Successfully purchasing, rehabbing and flipping a piece of real estate requires good timing, handyman skills and a keen eye for a good deal. It also requires money to close. This article is dedicated to helping those ambitious folks eager to start or expand their house-flipping enterprises by offering them some valuable information concerning sources of purchase money financing.
1. Partnering on Projects
Have you ever seen those ubiquitous cardboard signs posted on nearly every street corner advertising the availability of money to buy pre-foreclosure homes? If you do, take down the contact phone numbers on them. These people have money and are your potential future partners.
Anyone who is willing to invest in a foreclosure situation will certainly invest in a rehab deal if they believe they can make money. All you need to do is call these investors and ask them if they would be open to looking at a non-foreclosure deal if it makes economic sense to them.
2. Hard Money Lenders
Conventional banks do not cherish making short-term loans because they earn so little interest on them. When a loan is paid off, their income stream ends. Hard money lenders work differently. Being more nimble and less averse to risk, hard money lenders can find ways to earn a living making the kinds of short-terms loans used to finance fix-and-flip deals. Interest rates on hard money loans tend to be higher than traditional bank financing, but these types of loans are far easier to qualify for.
Moreover, hard money lending solutions with all of their interest charges and other fees, can in the end, cost the flipper far less than an equity partner. The professional real estate finance staff of Ellis Equity hastens to point out that money is presently available to finance many types of real estate transactions including the rehabbing of residential property, flat land deals, commercial property, industrial warehouses and all manner of income properties.
3. Home Equity Credit Lines
If you are already a homeowner with good credit and a bit of equity in your property, you may be able to convince your current lender, a new lender or a credit union to issue you a book of checks tied to a revolving equity line secured by your existing home.
The advantages of this type of credit include very favorable interest rates and the fact that you will be charged interest only when the credit line is actually put to use. The very best part of equity credit lines is that unlike conventional second mortgages, they can be used again and again provided that you pay down on them each time a flip transaction is completed.
The Future Outlook for Flipping
According to Forbes.com, home flipping activity is “gaining steam” across the USA. This is so because an increasing number of buyers are trying to find ready-to-occupy homes. Such buyers are willing to pay a premium for these homes thereby putting upward pressure on the market for them. It doesn’t hurt that the underlying economic fundamentals continue to recover. In certain regions of the nation, home prices have risen by 17% in just the past two years. If bank lending standards loosen up a just little, we can expect these numbers to expand further.
Perhaps the biggest sticking point for fledgling or growing home flippers is facing the icy challenge of finding financing to bankroll their sweet deals. Now that you know now to finance house-flipping, all you need is an agent to help you find the perfect property. Contact a First Team agent today and start chatting about what type of home you’re interested in purchasing.
Email us at clientservices@firstteam.com
Call us at 888-870-1142
This guest post is written by Anica Oaks, a professional content and copywriter who graduated from the University of San Francisco. She loves dogs, the ocean, and anything outdoor-related. She was raised in a big family, so she’s used to putting things to a vote. Also, cartwheels are her specialty. You can connect with Anica here.
