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Fix and Flip Projects: Getting Them Funded Easily
 - First National Capital Advisors

Fix and Flip Projects: Getting Them Funded Easily


by / Thursday, 11 May 2017 / Published in Financing Blog

You’ve seen the shows on television. Someone purchases a run-down home for a small amount of money, renovates it and resells it for double or more. If you are a creative thinker with a knack for home improvement, fixing and flipping homes may be an industry that interests you. Now more than ever, it is actually easy to get funded for a fix and flip project.

Qualifications

You first need to see if you qualify for funding. Although it sounds like a catch-22 situation, in order to get funding for this venture, it helps to have already completed one. Lenders are more likely to consider lending to someone who already has experience and is aware of the potential hazards and pratfalls associated with housing costs and renovations. A healthy credit score of at least 620 is also a plus when looking for any type of loan, but is especially beneficial if you are looking for funding for fix and flip projects. Finally, in order to qualify, loan should be less than 75% of the final cost of the home after all the renovations have been completed. After all, the purpose of flipping a home is ultimately to make a profit.

Types of Loans Available

For house flippers with very little experience, loans known as hard money or private money loans are available. The two loans are very similar in that they specialize in lending to house flippers. Hard money loans are usually a conglomerate of lenders while private money loans are generally just one lender. In addition, private money loans typically have a lower interest rate.For more experienced flippers, bank loans are more readily available since the borrowers have the experience of having renovated multiple homes under their belts. Before being considered for a fix and flip loan, borrowers should have at least 2 years of experience and be a registered business in order to qualify.

The final option for funding a flipping project is the idea of crowdfunding. There are several public crowdfunding sites available but real estate has its own specialty crowdfunding websites. Like hard money lending, house flippers borrow from a consortium of lenders. Even with this type of borrowing, there are stringent regulations and flippers should have the experience of at least one flipped project.

Flipping properties can be extremely lucrative for the person who is willing to put in the time and effort. Though it seems as if anyone can do it, there is a lot of preparation and financial planning that goes into this type of venture. With experience, funding for it can be easily obtained.

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