The concept of house flipping has continued to rise in popularity.
While there are many factors that affect this, the loyal following of house flipping shows on HGTV has only helped the interest of the average person getting into this side of real estate.
In order to buy homes to flip, you will need help with financing in the short term.
Keep reading to learn about the financing options to start your fix and flip business.
1. Hard Money Loans
One option for financing your fix and flip business is to choose a hard money loan. These loans do not come from a bank but are typically used for this exact purpose when buying a house to rehab.
A benefit of these loans is that you can have access to more cash at a fast rate. The potential drawback is that the property will be used as collateral if the loan is not paid back.
2. Personal Loan
No collateral, no problem. The benefit of using a personal loan is that you don’t have to put your car or other high assets up as collateral in exchange for the money. With a personal loan, you can borrow from the bank and face less qualification standards than many of the other options to finance buying a house.
3. Home Equity Loan
If you already own a property, borrowing against your home equity loan could be an option for financing. The amount you will be able to borrow will be dependent on your current property’s value and how much you owe. The cost of the property that you are looking to fix and flip will not affect the amount.
This option is especially beneficial if you have already paid a significant amount toward your current loan, leaving more available to borrow to rehab a house.
4. Private Money Loan
Given the fact that private money loans don’t come from an established institution, it is important to know where the money that you are borrowing is derived from.
These private money loans allow you to get the funds that you need for your project without following the strict or non-negotiable rules that banks have in place. The flexibility in the speed of acquiring the loan or the terms of the loan could be beneficial for your lending situation.
5. Investment Property Line of Credit Financing Options
This form of financing requires some experience. For starters, you typically need to own the property for one year and have a history of successful real estate transactions.
While this may not be a fit for someone that is brand new to the business, it is an option to keep in mind as you grow. Similar to the other financing options.
Get Started Today
Now that you have read more about the financing options to start your fix and flip business, you can get started today. Knowing the options that you have for financing can help you decide what is the best fit for the property you are looking to fix and the funding needed to do so. Check out our website for more helpful articles like this one.