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The rising popularity of fix and flip investing has come as a direct result of the nation’s ongoing housing shortage. Savvy investors have figured out the key to identifying neglected properties in high-demand areas and turning them into desirable homes while making a profit. Brokers play a key role in helping investors perform these deals, from deal sourcing and vetting, to finding financing for each project. They also stand to gain a great deal of business by offering fast and reliable financing programs that meet the unique needs of these clients.
Read on as we break down the market opportunity for fix and flip investments and how brokers can set themselves up for success by expanding their loan offerings.
The Fix and Flip Market Opportunity
Today’s real estate environment is marked by low inventory and high interest rates, and as a result, investors are turning to creative methods of meeting housing demand. These investors require fast, flexible financing solutions to effectively conduct these deals, and this is where traditional mortgage loans tend to fall short. Instead, they are turning to private fix & flip loans which offer flexibility, quicker turnaround times, and less stringent loan requirements. Brokers that offer specialized fix and flip loans have the potential to reach a rapidly growing market of clients and close more deals.
What Makes Fix and Flip Lending Different
How are these specialized fix and flip programs different from a standard mortgage? Let’s start with the basics: they typically have a shorter-term, often ranging from 6-24 months, which can be tailored to the specific length of a project. Unlike conventional banks, the lenders who offer fix and flip loans designed them to close and deliver funds quickly. They have a streamlined application process that requires less documentation, and they are more willing to lend on properties in need of rehab than conventional lenders. Also, unlike with mortgages, fix and flip loans can provide additional funds to cover renovations on top of acquisitions expenses.
How Fix and Flip Lending Benefits Brokers
Let’s talk about why brokers should care about fix and flip loans. Offering this type of financing opens up a new stream of business in the form of repeat home flippers. These investors tend to perform multiple flips per year, and they can become some of your best clients. Offering a variety of loan solutions also helps position you as a versatile problem solver who can fund complex deals. Short-term financing programs can be used to fund a wide variety of loan scenarios which aren’t suitable for long-term financing. It also helps you diversify your own revenue sources, making your business more financially resilient.
Why Investors Value Brokers Who Offer Thee Loans
The investors who perform multiple flips a year require specialized financing that can meet the unique needs of each different project. They appreciate lending partners who can offer flexibility, speed, and reliability in deal funding. Fix and flip loans are perfect here because they offer a short, adjustable loan term and the ability to fund a wider range of projects. They also provide unmatched speed, with a timeline of as little as 10 days from application to fund delivery. As an added bonus, investors are more likely to return to brokers who can deliver fast, reliable funding, and are more likely to refer new clients to you as well.
How to Incorporate Fix and Flip Lending Into Your Toolkit
Do you want to start offering fix and flip loans to your clients? First, partner with a trusted wholesale lender that offers fast and flexible short-term funding. Be sure to make use of their educational resources to get up to speed on the specifics of fix and flip loans, and how they differ from conventional long-term financing. Once you have a good grasp of these programs, you can build marketing campaigns that highlight flix and flip solutions. Send out emails to existing clients, and network with local investor groups to promote your expanded offerings. And after you have closed a few deals, you can market these success stories to your previous clients to stoke interest and grow your fix and flip pipeline.
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.