How Investors Use Oregon Private Money Loans to Finance Projects
Real estate investing offers a wide range of opportunities. Understanding the benefits and challenges of the many types of investment strategies, including both active and passive, is essential to identifying the best fit for your interests, risk tolerance, and goals.
Two common strategies – house flipping and rehabbing – are often confused but differ in key ways. Here’s a look at each method, how it may align with your investment objectives, and tips for success.
What is House Flipping
House flipping is the process of purchasing distressed or undervalued properties, making minor cosmetic improvements or repairs to increase value, then quickly reselling at a higher price for profit, often within a few months.
A profitable fix and flip requires:
- A deep knowledge of local market trends
- A sense of design and savviness about quick, cost-effective upgrades
- An ability to budget and project manage
- An eye for finding distressed or underpriced properties with strong resale potential
House flipping can be highly lucrative in the right market conditions or in areas with robust economies and rapid population growth. However, it also comes with risks. Unexpected repair costs, budget overruns, permit delays, and market fluctuations can quickly eat into profit margins. Experienced flippers know how to pivot quickly and solve problems in the moment.
What is Rehabbing
Rehabbing, typically a longer-term strategy, is the process of renovating houses to increase their value and liveability, with the goal of selling for a profit or renting to tenants. Investors often purchase older or outdated homes to modernize and improve their appeal.
Renovations can include major structural repairs, system upgrades (such as plumbing, electrical, and HVAC), and full layout changes or additions. Many rehabbers have a vision for bringing new life to historic homes or family dwellings.
Successful rehabbing demands:
- A longer time commitment
- A larger renovation budget and contingency funding
- Detailed project planning and management
- A reliable contractor and trusted team of professionals
Rehab projects can yield long-term rewards, especially for investors seeking to build equity or generate rental income. But like flipping, the potential for delays and cost overruns is high. So patience, preparation, and strong project management are essential.
Types of Financing
Whether flipping or rehabbing, investing in real estate requires financing. In many cases, traditional bank loans don’t meet needs. That’s why many real estate investors turn to private money lenders to fund their projects.
- For House Flippers: Fix-and-flip loans are short-term loans designed for fast-paced projects. Speed is critical in flipping, and these loans provide the upfront capital needed to purchase and renovate a property. Private money loans close in days, not weeks. Investors repay the loan once the property sells, ideally at a significant profit.
- For Rehabbers: Bridge loans can be an excellent option for investors renovating a property with plans to refinance later into a long-term mortgage or rental loan. Bridge loans cover both purchase and renovation costs, giving rehabbers immediate funding to undertake major upgrades. Once the rehab is completed, many borrowers refinance into a more traditional loan at a lower interest rate.
Make Our Oregon Hard Money Lenders Your Investment Partners
Choosing between flipping and rehabbing comes down to your investment style and risk tolerance. Oregon private money lender Gregory M. Russell offers flexible, asset-based financing solutions that can help you make whatever your real estate goals are a reality. Unlike conventional loans, our private money loans are approved based on property value and the viability of your house flip or rehab project. Credit score and income are secondary, and the application experience is streamlined. This speeds up the lending process and makes funding accessible even to newer investors. We loan up to $400,000 to qualified borrowers. Talk to us about your fix-and-flip or rehab financing needs today. (Call 1-888-477-0444). Ready to apply? Fill out our easy loan request here. We look forward to working with you!