How to Get Financing for Fix and Flip Property

If you’re ready to embark on a new adventure in real estate investment, consider a fix and flip. Renovating and selling improved properties is an exciting way to take advantage of the housing market and create a successful investment strategy. Discover how you can use the latest financing options to get started.

In order to be a successful flipper, you need to close quickly, make the necessary improvements and list your property quickly for a rapid turn around and minimal time spent with the property. Because of this strategy, there are a few financing options available to you that may be more lucrative than a traditional mortgage or commercial mortgage.

One option is to use your primary residence for a home equity loan. This option comes with risks since you’re using your own home as collateral for the loan. However, it can give you the financing you need for properties that need extensive renovations.

You can also look for a personal loan if you’re looking for a small, short-term option to cover the costs of renovations. Purchase the property with a traditional mortgage, then buy the materials and hire the labor with your personal loan. The interest rate may be higher than other options, but your fix and flip should be completed soon enough for this to be an attractive option.

Similarly, a hard money loan gives you the cash you need to make necessary renovations. Also known as a bridge loan, this financial tool typically requires an asset as backing and gives you a short-term loan that is highly flexible and perfect for paying for renovations.

Applying for these flexible financing options may seem daunting. However, you can become approved for your financing with a thorough plan, strong application, and the right property. Create a portfolio for the building you intend on purchasing and flipping. This portfolio needs to include key details, such as the price of comparable homes, a flipping strategy, and estimates for the renovations you’ll need. Just like a mortgage, you’ll need an appraisal of the property to ensure the asking price is reasonable before you receive the financing.

Perhaps the most difficult part of the entire portfolio is creating accurate estimates. There are many unknowns when it comes to renovating a home or professional building, so you need to reduce the uncertainty as much as possible in order to secure the funding you need. Once you become approved for a fix and flip loan, it’s up to you to stick with your budget and timeline for a profitable sale.

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