Sometimes, a quick fix and flip is not the best way to make maximum profit off an investment property. If there has been a swing in the local housing market and local comps have dropped in price, you may not be able to sell for as much as you anticipated when buying the property. In instances like that, it may make sense to hold onto the property for a while and rent it instead of selling. That way, you can earn a bit of income while waiting for the market to pick up again. However, if your fix and flip has become a rental property — or you know going into the investment that you’ll be holding onto it longer — the standard hard money loan probably won’t be the best loan option.

Enter the buy and hold loan. Instead of the standard “get rich quick” idea behind most fix and flip investments, the buy and hold is more of a “get rich slow” option. For those willing to put in the time as well as effort, the buy and hold method of real estate investment can lead to even better returns on your investment.

Buy And Hold Loans

If you know you will be holding onto the property for a while rather then selling it as soon as the work is done, a traditional fix and flip loan is not the right choice. Often, the trade-off for the quick closing and low down payment of a traditional hard money loan is a higher interest rate. If you will be keeping the property longer, that higher interest rate would mean higher loan payments and more money taken away from your overall profits. Hard money loans can still be used for buy and hold investment properties, but you will want to branch out from the traditional fix and flip loan.

Buy and hold hard money loans allow you to buy the property and make renovations, as you would with a traditional hard money loan. However, the difference is that buy and hold loans are created with the understanding that you will hold onto the property once the renovations are done. Even more importantly, buy and hold loans recognize that the property in question is not your main residence, and takes into account that the property will be rented out.

Qualifying For A Buy And Hold Loan

Building up sufficient credit to purchase rental properties can be difficult. At TABS, LLC, we can help you with a short term hard money loan for buy and hold investments while you build up credit. Or, if you know you want to take time with your investment, we are happy to discuss a long-term buy and hold loan with you. We at TABS, LLC prefer to personalize our hard money loans as much as possible based on lender, type of property, renovation needs, and so on. If you’re ready to invest in real estate in Denver, Boulder, Fort Collins, Colorado Springs, or anywhere throughout Colorado, TABS is happy to help. Give us a call or fill out our online application to get started.