I really want to get into flipping houses. I have been thinking about it for years but I am worried about the money aspect of it. How do you borrow enough money to buy the house and fix up the house? Is there a way to get a loan that is more than the value of the house? I have also heard of people getting a larger loan than what they need so they have some money to make mortgage payments if they don’t sell the house quick enough. I know some people get padded appraisals but I know that is illegal so that is not an option. Can someone offer some advice on how to finance a flip without putting in your own money or is this even possible? Thanks!
Hi Cammie,
Flipping has gotten a bad name due to many scam artists paying rock-bottom prices for a property, supposedly rehabbing it, then selling it to unsuspecting investors at over-inflated prices. So many of these deals were done that many lenders started to require “seasoning”.
To flip you use a “double closing”, which is simply two back-to-back closings. The proceeds from the second closing are used to fund the first closing. Both closings are done in escrow so that the “investor” can buy and resell a property for profit WITHOUT USING ANY OF HIS/HER OWN CASH. The Investor who is really a middleman, profits because he buys the property below market and resells it for market price. This is ethical, legal and profitable.
Be careful and good luck.
Da Wiz
Thank you so much for your advice. There is so much information out there and I am hearing so many different things its hard to get straight answer from anyone. Thanks!