GEt Funding for Flipping
- 5 Insider tips to get funding for flipping
- Why access to capital is crucial for flipping
- Maximize your investment potential with hard money loans
How to Get Funding for Flipping?
Real estate investors who need funding for flipping know that financing is the name of the game – if you don’t have a reliable access to capital you have no chance at success. Before starting a new fix and flip, real estate investors need to ensure they have the capital to purchase the property and capital to renovate it. Fix and flip projects by nature are unpredictable – unexpected snags in construction can cause months of delay and cost thousands more. Easy access to capital is essential to ensure profits. In this post we will share tips from industry insiders on how to secure funding for flipping – practical steps you can take to make sure your next project is a success.
1. Have a Clear Plan for Each Step
Give your lenders a clear picture about your plans to purchase, renovate, and sell the property to increase your chances to get funding for flipping. Funders want to know their money is secured, and once the project is sold they will get all of their money back. Presenting to your lenders a clear project plan with estimates, comparable properties, and conservative projections about profits will increase your chances to get funding for your flip. Tim H. from Texas, who is our client, tells us that including your past projects along with real numbers as proof that you can do the job always impresses underwriters. “I applied to a couple of Lenders and got rejected. When I applied online, I was asked to provide a business plan and show my track record. Once the lender saw I flipped 3 houses last year, I got approved in 6 days for my new project.”
2. Get Funding From Hard Money Lenders
Fix and flip projects are risky compared to buy and hold strategy – and we all know banks don’t like risk when giving out real estate loans. Hard money lenders are different – the underwriting is asset-based, which is more streamlined and yields higher approval chances. Private lenders charge higher interest rates and fees for the increased risk, but for flippers who need funds fast – it is often worth the extra money.
“Who better to know if a project is worth investing than a real estate developer?”, says Jeremy B., a developer turned lender from California. Jeremy tells us his 20 years of experience in developing single family homes in San Diego gave him special insight when he got into private financing. And today, they are using this special knowledge to find lending opportunities where other pass. “It’s been great for us, we continue to find value with home flippers.”
The most important advantage with private lenders is speed. Getting a construction loan for a fix and flip project is hard enough – but going through national banks will also take weeks if not months to secure. Don’t let an opportunity pass by with a long application process – the less time you spend securing funding for your next project, the faster you can move on to your next big flip.
3. Know Your Numbers
The biggest pitfalls of fix and flip projects are in the numbers. The difference between a successful flip and complete failure often comes to careful planning and reasonable expectations not just for the profit – but how much money you need to complete it. First time flippers should be aware that purchasing the property is just the first step – securing financing for the renovations and unexpected delays is just as important. We see so many good projects that fail because the flipper did not take into account unexpected expenses – like termites on the wall or a sudden increase in labor prices.
When getting funding for flipping – just make sure to plan for the unexpected. You want to make sure you are well funded so you can overcome minor or major setbacks to your flipping project.
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