How to Get Financing for Fix-and-Flip Property
Embark on an exciting fix-and-flip opportunity today with these easy steps. While flipping properties comes with risks, this investment strategy is a great way to leverage your income and make great profits. Follow these steps to see how you can grow your investment today.
Find Your Property
Obviously, you’ll need to find an ideal property before you start flipping real estate. The ideal property is a commercial building, single-family home or apartment complex that is in a great location but needs renovations. Whether you choose real estate that requires significant renovations or some cosmetic updates will alter the amount of funding you need, the risks involved and your potential for earning more of a profit.
Determine Your Costs
There are four basic costs to a fix-and-flip property. Evaluate the amount of financing you’re willing to invest out of your own accounts before you determine the loan amount you need. Some projects can be covered under a single, flexible loan, while others may require separate loans for the property, renovations and other costs.
You’ll need to have enough capital to purchase the property, pay any operating expenses while you renovate it, any material and labor costs associated with renovations and realtor costs of buying and selling the property.
Compare Financing Options
Choose a commercial mortgage, private financing option, 401(k) financing, line of credit or hard money loan to secure the financing you need for your real estate project. Each of these options come with their own limitations and advantages. Purchasing a property requires a significant amount of capital with a low interest rate, like a commercial mortgage. Operating costs and renovations must be covered by a more flexible solution, like a line of credit or hard money loan.
Apply for a Loan
Once you’ve created a solid business plan and gathered the necessary information, it’s time to apply for your financing and make an offer on your property. Be sure you have the funding in place before closing on your property, and have a firm exit strategy in place as well. Most real estate projects require more financing than investors originally planned, so have backup funding options available in case renovations are more costly than your initial estimates.
With an experienced team, the right property and a great financing option, you can enjoy a fast renovation and excellent income from your fix-and-flip property. Enjoy the thrills of restoring an outdated or damaged property and earning a profit in a short time period with these steps.