House flipping can be a lucrative business, but it’s not as easy as purchasing a house and renovating it. First, you have to fund your venture. Knowing the different types of fix and flip loans that are available could help you step into an adventurous side hustle or even a dream career. Here are some avenues to get you the cash you need.
Borrowing From Friends
Nearly everyone is interested in the business of house flipping. Tell your family members and friends about your idea and you may find some investors. Having a group invest in that first flip can also help you decide whether or not this is really something you want to submerge yourself in to. If you can get 4 to 6 people to invest in a property, your goal of reaching the purchase price becomes a whole lot easier.
Cash-out Refinance or Line of Credit
Owning the home you live in always provides access to cash. If you have plenty of equity in your home, you can do a cash-out refinance and possibly even secure 100% of the funding you need. It all depends on how much equity you have in your home.
Another option for your equity is to request a line of credit from your lending institution. Then, you can borrow and pay back the funds at your convenience.
Hard Money Loan
Hard money lenders are happy to work with you to create customized fix and flip loans. This is a great option for borrowers who don’t have stellar credit. The only downside to hard money loans is the interest can be quite high.
Other Options
Sometimes finding the cash you need requires you to think a bit creatively. There really is no limit to the ways that you might find cash.
- • Consider borrowing against your 401(k)
- • Ask the seller to finance your purchase
- • Work with a partner
- • Secure a personal loan
Whatever route you decide to take, it is always in your best interest to work quickly to finish the renovations so you can repay your lender and stop paying interest. Interest can quickly cut into your profits, and when it comes to fixing and flipping, it’s all about profit.
Finding fix and flip loans isn’t that difficult. It might just take time and patience. If you think you’re ready to get into the business, it’s never too early to start talking to friends, family, and your banker.
