St. Louis has become a hotspot for real estate investors looking to capitalize on distressed properties, renovate them, and sell for a profit. This strategy, known as fix and flip investing, requires quick access to capital, making fix and flip loans a go-to financing solution. But how do these loans work, and what should investors in St. Louis know before applying?
In this guide, we’ll break down the ins and outs of fix and flip loans, explain their benefits, and highlight how Westre Financial Group can help you secure the right funding for your next investment.
What is a Fix and Flip Loan?
A fix and flip loan is a short-term financing option designed specifically for real estate investors who purchase distressed or undervalued properties, renovate them, and sell for a profit. Unlike conventional mortgages, these loans are fast, asset-based, and flexible, making them ideal for projects that require quick funding.
In St. Louis, fix and flip loans are particularly useful due to the city’s affordable real estate market and high demand for renovated properties. Investors can leverage these loans to acquire properties in up-and-coming neighborhoods, complete renovations, and sell at a higher price.
How Does a Fix and Flip Loan Work?
Fix and flip loans are structured differently from traditional home loans. Here’s how the process works:
1. Find a Property
Before applying for a loan, investors need to identify a property with strong profit potential. This involves analyzing the market, considering renovation costs, and estimating the after-repair value (ARV).
2. Apply for a Loan
Once a suitable property is found, the investor applies for a fix and flip loan. Unlike bank loans, which require extensive credit checks, fix and flip loans are primarily collateral-based. This means the property itself is the main factor in loan approval.
With Westre Financial Group, the application process is streamlined:
- Borrowers submit an application
- If pre-approved, they complete a property application and provide proof of rehab funds.
- Brad Westre personally evaluates the property to assess its purchase price, renovation costs, soft charges, and estimated resale value.
3. Quick Funding & Purchase
One of the biggest advantages of fix and flip loans is speed. While traditional loans take weeks or months to close, hard money lenders like Westre Financial Group fund loans quickly—often as soon as the title company is ready. This allows investors to purchase properties without delays and stay competitive in the market.
4. Renovate the Property
Once the loan is secured, investors begin renovating the property to increase its value. Common improvements include:
- Kitchen and bathroom upgrades
- New flooring and paint
- Exterior enhancements like landscaping
- Fixing structural or mechanical issues
Having sufficient rehab funds is crucial, as some lenders, including Westre Financial Group, do not provide rehab financing. Investors must ensure they have enough capital to cover renovation costs.
5. Sell the Property for a Profit
Once renovations are complete, the investor lists the property for sale at a competitive price. The goal is to sell quickly and repay the loan, maximizing profits while minimizing interest costs.
Fix and flip loans are short-term, typically ranging from 6 to 12 months, so selling the property within that timeframe is essential to avoid additional holding costs.
Benefits of Fix and Flip Loans
Fix and flip loans provide several advantages for St. Louis investors:
1. Fast Approval and Funding
Traditional mortgages take time, but hard money lenders fund deals quickly, often within days, allowing investors to secure high-potential properties before competitors.
2. Less Focus on Credit Score
Unlike banks, fix and flip loans focus on property value rather than borrower creditworthiness. This makes them accessible to investors with less-than-perfect credit.
3. Short-Term Flexibility
With terms between 6-12 months, these loans align with the fix and flip investment cycle, ensuring borrowers don’t carry unnecessary long-term debt.
4. Leverage for Multiple Projects
By financing property purchases with fix and flip loans, investors preserve their own capital, allowing them to work on multiple projects simultaneously.
While requiremen
Fix and Flip Loan Requirements in St. Louis
ts vary by lender, Westre Financial Group has specific guidelines:
- Loans are available only in St. Louis City & County.
- No floodplain properties due to high insurance costs.
- Investors must have their own rehab funds.
- A 2% origination fee is the only upfront cost—no hidden junk fees.
How to Choose the Right Fix and Flip Lender in St. Louis
When selecting a lender, consider the following:
1. Experience & Local Market Knowledge
Work with a lender who understands the St. Louis real estate market. Westre Financial Group has been in the hard money business since 2001 and has funded over $143 million in loans.
2. Transparent Loan Terms
Avoid lenders with hidden fees and unclear repayment terms. Westre Financial Group offers 100% financing of purchase price with no prepayment penalties.
3. Speed & Reliability
Time is critical in real estate. Choose a lender that provides fast funding and efficient processing, so you never miss a good deal.
Conclusion
If you’re looking to start or expand your fix and flip investments in St. Louis, securing the right loan is crucial to your success. With Westre Financial Group, you get fast approvals, 100% purchase financing, and expert guidance from a team with decades of real estate experience.
Get started today by submitting your loan application online. Visit Westre Financial Group to learn more about how we can help fund your next fix and flip project.