Flipping houses can be a lucrative endeavor, but to become a property investor, you need funding to renovate real estate in addition to buying it. Fortunately, there are many types of loans that can help.

So what type of financing works best for flipping houses? Here are the most popular loan types and what they have to offer.

Bridge Loans

Bridge loans, also called hard money loans, are offered by private lenders. This means the application process is quicker compared to banks and credit unions. In fact, you can often get funds in as little as a week.

One thing to keep in mind is that bridge loans are short-term and usually last 2 years or less. Ideally, you should be able to buy, renovate and sell a property in that time, then pay off the loan. However, this can be problematic if you run into issues during renovation or aren’t able to find a buyer.

Fix and Flip Loans

Some private lenders offer fix and flip lending, which is specifically designed for flipping houses. The funding is incredibly flexible — you can use it to purchase property, hire contractors, obtain materials, pay taxes and cover permits. Like bridge loans, fix and flip lending tends to be short-term and typically lasts between 6 months and 2 years.

Fix and flip loans are secured, which means they require you to put an asset up for collateral. The asset is almost always the property, which will go to the lender if you default.

Mortgage

When most people think of real estate loans, they think of mortgages. It makes sense, as the majority of homeowners use mortgages to pay for their house. However, as a property investor, a mortgage may not do the trick.

For one thing, mortgages are long-term loans. Once you’re locked into one, you have 30 years of payments ahead of you. Mortgages can also be difficult to get, especially if you have other loans, as many property investors do.

There are many approaches to fix and flip lending, so it’s essential that you do your research before signing a contract. Not every loan fits every need and the best path to success is finding financing that covers all your bases.

As you search for a lender, make sure you look at several offers to ensure you’re getting the best deal. It can be tempting to rush the process and go with the first loan you’re offered, but taking the time to compare interest rates has long-term benefits.