Hello,
What is the best way to finance when flipping/rehabbing a property?
thanks,
Joseph
Hello,
What is the best way to finance when flipping/rehabbing a property?
thanks,
Joseph
Hi Joseph,
There a lot of variables to your question. It will depend upon the indivdual property and your financial status.
Even some investors who have the capicity to purchase + fix up still use financing to complete their projects.
Your local banks will typically want 15-20% down and will offer you a short term loan.
Conventional lenders (used by mortgage brokers) will be able to offer you loans that will give up to 100% of the purchase + fix up money. The amount of the loan must be within 90% of the after repaired value. The ARV is figured by an appraiser using the contractor’s bid provided by you. These loans must meet guidelines related to credit, income, and assets.
If the project does not fit within these guidelines or funds are need very quickly, then a hard money loan may be a better source. Hard money loans are base more on the loan to value and not the income, assets, and credit. However they will only loan up to about 70% of the after repaired value. Cost and rate will be higher but this is still a great way for you to find funding and still make money in investing.
Ben is right. Depending on your financial/loan parameters, there are a multitude of programs available for investment opportunities.
If you are flipping then you want to avoid prepayment penalties (PPP) as they will eat up equity. Most lenders will waive the PPP for a slightly higher rate. If you are planning on flipping with in 6 months it makes more sense to pay the slightly higher payment than a 2% PPP.
Try ‘Bank of Old Lady With Equity Line’. You may have to sleep with her but the return on investment could be worth it.
Sorry, I know that didn’t help much but couldn’t resist. My bad.