Tips for Financing Fix and Flip Projects
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With interest rates at historic lows, many properties are selling like hotcakes. Additionally, many regions of the country are experiencing a historic influx of people moving in, adding fuel to the boom in the property market. Because of these underlying trends, it’s a good time to be in the fix and flip business. Your cost of capital can be quite low. Fix and flip financing terms can be excellent.
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Game Plan for Your Fix and Flip Business
Before we get into the actual financing aspects of your business, it’s best to start at the beginning. Do you have a solid business plan for your fix ad flip enterprise? This may be old hat if you are an experienced fix-and-flipper. If you’re just starting out, make sure that you:
- Scout out your target properties in advance
- Have a specific business plan, including strategy and timeline, for each property under consideration
- Obtain a professional appraisal of the current value of the property and the estimated value after your work is completed
- Seek out and obtain any fix and flip financing that you may need
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Financing Your Fix and Flip Business
There are a number of ways to get the capital you need to be successful in the fix-and-flip arena. Here are several to think about:
- Obtain funds from a financing partner. Often used by those with deep market knowledge, the property flipper borrows from a partner for a share of the profits.
- Take out a home equity loan. If you have substantial equity built up in your personal residence, a home equity line of credit may serve you well.
- Finance via your 401(k). Many folks have considerable sums in their 401k accounts. You can borrow against these sums and use the money as you see fit.
- Business Lines of Credit. In this form of financing, often used by experienced fix-and-flippers, you get access to a pool of money that can be used as working capital in your business.
- Borrow from family. This is generally not a preferred method. It may be useful for those who work closely with close family members who understand the business and are engaged in it themselves.
Vista Capital Solutions offers financing programs specifically designed for property flippers. Contact our team today to learn more about our fix and flip loans, as well as our fix and flip lines of credit.
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