A lot of people dream of getting into the business of fixing and flipping homes, but money is the number one obstacle. You need capital to purchase homes and do the renovations before you can sell them for a profit.
To get some insight, we spoke at length with Than Merrill, star of the A&E show “Flip This House” and CEO of FortuneBuilders and CT Homes. Merrill has a multi-million dollar real estate business and also coaches people who want to become professional house flippers. You can read the full article at Fit Small Business – this page goes over the basics, but we look at these options in-depth in the full version.
The Four Options for Fix and Flip Loans
Fixing and flipping houses costs a lot of money. In addition to buying the home, you will need to pay for repairs, contractor fees, listing and broker fees, and more. Merrill says there are three main kinds of financing for flipping houses. There’s also a newer fourth option (crowdfunding) that is increasing in popularity:
- Hard money lenders – Best for novices or borrowers with a bad credit score
- Private money lenders – Best for novices or borrowers with a bad credit score
- Bank financing – Best for experienced flippers who have a good credit score and some capital on hand from other sources
- Real estate crowdfunding – Best for experienced flippers who need money quickly.
Out of these four options, the best one for you depends on the type and condition of the property, your experience with real estate investment, and your personal financial situation.
There are other resources to finance fix n’ flips that we didn’t discuss in this article. For example, you can use a credit card to finance renovations or take out a personal loan. As a house flipper, you sometimes have to be creative and combine financing from multiple sources to get the capital you need to be successful. As for the four main methods mentioned above, check out the complete guide to Fix and Flip Loans at Fit Small Business.
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