Flipping houses has a cost. The 4 top financing options for flipping houses addressed in this post are provided to help you get started. Use one, two, or all of these options to acquire all your investment properties in Fort Worth you want to flip!
When investing in real estate, you have several methods or strategies available… you can rent, rent-to-own, lease purchase, owner finance, wholesale, fix and flip, and many other options as well! If you’re thinking about flipping, you’re probably looking to acquire an investment property, fix it up, and then sell at a higher price. If so, here are 4 top financing options for flipping houses…
4 Top Financing Options For Flipping Houses
Flipping Finance Option #1
You can get a traditional bank loan from a mortgage loan lender like a bank or mortgage company. These are usually similar to the traditional mortgage loan that you might get for your residence: you pay a down payment and “use your credit score” to borrow the rest. Unlike your residential mortgage, you would sell the house to a buyer and then pay off the mortgage quickly.
The biggest drawback to this method is that you can usually only get a few mortgages in your name at any one time before the banks won’t lend you anymore. That will limit how many properties you can flip at once and having all these loans also has a negative impact to your personal credit score.
Flipping Finance Option #2
Another way to finance your flips is to partner with other investors so that each of you put in a portion of the total cost. For example, you might acquire a $100,000 property by finding 3 other investors and each of you put in $25,000.
Of course you’ll also need to figure out what percentage each person will invest in the renovations, and what percentage each partner earns at the end. In the example above, the simplest option would be for each partner to invest 25% and then get 25% back but some investors might prefer to be just “silent partners” while other investors might want to roll up their sleeves and do the renovation work! NOTE: A word of caution when using this strategy. Do your due diligence on the potential partners and ensure your entire agreement is in writing.
If you’d like to flip some properties and perhaps want to partner with other investors, why not get in touch with us at (817) 550-5069 Opt# 8 and we might be able to give you some suggestions or even make some introductions.
Flipping Finance Option #3
In some situations, you may be able to invest in real estate with your IRA or 401(k). This is a very smart strategy (although you should be aware that there are some restrictions and guidelines — so make sure you talk to an expert who can help you with your first deal).
There are some significant tax advantages to using this financing option, so it’s one that you may want to consider if you have money available in your self-directed IRA.
Flipping Finance Option #4
Seller financing is a very powerful way to finance your investments. Using this method, you by pass the bank and the seller actually becomes your bank! Instead of getting a loan from a mortgage company, you simply buy the house and pay the seller a regular “mortgage” payment each month until you’ve paid the entire amount off. Some sellers like this option because they want to sell fast, don’t like the capital gains impact of all cash, and like the monthly cash flow.
If you’re an investor who wants to fix and flip houses, you probably need to finance the purchase of your investment properties. The above 4 top financing options for flipping houses can help you acquire as many properties as you want and can handle!
You can talk with us at All Wholesale Properties about how to acquire more properties to flip, or to help you figure out how to invest with your self-directed IRA or 401(k). Just click here to enter your information or give us a call at (817) 550-5069 Opt# 8.
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