A Fix and Flip Loan, alternatively referred to as a hard money or bridge loan, is a specialized form of asset-based financing wherein a borrower acquires funds secured by the value of a real estate parcel. At Fezatte Capital Solutions, we collaborate with lenders who specialize in providing loans tailored for fix-and-flip property opportunities. Contact us today via phone or email, and we can promptly connect you with the most competitive rate quote from our preferred network of lenders.
Typically, Fix and Flip loans come with notably higher interest rates in comparison to traditional commercial or residential property loans and are seldom granted by mainstream commercial banks or deposit institutions. Hard money and bridge loans share similar lending criteria and borrower costs. The principal distinction lies in that a bridge loan often pertains to commercial or investment properties undergoing transitions not yet eligible for conventional financing. In contrast, hard money typically denotes an asset-based loan with elevated interest rates, potentially associated with financially distressed situations, such as existing mortgage arrears or ongoing bankruptcy and foreclosure proceedings.
A substantial portion of Fix and Flip mortgages is extended by private investors, usually within their local areas. Borrower credit scores are typically of little significance, as the loan’s security primarily hinges on the collateral property’s value. Typically, the loan-to-value (LTV) ratio does not exceed 65-70%. This means that if the property holds a value of $100,000, the lender would provide a loan in the range of $65,000 to $70,000. This conservative LTV ratio bolsters the lender’s security, ensuring protection in the event of borrower default and subsequent property foreclosure.