Need Money For a FLIP using another house for collateral

5 Replies

So I found a property that I would like to buy and flip the price is 1m. I don't have the cash to buy it. My partner has a home that is paid off and want to use the equity to purchase this home to flip.

The house is worth 2m and he willing to put the house up to get the loan.

We need a loan for about 4 months only. However we need to move quickly because the house will hit the market by Monday. We would like to lock it up before this happens.

Question:

What kind of financial option do we have? 

A home equity line of credit to setup would take too long.

Both of our credit is 780+.

What option do we have that we can close quickly and use his home for Collateral.

Thanks!!

You may be able to cross collateralize that home for the down that you need, assuming your are getting a hard money loan for the purchase. Some of the hard money guys will do that. You have to call them to find out?

The biggest issue you may run into would be if that the home he has already is an owner occupied home? Hard money is designed for business use or non-owner occupied?

I hope this helps?

Originally posted by @Taye N. :

So I found a property that I would like to buy and flip the price is 1m. I don't have the cash to buy it. My partner has a home that is paid off and want to use the equity to purchase this home to flip.

The house is worth 2m and he willing to put the house up to get the loan.

We need a loan for about 4 months only. However we need to move quickly because the house will hit the market by Monday. We would like to lock it up before this happens.

Question:

What kind of financial option do we have? 

A home equity line of credit to setup would take too long.

Both of our credit is 780+.

What option do we have that we can close quickly and use his home for Collateral.

Thanks!!

 Any lender is also likely to want to see that you have enough cash flow to make payments on the new loan, though some will lend with "no payments" until you sell or refinance the project. However, I don't know anyone that will cut a check by monday for a million dollars. ;-) They have no clue who you are and aren't going to risk losing a cool million. It will take 3 or 4 days alone just to get a title report. Most lenders can respond with 3 weeks notice.

@Taye N.   Your partner can certainly do a cash out refinance on his paid off home to get the money to purchase another property.  I don't see a way to get the funds in your hands by Monday; however you could make your offer to purchase the new home contingent on getting financing on this other house.  (Just be careful how you write your offer!)

Since this is an owner occupied property, your partner is going to be the one liable for the loan on his house since he is the one on title.  I don't know if that will matter to him, but he will essentially be the one borrowing the money.  If the flip property is purchased with this cash, you would have to work out between the two of you who is going on title to the new house.

You also have the option of borrowing just the down payment against his house, and then financing the remainder of the purchase price against the new house, although that would be less straightforward than just taking out one loan.

Keep in mind a lot of lenders cap the amount of cash out you can get at $500,000 or $750,000, but there are lenders that will go to $1 million and even more than $1 million.