We see it all the time: A prospective borrower with a brilliant plan is interested in an investment property for a fix and flip - but at the crucial moment, their plans are dashed by a less-than-perfect credit score. Why? Because bad credit is almost always an insurmountable barrier to acquiring funding from traditional lenders.
That’s where hard money lenders like Walnut Street Finance come in. While banks turn their backs on investors based on their credit, private lenders primarily make that decision based on the project rather than the person.
Why a Hard Money Loan Is the Answer to Your Financing Needs
Even though credit score plays a small role in selecting which borrowers to lend to, factors like after repair value (ARV), equity, and the overall viability of the investor’s project are far more important to the decision-making process. We’ve all made mistakes, and here at Walnut Street Finance, we’re more interested in what you’re planning for the future.
The benefits of hard money loans extend far beyond credit score, though. Borrowing from a traditional lender may leave you mired in paperwork for days or weeks, which might mean missing out on your investment opportunity entirely. Our process is optimized towards getting your project funded quickly and with minimal hassle, which only adds to the speed with which you can get your fix and flip project underway.
Plus, while a loan from a traditional lender may take weeks or months to close, a hard money loan from Walnut Street Finance can take as little as seven days. This speed is everything when it comes to a fix and flip - as soon as you’ve identified the right property in which to invest, you’ll need to get underway ASAP.
Finally, loans from Walnut Street Finance are made with the borrower in mind. A typical bank may have set rates and terms and ask for as much as 30% down. Walnut Street Finance, on the other hand, offers loans at a much lower percent down, and has flexible rate and terms that are created with the specific borrower and project in mind. This is crucial because with fix and flip investing, every penny counts. The ideal strategy is built around maximizing the number of homes you can invest in on an annual basis, as well as the margin on each of those projects - meaning every dollar you can save on funding is another dollar to pad your bottom line.
The Bottom Line
If you’ve got aspirational plans for a fix and flip investment, but lack the credit score to acquire funding from a traditional borrower, don’t despair. We can help.
This post was originally published May 2018 and has been updated and revamped.