If you are a real estate investor who does rehab/flip projects, you generally have 4 options for funding your deals:
1. Your own cash
2. The cash of a partner
3. Hard money loans
4. Private money loans
5. ______________ ???
Most banks and mortgage companies will NOT provide funding for acquisition, construction and marketing costs associated with residential fix-and-flip projects… at least not without lots of major restrictions and red tape.
1. Using your own cash may seem like an ideal method, but most investors don’t have sufficient cash OR they want to preserve their cash and leverage other people’s money (OPM).
2. Working with a financial/investment partner would require you to give up half of your profits, if not more.
3. Hard money loans have helped thousands of real estate investors make millions of dollars over the years, but they are both expensive, tedious to apply for and process, and require a lien on the subject property.
4. Private money loans are becoming more popular, but are not always easy to secure, and are limited to the amount of money and risk each private investor is able and willing to offer.
Even if you’re using more conventional mortgages to hold rental properties/income properties, it’s always a good idea to have extra capital on hand for the unexpected replacement of an appliance or roof, and as a way to manage cash flow during period of vacancy. These funding programs are not limited to fix and flip projects.
Funding For Flipping offers a compelling alternative/supplement to each of the above four options.
5. Unsecured lines of credit (LOCs)…
- Funds can be used for anything, and usage doesn’t have to be approved or reported to a lender or partner
- LOCs can be used over and over on new projects without having to pay upfront points every time, as with hard money
- The overall cost of LOCs is very low compared to working with a partner or using a hard money loan
- LOCs are revolving credit-based accounts, which can be drawn from and paid back (with proceeds) within a billing cycle in order to “float” the interest, thereby incurring no interest at all
- No collateral is involved, and if a deal goes south, there is no property lien that can lead to a foreclosure and repossession
- No RESPA restrictions or regulations
If you are interested in applying for unsecured lines of credit through us, or know of any real estate investors who would be, please click on the link in the right sidebar for more information!