How to Leverage A Short-Term Fix and Flip Loan: A Broker’s Guide

If you're a broker dealing with real estate investors, then you understand the importance of timing. When that ideal deal arises, your customers have to act immediately—and this is where short-term fix and flip loans can save the day. These are specially created for investors who would like to purchase, repair, and sell properties fast. So how do you, as a broker, enable your customers to get the most out of these loans?

In this blog, we'll demystify all you need to know about fix and flip loans, from how they work to how your clients can leverage them for maximum profit. Whether your clients are experienced flippers or beginners, this article will empower you to become their go-to advisor.

What Are Fix and Flip Loans?

Fix and flip loans are short-term loans intended for real estate investors. They differ from regular mortgages in that they are normally provided by private lenders and carry a 12–18 months term. They're ideal for investors who want to purchase a property, rehabilitate it, and resell it in a hurry for a profit.

Key Features of Fix and Flip Loans:

• Short Terms: 12–18 months, ideal for quick turnarounds.
• Collateral-Based: The loan is secured by the property itself, not the borrower’s credit score.
• Fast Approval: Loans can be approved and funded in as little as 10 days.
• No Prepayment Penalties: Investors can pay off the loan early without penalties.

As a broker, your role is to help your clients understand these features and choose the right loan for their needs.

How Do Fix and Flip Loans Work?

The process of securing a fix and flip loan is straightforward, but it’s important to understand the steps involved. Here’s how it works:

1. Property Evaluation: The lender will send an appraiser to assess the property’s current value and its potential after repairs (ARV).
2. Loan Approval: Based on the ARV, the lender will determine how much to lend.
3. Funding: Once approved, the loan is funded quickly, often within 10 days.
4. Repayment: The investor has 12–18 months to renovate and sell the property, repaying the loan in full.

Why Brokers Love Fix and Flip Loans:

• Speed: Fast approval and funding mean your clients can move quickly on opportunities.
• Flexibility: These loans are tailored to the needs of real estate investors.
• Focus on Property Value: Lenders care more about the property’s potential than the borrower’s credit score.

How to Leverage Your Short-Term Fix and Flip Loan

Now that you understand how fix and flip loans work, let’s dive into how your clients can leverage them for maximum profit.

1. No Money Down Options

For investors who lack the cash for a down payment, crowdfunding sites are a good choice. These sites enable investors to obtain fix and flip loans with no money down.

How Brokers Can Help:

• Research reputable crowdfunding platforms that specialize in real estate.
• Highlight the benefits, such as access to capital without upfront costs.

2. Low Credit or No Credit Check

Fix and flip loans are perfect for investors with poor credit. Because the loan is collateralized by the property, lenders care more about the potential of the loan than the credit score of the borrower.

How Brokers Can Help:

• Recommend fix and flip loans to clients who may not qualify for traditional financing.
• Explain the benefits of collateral-based lending.

3. Reliable Collateral

If your client does not pay the loan, the property is taken by the lender. This results in their own credit being less impacted than with a conventional loan.

How Brokers Can Help:

• Advise clients to purchase properties through an LLC to further protect their personal assets.
• Highlight the reduced risk compared to traditional loans.

4. No Prepayment Penalties

Prepayment penalties are not found in fix-and-flip loans like they are in conventional mortgages. This results in your clients being able to pay off the loan early without additional fees.

How Brokers Can Help:

• Emphasize the flexibility of fix and flip loans.
• Explain how early repayment can save clients money on interest.

5. Fast Approval

In the quick-moving world of real estate investment, timing is critical. Fix and flip loans may be approved and funded within 10 days, providing your clients with a competitive advantage.

How Brokers Can Help:

• Partner with lenders like RCN Capital to offer fast approvals and funding.
• Highlight the importance of speed in securing profitable deals.

Short-term fix and flip loans are an extremely useful tool for real estate investors, but only if utilized effectively with the proper strategy. By assisting your clients through obtaining and using these types of loans, you can both fulfill their investment aspirations and grow your own business simultaneously.

Why Brokers Should Work With RCN Capital

At RCN Capital, we know the special needs of real estate investors—and the brokers that serve them. Here's why brokers prefer to work with us:

• Flexible Programs: From fix-and-flip financing to long-term rental funding, we provide solutions to suit your client's requirements.
• Fast Closings: We can close loans in as few as 10 business days, helping your clients move quickly on opportunities.
• Broker-Friendly: We value our relationships with brokers and offer competitive commissions, fast approvals, and dedicated support.

By partnering with RCN Capital, you can provide your clients with the financing solutions they need to succeed in the competitive world of real estate investing.

Ready to take your brokerage to the next level? Connect with us today to discuss our real estate financing solutions and how we can help you grow your business.