Fund That Flip started in 2014 as a platform to connect flippers with individual investors. In return for lending money meant for fix and flips, investors collect a monthly interest, typically ranging from 9%-11%.
Fund the Flip joins the ranks of Peerstreet, Groundfloor, and Patch of Land as a marketplace for secured real estate loans. But what differentiates them from competitors is:
- Their singular focus on the short-term residential bridge market, resulting in higher quality loans
- Their extreme transparency about their default rates, which is updated monthly
|Investment Type||Hard money lending|
|Accredited Investors Only?||Yes|
|Minimum||First time minimum investment of $5,000, afterwhich you can invest in $1,000 chunks|
How Does it Work?
Traditionally, developers working on rehabs borrowed capital from local hard money lenders. But the passage of the JOBS act in 2012 opened up these investment opportunities to a much bigger audience.
Fund the Flip sources and underwrites all the loans. They break the loan into smaller pieces (you can invest in $5,000 increments) and sell those pieces to individual investors.
How Do They Make Money?
They make money two ways.
They charge developers an origination fee for underwriting the loan. This fee is fully disclosed on each note and is typically between 1.5% and 3.5% of the total amount borrowed.
They also make money on the interest rate spread by charging the borrow a higher rate than the APR you collect. This amount is fully disclosed in each note and is between 1% - 3% percentage.
Unlike their competitors (some of whom [won’t reveal their default rate](internal link to Patch of Land)), they are incredibly transparent.
Fund That Flip publishes their default rates every month on their blog. As of January 15, 3.89% of their book was 30 days or more late on payments.