With market prices still low after the great recession, many people dream of making money fixing and flipping property. While fix and flip projects have been a tried and true way to earn extra money, there is one thing that stands in people’s way: financing. While the return can be great, purchasing a house and paying for the renovations requires a lot of capital up front. This article will help you understand the various funding options that can get you flipping your first house in no time.
Hard Money and Private Money Loans
If you are a new to the fix and flip world and have a low credit score, your best option would be a hard money or private money loan. A private money lender is usually a single person that loans you money for a relatively low interest rate. They are good to use when funding smaller projects. A hard money lender is usually a group of investors that loan money for larger projects.
The reason these loans are especially advantageous if you have bad credit, is that that the main focus for the lender is the potential of the property not your experience or financial history. You will, however, want to make sure you have done your research to be able to prove that your property is a solid investment for the lender.
Real Estate Crowdfunding for You Fix and Flip Project
Real Estate Crowdfunding is the fastest form of financing available. While it is fairly new, it is expected to take off as a preferred source of funding for people in the fix and flip community. Real estate crowdfunding platforms use the internet to allow you to connect directly to people interested in investing in property flipping projects. Crowdfunding gives you the option to get funding from one or two large investors or many small individual investors. Financing can be secured in a few days instead of several weeks as if often the case with more traditional lending sources.
It doesn’t matter if you are looking to fix and flip your first property or are a seasoned veteran. Using one of more of these financing methods will help you achieve your funding goals.