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Posted over 7 years ago

Real Estate Elevated: 4 Super Easy Ways to Fund Your Next Flip

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Tarek and I have taught hundreds of investing workshops over the years, and one of the main concerns that most of our students have is how they are going to find the money to fund their house flips. It can feel pretty stressful starting out, as most people don’t exactly have thousands of dollars lying around waiting to be invested. Fortunately, finding funding is not as tough as it sounds as there are many options available to real estate investors.

Put your nerves at ease and try out these super easy ways to fund your next flip. You’ll be on your way to flipping dozens of houses in no time!

Partners

One of the best ways to start looking for funding is by seeking out people who you could partner with. Partners don’t necessarily have to be house flippers or know anything about real estate, they can be anyone from attorneys to doctors – essentially people who have money and who are willing to invest it. You’ll do all of the work and they’ll receive an equal portion of the profit, making it a win-win for both parties.

Partnering with someone on a flip means that you’ll share the profit with whoever helped you fund the flip, as well as any risk involved. This is a great route to take if you are nervous about investing your own money or you are just starting out and don’t have much experience with house flipping.

Crowdfunding

While crowdfunding is usually seen as a source to fund small businesses, it has recently become an easy way for house flippers to find funding for their house flips. Crowdfunding makes it easy to share a project online with thousands of people who are encouraged to contribute a small portion to fund your project in exchange for a portion of the profit (or another reward). This is a super easy way to reach out to potential investors, although it can often take some time to raise the money needed to fund your project. I would recommend this route if you already have a name set for yourself or you have more time on your hands and don’t need a fast source of money.

Hard Money Lenders

Hard money lenders are a great source for funding…if you are able to flip the house fast. If the term is unfamiliar to you, hard money lenders lend money based on the property you are buying instead of your credit score. This is a great option if you don’t want to wait to be approved for a mortgage, or don’t have the best credit score. The catch though is that these loans usually come with interest rates as high as 3 times that of a standard mortgage. If you are an inexperienced investor and take longer to flip a house, this probably wouldn’t be the best route for you to take.

Conventional Lenders

If the idea of working with a hard money lender seems a bit stressful, conventional lenders are also a good option, especially if you have great credit. Conventional loans come with a much smaller interest rate than hard money, but they usually require a down payment of anywhere from 5% - 20%. If you have money saved up that could be put towards a down payment, then this might be a good option for you to try.

Let’s face it, finding funding for your first house flip or your 15th can be overwhelming, but it’s a lot easier than it sounds. Try out one or several of these easy ways to get your flips off the ground and you’ll be a flipping guru before you know it.

For more information about real estate investing, visit Real Estate Elevated's BiggerPockets blog



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