0ne of the most important financing options for house flippers is a bridge loan. This is a business loan that investors can use to buy a new property, flip it, then sell it. But while there are many types of business loans, what is so special about this one, that drives real estate investors towards it? Let’s find out below.
How Do Bridge Loans Work?
A bridge loan is a form of financing intended to provide a house flipper with immediate funding to flip a house as they await future income. An investor needs money to buy and renovate a house, and in most cases, they do not have that money. That is where a bridge loan comes in, to provide them with the working capital needed for remodeling that house and selling it at a profit.
A bridge loan is what allows an investor to complete a purchase instead of watching a property being acquired by someone else. Plus, in most cases, paying in cash works to the advantage of house flippers as they are likely to get a better deal. Borrowers usually have about a year to sell the renovated house and pay back the loan.
House Flippers Usually Need Funding Quickly
One of the reasons that bridge loans are attractive is that getting them is much quicker. The house-flipping businesses tend to move really quickly. If you have seen a house that you want to flip, so have other investors. And if you delay in acquiring it, another investor will. However, banks tend to take a long time before approving loans. The quickest way to get funding is through bridge financing. In most cases, such a loan gets approved in 24 hours.
House Flipping Needs One to Move Quickly
A house-flipping business requires investors to get in and get out quickly. That is because the real estate market changes frequently. You want to ensure you can make a profit at the end of the day, and so you cannot afford to hold on to a property for long. Otherwise, the market can turn, and you find that you are not making the profit you expected to.
If you are looking for a bridge loan, let Artis Commercial Capital help. We offer alternative financing solutions to house flippers, allowing them to acquire properties easily. Call us today for your funding needs.