3 Best Financing Options for House Flipping Loans

The 2017 real estate market is bound to present limitless opportunities for house flipping investors.Right now, home values are on the rise and sale prices remain high.The demand for homes is also not as competitive due to fluctuating mortgage rates, which means investors do not have to struggle with low inventory like they have in the past.

If you’re ready to get into house flipping or are already successful in this industry, here are three of the best options you currently have for house flipping loans:

Hard Money Loans
The good thing about hard money loans is that they can be obtained by people who have low credit scores.In fact, these loans primarily serve those with bad credit who do not qualify for a traditional bank loan.The bad news about hard money loans is that they come with high interest rates.This means you’ll have to be very careful when considering things like your budget, your costs apart from financing the property, and the length of time it’ll take you to realistically pay back your house flipping loan.So, while these loans serve a purpose, they are not ideal for those who qualify for other types of financing.

Bank Loans
Bank loans are still a solid option for those who plan to invest in maybe one or two properties.However, to get the best terms on a real estate bank loan, you need to have excellent credit, your own capital on hand for a down payment, and collateral too.

When it comes to financing fix and flip properties, bank loans work well for experienced house flippers who understand the true nature of the business and have already achieved returns on their investments.One major disadvantage of bank loans is that the interest rates are going up, not down.As of today, the mortgage interest rate is 4.21% for a 30-year fixed loan.Last year at this time the average rate was only 3.79%.That’s quite a jump!

Private Money Loans
Perhaps the best option for serious investors is private money loans for real estate.Unlike hard money loans that come with a high interest rate, private money loans have very competitive interest rates, but can only be taken out by investors who have good credit scores.Typically, private money lenders like to work with investors who have a credit score of 650+, some may want to see scores that are higher than that.

The other great advantage of working with a private money lender is that they understand the house flipping industry and are willing to share their knowledge to create lasting partnerships with their investors.They also fund quickly as they know time is of the essence when trying to secure a great fix and flip property.

As you can see, when it comes to financing a rehab property, investors have many options.Therefore, it’s important to do your research to see which option makes complete sense for you and will help you meet your financial goals.