Getting a Loan to Flip a HouseBrio Support
Turn on the TV and you might find several programs devoted to flipping houses. However, flipping houses in real life is not as easy as it looks on TV. Although it has become more popular in recent years and rising home prices make it more attractive to investors, flipping houses is not always profitable and can cost an investor a lot of money by the time the house actually sells. Flipping houses, also referred to as wholesale real estate investment strategy, is a real estate investment strategy where an investor purchases a property not to use, but to sell for a profit. Many house flippers will tell you that sometimes the hardest part is getting the money necessary to make capital improvements in the house and to be able to continue flipping with more houses. If you are intrigued by the idea of making money from flipping houses, there are choices for home buyers.
A home equity line of credit (HELOC) may be a good way to get started. If you have sufficient equity in your home, you may want to use it to buy another property to flip. Every lender has different rules regarding how much they will lend and the rates may be a bit higher than normal mortgage rates. It is important to remember that using your home as collateral is risky if something does not go right in the process.
You can also borrow money from a lender or bank for an investment property. You may have to put down 20 percent or even higher, but it will be the least expensive money you can borrow at around 4 percent. You may need a higher credit score and some money on hand to buy an investment property in this way. You can also go to a private lender for the money. The private lender can be a parent, wealthy relative, non-bank company or a person able to lend the money. The money is secured by a note and deed of trust for the purpose of funding a real estate transaction. This would cut out the need for appraisals and other costly add-ons that increase the cost of a normal home loan. You may find better interest rates and terms with a private lender, but keep in mind that involving friends and family in business pursuits does not always work out well.
Before you commit to any lender, understand the flipping process. To do this successfully, find a mentor. Speak with people who have done it successfully, and unsuccessfully, so you understand all the ins and outs, the pitfalls and everything you must watch out for. Remember that you never really know what you’re going to find in the home you want to flip. The process can be long and difficult. Do your research and find out everything you need to know before embarking on this type of project. Skills, knowledge, patience, time and money will help you get through any real estate strategy you use to increase your income.
At Superior Mortgage Company, Inc., we specialize in residential and commercial loans and provide the best products and services available. If you are purchasing, refinancing or in need of a home equity loan or reverse mortgage, and regardless of any credit problems, we can help you. Contact the company that can answer all your questions. Call us at 845-883-8200.