There has never been a better time to finally get around to your real estate investment plans; in particular, the fix and flip. The plethora of new funding options available means that you need not depend on the monolithic big banks and lenders, who can have very conservative terms for the average person. In the following, we’ll take a look at some of the more liberal alternatives.
The Partnership Option
Just starting out with real estate can be daunting, which is why pooling your resources with a trusted partner can be just the thing needed to get your feet wet in earnest. The fix and flip venture stand to make more than enough for everyone, in principle. The pooling of resources makes it easier to secure additional financing; alternatively, it can be more of an “angel investing” relationship if your prospective partner has deep pockets but not a lot of time. You do the work, and he receives an agreed-upon percentage of the profits.
The Bridge Loan
This is often called “hard money lending.” The loan terms are short since you should be able to fix and flip quickly; the option to extend is almost always available if you can show the project is proceeding. The benefit of the bridge loan? They are a lot easier to secure than mortgages and more common types of loans.
Personal Property with the Cash-Out Loan
This one is straightforward: you employ the equity in your actual, live-in property to help you with your investment choice. Basically, it’s a mortgage refinance. Your credit rating does need to be on the high end, around 640 or greater, and you must have an adequate debt-to-income ratio. This one is probably more attractive if you’re single or an invested couple. Similarly, we can toss the home equity loan option in this category; the wad of upfront cash from this can form the base of your flip and fix operation – although, of course, your home is the collateral.
It doesn’t take wads of cash to start your investing journey – but it does take a guiding hand and understanding of the principles and options. Aspen Commercial Lending is poised to help you with both – contact us today.
Like anything else, it helps if you know a little about what you are getting into before you fall for the next “Get rich quick” guru selling his or her “how to buy real estate with no money.” Can you buy real estate with no money, no, but you can do it with partners, joint ventures, and leveraging what money you have with a preferred lender.
Here is another great book we recommend you read on this subject before you get started. Then, contact us, and we will be happy to help you through the process. We have flipped hundreds of properties.