There is a lot of information on “fix-n-flip” real estate investing. Seminars, brochures, advertising and a variety of media touting the many ways this type of investing can lead to big profits, etc.
So, how does it work?
First, is the acquisition cost and amount of investment needed to “fix” the property. Secondly, what is the ACV (after completion value)? With these 2 primary numbers one can quickly figure out if there will be adequate profits to cover the costs and make a reasonable return on the investment. This is often the biggest challenge in planning and moving forward with a fix-n-flip project.
IFG works with private and hard money lenders who have programs for fix-n-flip investments. Depending on the borrower’s qualification, experience, and scope of the project, financing can go as high as 90% of the purchase and rehabilitation costs. Terms are anywhere from 12 to 24 months, interest only payments. Fees, points, closing costs for both the purchase and the loan will vary. After completion, if selling (the “flip”) factoring in the sale expenses along with the time it will take to sell the property, all have to be included in the planning stage of a fix-n-flip investment.