The Benefits of Fix and Flip Loans for Investors and Brokers

Investors typically run into issues when securing funding for short-term projects like home flips. Working with conventional mortgage providers like banks can be a struggle, since they are not keen to lend on distressed properties and their loans often do not cover renovation expenses. Instead, investors turn to specialized fix and flip loans offered by private lenders. These loans offer numerous advantages that help investors secure properties and perform flips quicker and easier. Brokers and lending partners can also benefit from adding fix and flip products to their loan offerings.

Continue reading as we break down the key benefits of fix and flip loans for both investors and brokers, along with how lending partners can grow their businesses by branching out into this rewarding asset class.

Benefits for Investors: Speed, Flexibility, and Increased Buying Power

There are 3 major benefits of these loan programs for an investor’s use case:

• Fast Access to Capital: Fix and flip loans are offered by private lenders, who are more concerned with the investment’s viability than the borrower’s credit history. This means they can approve loans faster, without the long turnaround times of a conventional mortgage. This speed can be the difference between securing a lucrative deal or missing out on it.
• Flexible Terms for Unique Needs: Fix and flip loans offer shorter loan durations that can be tailored to the length of an investment project. Lenders are also more willing to customize loan terms, including offering additional funds to cover renovations, and interest-only repayment options.
• Increased Buying Power: Fix and flip loans are not bogged down by the same limitations of conventional mortgages and can be used to increase an investor’s buying power by taking on multiple projects at one. They also allow borrowers to compete with cash buyers in competitive real estate markets when they don’t have the available liquidity.

Benefits for Brokers: Faster Deals, Repeat Clients, and Niche Expertise

The benefits don’t just end with investors, though, they can also be a great opportunity for brokers to expand their businesses:

• A Quicker Turnaround Means Faster Commissions: Fix and flip projects are time sensitive because investors want to complete them quickly to reduce holding costs. For brokers, this means you’ll see commissions sooner and more often.
• More Transactions from Each Client: Investors who specialize in home flipping typically perform multiple flips per year, and they can become some of your best clients. Be sure to create a stellar financing experience for them, as this helps encourage them to return to you for future financing solutions.
• You Can Position Yourself as a Specialist: The fix and flip niche can be very lucrative, but you won’t find much success unless you take time to become an expert in the space. These projects demand knowledge that not every broker necessarily has, but by positioning yourself as a specialist,  you’ll be able to set yourself apart from more generalized brokers and grow your business.
• Repeat Business and Referral Opportunities: We mentioned how fix and flip investors are great for repeat business, but they’re also a great source of referrals. Investors talk to other professionals in the space, and you can ensure that your name comes up in the conversation by providing clients with a standout lending experience.

How Wholesale Lenders Support Both Sides

The wholesale financing partner you work with has a major impact on both you and your clients. The level of customer service they can provide will directly affect how good your client’s financing experience is. Be sure to choose a partner that has experience in the lending space, with a good track record and reputation, along with specialized programs designed for home flipping.

What really sets the best lenders apart is their ability to support their brokers. Most wholesale partners have broker referral programs, but not all are created equal. A stellar partner will offer things like white label marketing materials, educational resources, access to loan software, and expertise that enhance your lending capabilities.

How Brokers Can Start Winning with Fix and Flip Loans

So, how can brokers start closing more loans with fix and flip products? Start by educating yourself on the ins-and-outs of these programs, especially for the type of fix and flip loans your lending partner offers. Then, focus on delivering a great financing experience for clients with your first few loans. Once you have some deals under your belt, you’ll be able to start marketing yourself as a broker that specializes in flips, and you’ll be in a better place to deal with any future issues you might run into.

Marketing yourself as a broker who specializes in fix and flip property is also a crucial step. This helps you reach more investors who operate in the space and furthers your credibility as a fix and flip expert. You can share client testimonials and wins on social media or send emails to your existing clients where you highlight fix and flip opportunities. Regular communication helps you stay top of mind, and you will be the first one they think of when they need financing solutions.

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 & flip financing to your clients, RCN Capital has competitive loan options and an award-winning broker referral program available to partners.