If you want to flip homes - buy cheap, fix up, and resale for profit - you're going to need some investment capital. If you have a ready supply of cash on hand, you don't need to worry about the financing. However, if don't have access to cash, it's time to start thinking about the financing. Here are four ways to identify the type of flip-and-fix loan you're going to need for your project.
If you're an experienced investor, meaning you've already flipped several homes for a profit, you're going to need a hard money loan. Hard money loans are designed for investors who know what they're doing and want to move on with the sale of the property as quickly as possible. If you plan to purchase your investment property, fix it up, and get it sold within a year, talk to your financial institution about a hard money loan. It's important to note that hard money lenders are also an excellent choice if you're still an inexperienced investor who'll be working with a contractor this time around.
Own Existing Investment Property?
If you currently own existing investment property and that property has equity that you can draw from, you need to talk to your financial institution about a cash-out refinance loan. Cash-out refinance loans allow you to utilize the equity you've accrued in your existing investment properties. One of the benefits of this type of loan is that you can draw on it multiple times. All you have to do is wait for your equity to build up again.
Have Equity in Your Own Home?
If you own your own permanent residence with a high equity balance, you have an untapped resource for purchasing investment property to flip. A home equity line of credit will allow you to utilize the equity you have in your own home to finance your fix and flip investment purchases. Much like those cash-out refinance loans, you can tap into your home equity as often as it accrues.
Need to Close Quickly?
If you want to purchase a fix-and-flip property but you're already in the process of selling another one, you're going to need a bridge loan. Unlike other types of loans, bridge loans aren't permanent financing options. Instead, they serve as short-term loan options that allow to close quickly on one property while still allowing you to work on the sale of your existing fixer-upper.Share