The Broker’s Guide to Winning Business with Fix and Flip Investing

More and more investors are turning to fix and flip projects as a means of combating the ongoing nationwide housing shortage. This strategy offers investors a way to bring much needed housing to underserved areas while also providing them with a tidy profit. As a broker or lending partner, understanding the fix and flip strategy is key to capitalizing on these opportunities. Offering specialized financing programs for these investments helps you grow your lending business by allowing you to fund more types of projects and positions you to build lasting relationships with these investors.

Are you looking to start offering specialized programs for home flipping, or maybe just refine your fix and flip financing strategy? Continue reading for our guide on how to grow your business through this lucrative asset class.

Why Fix and Flip Investments Matter for Brokers

There are several reasons why brokers should be focused on fix and flip investing, especially in today’s highly competitive market. With less and less viable properties available for sale, investors are increasingly turning to home flipping. That means the demand for fixer-uppers, and specialized financing for them, is expected to continue to grow. For brokers, you act as the bridge between investors and their capital needs. You can facilitate a successful investment by providing them with fix and flip loans that are tailored to their investment’s specific needs, with shorter terms and additional funding provided for renovations.

Understanding Investor Needs

Since you play a key role as a financing partner, it is important that you take time to understand your client’s specific needs before recommending any loan options. For home flippers, speed is one of the top priorities due to the short-term nature of these deals. Similarly, they will value flexibility, so that they can tailor loan terms to the length of the project. Luckily, the private lenders who offer fix and flip financing have much less stringent criteria for loan approval and are much more willing to adjust loan terms. Not only can loans be more easily tailored to each project, but since they are asset-based, borrowers can still be approved for financing with less than perfect credit or non-W2 income.

Financing Options That Drive Success

To ensure success for your investor clients, you should familiarize yourself with the specifics of fix and flip financing programs. As we mentioned, these loans are offered by private lenders rather than traditional financial institutions like banks or credit unions. As a result, they can be approved faster, often closing in as little as 10 days, and they offer more investor-friendly terms than conventional loans. For instance, funds are not disbursed all at once, but rather in a series of deliveries called draws, each serving a different purpose. Additionally, interest is only charged on funds that have been disbursed (not funds still in escrow). These programs are designed from the ground up to facilitate home flips, rather than just being another source of funds. Be sure to highlight these advantages when discussing financing options with your clients.

Strategies Brokers Can Use to Win More Fix and Flip Clients

So how can you start winning more business through fix and flip investing? It starts by positioning yourself as not just another source of financing, but a trusted advisor that helps clients reach their investment goals. Build relationships with local REI groups and make use of social media (particularly Facebook and LinkedIn) to get the word out about the services you offer. Leverage data to follow trends and stay up to date on the state of the fix and flip market and share these insights for free to get conversations started with new clients. As you start to build a solid presence in these spaces, you establish yourself as an authority on home flipping, and good marketing means that you’ll be the first person investors turn to when they begin to seek out financing for these projects.

Long-Term Benefits for Brokers

The long-term advantages of branching out into fix and flip financing are not to be overlooked either. Since fix and flip projects are completed fairly quickly, the investors who specialize in them tend to perform multiple flips a year. These investors also frequently go on to refinance properties, creating opportunities for you to cross-sell other products. As a result, fix and flip clients can become some of your best sources of repeat business. They also represent a fantastic opportunity to build lasting relationships that lead to more business as they build their portfolios, and even cases where they refer new business to you.

RCN Capital

Just as important as the programs you offer is the wholesale lender you choose to partner with. If you want to help your clients maximize the returns on their next investment, choose a lender that can provide you with the best leverages and rates. RCN Capital works with 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.