Being a new entrant in real estate business, you are supposed to know about the term flipping, and it is actually slang and what you mean by flipping is buying and reselling. I mean if you talk about a manufacturing plant, let’s say they make trailers, you know, like it puts your four wheelers on or whatever the case is. What they are doing is they are actually buying metal and they are turning around and selling metal. What they are doing is improving the metal. So they are buying a piece of metal. So Fix and Flip Loans help in reshaping the old property into a new kind of thing.
Just like the guy who is redesigning the building trailers, which is really just flipping a metal into another shape and design. He is purchasing metal. He is making that metal better and he is reselling it for a profit. So everybody out there is flipping something and so if they are flipping something they are actually dealing in product. When it comes to houses then you need to think of these as products. Houses are actually just a product. You are buying it with fix and flip loans, and you are making it better. You are improving it and you are selling it for a profit and that is how anything works in any type of any industry when it comes to products.
When we talk about Fix and Flip Loans that enable you to acquire and to resell a property hopefully for a profit, which is the whole reason for doing that. So when you are looking for somebody that will give you a flipping loan you are probably going to want a look for a hard money lender or private money lender because those are types of people that actually give you a loan where you can actually flip a property. All you require is to pick up a good property, fix it up, resell it for a profit and that is what is going to happen when it comes to a flipping loan. It is also referred to as rehab and retailing. Rehabbing mean you are fixing a property up to make it possible for retailing. Most flipping loans are actually for people that are going to fix up and sell that property to an end user. Someone is actually going to move into property and live there.
There are some kinds of fix and flip loans which are going to go to other investors and those investors are going to plan on keeping the property and renting it out. So they are going to go to, you know, a rental type investor similar to a long term holding, which also works as well. In some cases you would get a flipping loan so that you could sell the property to another investor that is also known as whole selling. So you may get a flipping loan to purchase a property. You would then sell that property to another investor without improving the property and selling would pay you off so it is really a short term flipping loan.