Actually, just a few lenders truly understands the complete notion of fix and flip investing and these private hard money lenders are categorized into the following five basic types:
1. Residential lenders
2. Commercial lenders
3. Bridge lenders
4. Top end lenders
5. Development lenders
Amongst these five different types of lenders, you will need to find out which lender is going to be ideal for your real estate investment. Generally people start by investing in to a single family home, this is exactly why they choose residential hard money lenders best money lender.
But the fundamental difference between the lenders depends upon the source of funds. This is exactly why; they could be easily categorized into bank lenders and private hard money lenders.
Bank Type Lenders – If you’re dealing with a lender who is offering you funding with the aid of some financial institutions, where they will sell or leverage your paper to the Wall Street in order to get you money. These types of lenders is likely to be following some rules and regulations specified by the banks or Wall Street.
This is exactly why, to be able to obtain the loan, you need to follow these rules and regulations, which isn’t suitable for a real estate investor interested in doing fix and flip investing.
Private hard money lenders – They are the lenders who work with private basis. They generally work in a small grouping of private lenders, who loves to lend money regularly. Their utmost quality is that they do not sell their paper to any financial institution or bank. They’ve particular rules and regulations, which are made to help a property investor.
Private Lenders That Are into Fix and Flip – It is simple to find residential hard money lenders, who’re really into fix and flip loans. A lot of the real-estate investors find it very difficult to get financing for buying home, which they have taken under contract.
And once they finally a good property and contact a lender for funding, their loans will get rejected on the foundation of some neighborhood problems. Then the investor search for another property however the lender couldn’t fund them because of market depreciation.
In this way, an investor is definitely trying to find properties. But some lenders don’t have enough money to fund their deal, whereas others are continuously increasing their interest rates, which can’t be afforded. Aside from each one of these issues, you’ll find lenders who are willing to lend money on fix and flip properties.
These lenders likewise have certain rules and regulations such as a typical bank or financial institution but they are created to work in favor for the true estate investor.