A rehab loan, or “flip” loan, or “fix and flip” loan, is one of the most popular types of loans used by real estate investors today. In short, these loans let investors purchase properties, rehab them, and then sell them for profit. The rehab itself may range from minor renovations to a complete reconstruction of the existing property. Unlike a conventional mortgage, a fix and flip loan is a short-term loan that is underwritten and funded quickly. In most cases, the term of the rehab loan is one year, covering 100% of the costs of any renovations.
The Benefits of a Rehab Loan for You
For fix and flip investors, quick access to funds is extremely important. With a hard money loan issued by a reputable lender, you can close on your own rehab loan in less than two weeks. One of the major advantages of this is how the dollar amount of the loan is calculated.
A rehab loan is calculated by looking at the value of the property in its as-is condition, as well as the estimated after-repair-value (ARV) when the project is complete. In a majority of cases, this estimation covers the entire budget of a rehab. Coupled with this, your fix and flip loans tend to have lower down-payments compared to traditional mortgages—meaning more buying power for the investor at the end of the day.
In a highly competitive real estate market, a well-timed rehab loan can make all the difference. When borrowers have limited time in which to seize upon a new investment opportunity, a rehab loan opens doors that would have otherwise stayed closed. With a rehab loan from a reputable hard money lender such as Advest Funding, your fix and flip loans can be funded and finalized with speed and efficiency.
The key advantages of rehab loans are:
· Quick funding
· Flexible terms
· Lower down-payment
· Interest-only payments
· No prepayment penalties
Low credit scores may be accepted
The Rehab Loan Process
As a hard money lender, we provide the funding to cover the costs of a rehab loan, as well as many other expenditures and fees. However, the funding isn’t advanced in one lump sum but rather in a series of construction draws.
The process starts with a draw schedule—a detailed payment plan for the construction portion of the project. These are typically segregated into various phases of the overall project. When a given phase of work has been completed, the borrower submits their draw request. Draws are funded after the inspector confirms the work has been completed. The entire process generally takes 2-3 business days. Savvy real estate investors know to ask their lenders about the speed with which they can advance their funds. Slow lenders can lead to lost profits!
What Distinguishes Us as Rehab Loan Lenders
At Advest Funding, our efficient underwriting process and experienced processing team boast an average closing time of 10 business days.
Our clients become repeat customers because of our fast draw process compared to other hard money lenders. We understand how important it is to keep a project on schedule; and with our private capital, we can usually wire funds within 2-3 business days after a draw request is made.
Another major benefit of Advest pertains to how we handle interest on rehab loans. Unlike other hard money lenders, Advest only charges interest on funds after they’ve been advanced to you. Any funds that are held in your project’s construction reserve account do not accrue interest until they’ve been drawn. Our policy lowers your total interest payments and saves you a considerable sum of money.
Rehab Loans Backed by Honesty and Transparency
As a fix and flip investor, you want to work with a lender who can act quickly, close quickly, and issue funds backed by their own capital. A hard money lender like Advest can ensure you get the exact rehab loan you need.
At Advest, we never charge an upfront fee before we approve your rehab loan. Apart from an appraisal, which is customary for borrowers to pay, we do not ask for any money upfront.
In our line of business, it's all too common for lenders to advertise interest rates that they don't actually offer in lending situations. As a reputable organization, we pride ourselves on our upfront honesty and high degree of transparency. Before all parties move forward, we always issue a clear and concise outline with all the terms of the rehab loan laid out.
Being intimately familiar with the Bucks County, Pennsylvania area, we have the local touch and regional expertise that other lenders lack. With our understanding of the market, we move faster, nurture stronger relationships, and save you time and money in the end.
Get a Rehab Loan from Advest Funding
Call us today at (215) 550-1322 to discuss a rehab loan that’s right for you. Our team will speak with you to learn more about your current project and your plans for the future.
At Advest Funding, we make rehab loans easy for local real estate investors and developers with our quick closings, flexible underwriting, and the utmost professionalism.