Hard work is required for anyone who wants to do well with property investments, but people who fix and flip are in a category of their own.

Not only do they seek the lowest home purchase deals and sell them for the highest amount, but they also do the heavy lifting, literally. This means lots of dust and sweat to transform what’s often a dump into something much more valuable.

A related challenge for those who fix and flip is finding ways to finance these ventures. Although there hopefully will be a big pay-off once the renovated place is sold, traditional lenders might be wary especially if someone is new at this, or doesn’t have a lot of capital.

So applicants need to get creative in where and how they seek financing.

Some options can include:

• If you own at least one property, refinance it and use the cash to purchase another one to fix and flip. You’ll still need to pay off the first but if the second one sells, everything works out fine. 
• Bridge loan. This temporary loan allows you to cover the time between purchasing property and selling another. It’s typically a 12- to 18-month period and you must make payments on both mortgages. 
• Permanent bank loan. This fix and flip financing often come with a 15- to a 30-year mortgage, especially if the property will be used as a primary residence. In some cases, financing pays for the renovations plus a second property as an investment. 
• Home equity line of credit. Similar to a credit card, applicants take out and pay interest only what they need rather than a lump sum. This can come from the property’s equity. 
• Property line of credit. This short-term solution uses equity from investment properties to pay specific aspects of your improvement project, provided you don’t live there. 
• Rehab loans. Also called hard money loans, this short-term financing is secured by the actual real estate, which is useful if a property is in poor condition.  

For more renovation strategies visit LMC Alternative Business Capital.