additionally, these clients tend to work with other real estate professionals such as contractors, real estate agents, and tax professionals, all of whom can help expand your customer base and serve as resources to your existing clients.

If you’re looking to grow your network even further, consider attending events designed for fix and flip investors, such as tradeshows or networking sessions. At best, this gives you a chance to connect with clients and other like-minded professionals, and at worst, you still get to brush up on your knowledge about this rewarding asset class.

RCN Capital

To help your clients maximize the returns on their next investment, partner with a lender that can provide you with the best leverages and rates. RCN Capital lends to real estate professionals, commercial contractors, developers & small business owners across the nation. We provide short-term fix & flip financing, long-term rental financing, and new construction financing for real estate investors and lending partners. If you are looking to offer fix and flip financing to your clients, RCN Capital has competitive loan options and an award-winning broker referral program available to partners.