A real estate investor’s ultimate goal is to flip properties with as little of their own money as possible. On the other hand, there are situations when you’ll need actual cash to close a sale.
You may wish to acquire and hold specific properties. You may need a few more weeks to sell a house you know will sell. Whatever the case, utilizing real estate as collateral for short-term money can overwhelm a first-time investor.
Funding Options for Flipping Properties
If you want to maximize your profits from real estate flips, consider the following funding options:
1. Conventional Loans
These loans are your regular bank mortgage loans. They are not very helpful for two reasons: First, they are hard to qualify. Second, cash is king when purchasing REO properties, so be prepared to show proof of funding in the form of cash with your offer.
Some investors still use conventional loans for investing objectives, although they are a minority. Remember that this is not the place to spend too much time. The minimum credit score for a second house loan or investment loan is 700, but it will most likely be higher.
Investing in real estate is not something banks are willing to lend on at the moment. They will try to find any excuse not to proceed with the transaction. Even if you meet the legal requirements for several loans, the bank will find a way not to approve them.
2. Hard Money Loans
Typically lasting between 6 and 12 months, hard money loans are short-term private loans. Hard money loans finance real estate transactions to sell the property quickly.
Do your homework before committing to these loans because of the high-interest rates and penalties involved.
The payments can be crippling if you aren’t prepared to get out of the contract in the event of a default. How I know this, though, is a mystery! Investors with a clear retail plan or wanting to fast flip properties may find these loans helpful despite the hefty terms. Short-term loans are sometimes known as bridge loans or short-term funding.
3. Private Investors/Partners
It’s up to you to network your way into this opportunity. I’ve closed a wide range of deals with a wide range of partners using a wide range of structures. Your only constraints are those you place on yourself through a lack of imagination and dedication.
If you can show that you can make money in real estate, you’ll have no shortage of potential business partners knocking on your door. So, be imaginative. Give someone who has money a stake in the property.
You provide the strategy, and they provide the funding. Instead of earning 2% on their money in a savings, CD, or money market account, offer your friends and family 7% interest on a loan. No limits exist within this space. If they say no, at least you tried.
4. A Big Win at the Lottery
This includes becoming a famous athlete, winning the lottery, or receiving a large bequest from a long-lost wealthy relative. Get in touch with me if any of the following situations sound familiar.
Max Profit Assignment For Wholesale Flippers
As an investor who plans to sell to other investors, you should know the lending options available in your area. As a result, your regular customers will appreciate the added value.
Conventional
Talk to at least three lenders who cater to investors. Getting recommendations from other investors is ideal, but you can always look them up online if you have to. Please inquire as to the actions being taken by investors with them.
Property type, location, budget, and interest rates are considered. Collect information and make notes.
Hard Money Loans
Get in touch with at least three hard money lenders (if possible). Find out if you can get a loan for the properties you are interested in. A significant benefit of this is the opportunity to learn about the strategies employed by other local investors. Determine the property’s category, location, price range, etc.
Flipping houses may be very profitable. With the appropriate strategy, it may be a rewarding venture for you. Good luck with your real estate investments, and remember the aforementioned financial sources!
