Find Funding for Flipping: The Best Loan Options for Flipping Houses

Are you ready to flip? Houses, that is! If so, you’ll need funding. Here’s how to find funding for flipping and the best loan options for flipping houses.

Flipping houses can be a lucrative way to invest. It takes a bit more work than investing in, say, the stock market, but the potential gains are worth the effort.

Of course, you need to know what you’re doing. 

If you’re just starting out, the world of flipping houses can seem intimidating. You’re dealing with large amounts of money and a wrong decision could turn your good idea for making money into a good way of losing it instead.

Unless you’ve got a few hundred thousand dollars sitting around in cash you’ll need to know where to get the funding for flipping. Let us help you understand this piece of the house flipping puzzle. Here are 6 of the best loan options.

1. Hard Money Loan

You’ve got to be quick to be successful in purchasing the right properties. Prime properties for flipping don’t last long on the market. Other house flippers are standing in the wings ready to snatch up the best deals. 

Thus, you need to get your hands on the money quickly. A hard money loan can be a good option for doing that. You can typically have the money in your account within a week or two.

This is an especially useful loan if your credit isn’t the best in the world. Hard money lenders tend to have less stringent requirements for borrowers. This makes the loan easier to get. 

The downside is that the interest rates tend to be higher and the terms shorter. Hard money lenders work a lot in flipping houses and tend to be more hands-on in your project.

For example, they may release the money in stages. First, the money for the purchase, then the money for the first round of renovations, then for the next, and so on.

2. Bridge Loan

Bridge loans are perfect interim loans. For example, say you’ve finished one house flip and are putting it on the market. It hasn’t sold yet, but you’ve found an amazing deal for your next flip. 

Your money is still tied up in the first house, so where do you get the capital from?

That’s what a bridge loan is handy for. It’s a short-term loan with better interest rates than that of a hard money loan. You’ll have to have a certain amount of equity in the property you currently own (usually 20%). You’ll also need to have a clear exit strategy in place. 

You usually can’t use bridge loans for renovation costs. But if you did your first flip right, you should have money to spare from that sale to put into renovating the new property.

You can check out this page to learn more about how bridge loans work and learn if one would be right for your situation.

3. Home Equity Line of Credit

If you are a homeowner and have enough equity built up in your home, you may be able to take out a home equity line of credit, or HELOC. This is a handy option as you don’t have to keep reapplying for new loans. 

A HELOC is a revolving credit line, much like a credit card. You can qualify for a certain amount, but you don’t have to take it all out if you don’t want to. That way you only pay interest on the money you actually need. 

As you pay off the line of credit, that money becomes available to you to borrow once again. So when you make a sale, you can pay off the loan and stop paying interest. But the money is there ready and waiting for you when you find the next perfect property to purchase.

4. Investment Property Line of Credit

If you own an investment property you may be able to qualify for an investment property line of credit. This is essentially the same thing as a HELOC, but you cannot be living in the residence. 

Like the HELOC, this loan option is pretty flexible. It revolves as well so you can pay it down and take out more as you need. 

This type of loan can usually be used for purchases and renovations as you see fit.

5. Traditional Bank Loan

Because of the speed necessary for purchasing good properties a traditional bank loan is not as common in house flipping. They have more stringent requirements and it can be harder to qualify a property if the necessary repairs are rather extensive. 

However, it’s work mentioning because this will typically be one of your cheaper options. If you have good credit it will be easier to qualify.

This can be a good option if you plan to flip the house slower, or if you will be living in the home while you do the renovations. You don’t want to be paying the higher interest rates on the other loans we’ve mentioned if you plan to keep the property for a few years.

6. Financing Partner

If you have something you can bring to the table, you may be able to bring on a financing partner.

For example, perhaps you understand well how to go about flipping houses. But you don’t have the capital to do it. You could bring on a partner who supplies all or some of the cash and you supply the knowledge and work.

How you divide up the tasks needs to be spelled out explicitly in a legal agreement. Along with what happens with the profits. Otherwise, you could end up in a legal battle when the property sells. 

But with the right partner, this can be a cost-effective way to get the money you need for funding your house flip.

Funding for Flipping Isn’t that Hard

As you can see, there are plenty of options out there for getting the funding for flipping a house or property. Which one is right for you will depend on your specific situation. 

To learn more about all sorts of interesting topics, feel free to check out the other posts on our blog.