Lately, the real estate market has been booming. To capitalize on recent trends, one method that many investors are taking up is the art of the fix and flip. In essence, the idea is to buy a home that can be fixed up and flipped for profit.

While house-flipping can be a very profitable venture, it usually takes some upfront capital for it to be effective. If you don’t have the cash reserves to go out and buy a home to fix and flip, you might consider financing to help you secure the property.

Financing a Home For Flipping

Thankfully, there are quite a few options when it comes to taking out a loan on a home. This allows you to get the home quickly, while the price is low, and turn around and sell it high in a matter of months.

There are lots of small business loans that are made specifically for fixing and flipping. In this article, we’ll talk about some of the most common fixes and flip loans and how to choose the right one for your real estate investment portfolio.

Types of Home Loans for Fixing and Flipping

When approaching a lender for fix and flip financing, you might encounter the following types of loans:

• A Business Line of Credit
• Hard Money Loans
• Home Equity Loans
• Personal Loans
• Loans from Family or Friends
• A Partner for Financing
• Seller Financing
• 401(k) Financing

Each type of loan comes with its share of perks as well as purposes. For instance, family and friend loans are best for beginners in real estate investing who want to get others they know involved in the investment. Personal connections can go a long way and you can all benefit together if done correctly.

Home equity loans, on the other hand, would be for flippers that have about 20% of the equity in their primary residence to be able to pull out. This type of loan only works if you already own a home.

What To Finance on a Flip

When deciding what loan to go with, it’s important to get some information together to analyze first. This would include finding out the purchase price of the property you’re looking to get, the cost of insurance, HOA, or other fees involved when owning the home, and also the cost of fixing the house up (including labor and materials).

Once you have this together, you can make an informed choice on a fix and flip loan.