4 Ways to Finance House FlippingMar 25, 2022
Flipping is a particular term used in the United States that describes buying a property and selling it in the market for a profit. Then, real estate investors are using the term house flipping to mean the process of purchasing, rehabbing, and disposing of the property for a profit. However, when house flipping can be profitable, it needs more funds to cover all expenses from acquiring the property to utilities, taxes, and all expenses for renovations and repairs. With that, here are various ways below you can finance flipping a house when you have plans to do so in the future.
Flipping in Cash
Using cash is obviously the most straightforward solution to pay for a house you’re interested in purchasing. On top of that, it is also the best way to avoid getting a loan that will give you more expenses for the possible interests and other fees. So if you have enough available funds to finance the house you want to flip, it’ll be one of your best options to get rid of all the stress you may deal with when applying for any loans.
Hard Money Loans
Not all financial institutions and other lending companies offer mortgages to flip houses. That’s why if you’ve tried to apply one and the result was negative, you better look for other forms of lending that you may qualify for, like a hard money loan.
Private lenders mostly offer these hard money loans on a short-term basis. Besides that, this type of loan can have a high-interest rate, but it can also be one of your available options to get the funds you need to flip a house easily. Just remember to only work with a reputable lender to avoid any possible problems in the future. Do a background check and even look for any feedback about the lending company before closing any deal with them.
A traditional mortgage is a common and popular option to fund flipping a house. However, before your application gets approved, the process may take so much time and is so complicated. As a result, you may miss out on some opportunities of acquiring the best properties in your area while you’re still waiting for the approval of your loan.
So instead of obtaining a traditional mortgage, you may consider a cash-out refinance. If you have built equity in your main property or house, you can tap into that equity that will allow you to lower the payments of your monthly mortgage. Doing so will significantly help you free up funds for your planned project in flipping a house.
If you already have your own home, you can finance house flipping by getting a HELOC or Home Equity Line of Credit or a home equity loan. With these loans, you can make use of one of your valuable assets, like your home, as collateral. It can be risky, though, but it’s also one of your available options where you can easily get the funds you need to flip a house.
So if you want to consider financing your flip with a loan, make sure you completely understand the terms and conditions stipulated in the contract so that you would know what the fees and interests you need to pay in the future are. Just make sure to find the lending company with the best offer and interest rates. You can contact me if you are ready to get a hard money loan, a refinance or a cash out refinance on any of your investment properties.