FIX 'n' FLIP
Private Money Loan
at a Glance
Up to 90% of Loan-to-Value (LTV)
Up to 80% of After-Repair-Value (ARV)
Loan Term: 1 - 3 Years
Time to Approval/Funding:
24 Hours for Approval
10 - 15 Days for Funding
Interest Rates: 7% - 12%
1.5% - 10% Lender Fees
2% - 5% Closing Costs
550 Minimum Credit Score
2 - 3 Past Rehab Projects
Licensed Contractor Help
Fix and Flip Hard Money Loan Rates & Terms
Hard money loans have high rates but they offer short terms and can even finance renovations. Lender fees are taken directly out of the loan and closing costs are either paid out of pocket or taken directly out of the loan. When you consider the cost and fees along with the rates, it’s obvious that hard money loans don’t come cheap.
Hard money loans rates and terms are:
Term: 1 – 3 years
Time to funding: 15 days
Interest rates: 7% – 12%
Lender fees: 1.5% – 10%
Closing costs 2% – 5%
However, hard money loans typically don’t have a prepayment penalty and you can reduce the overall financing costs by paying the loan back early. Monthly, interest-only payments are made during the loan and the principal repayment is at the end of the loan term. Hard money loans generally finance 90% of a property’s loan-to-value (LTV) and 80% of a property’s after-repair-value (ARV).
Also, keep in mind that you’re not paying the interest for very long since you can usually flip a home in less than 1 year. To help speed up the process, Private money lenders such as PFS offer prequalification.
Fix and Flip Hard Money Loan Qualifications
Hard money loans offer comparatively easier qualifications when compared to the other options on our list. For example, hard money lenders will typically require the following:
Credit score: 550+
Debt to income ratio: 35% – 45%
Experience: 2 – 3 past rehab projects for DIY projects or licensed contractor help for inexperienced fix and flippers
However, a credit score of 640 or above is preferred. Borrowers with better credit scores and a long history of successful fix and flip projects will be seen as safer and likely qualify for lower rates and fees as well as higher borrowing limits.
Fix and Flip Cash Out Refinance
A fix and flip cash-out refinance is a strategy where a fix and flip investor refinances an existing property to finance the purchase of a new investment property. A cash-out refinance helps fix and flippers extract equity from an existing property by issuing a new loan and paying off the existing mortgage.
The new loan issued on a cash out refinance is considered a “first lien.” This means that any existing liens (such as the original mortgage) must be paid first before you’re able to extract any equity. The difference between the amount of the new loan and the amount of the old mortgage amount is the cash a fix and flip investor can use to finance other investments.
There are no restrictions on how a fix and flip investor spends the cash received from a cash out refinance. Fix and flip investors can use a cash out refinance, also known as a “cash out refi,” on an owner-occupied home as well as a non-owner-occupied investment property up to 4 units.
PFS offers real estate investors a way to refinance an existing property or portfolio of properties. Their cash out refi offers range from 24-month bridge loans to 30-year rental loans.