When it comes to financing a fix and flip it can be difficult, depending on the condition and state of the property. Other things that come into play is the purchase price, rehab, and ARV/potential sell price. Below are some different types of financing options other than the “All Cash” option.
Traditional Banks:
- Low interest rates
- 20-25% down payment
- No repairs financed
- Low fees
- Appraisal sometimes needed
Hard Money:
- High Interest rates 8-12%
- 10% down payment
- 100% Rehab Financed
- Higher Fees
- Appraisal Required
- Lender typically lends on 70% of the ARV
Private Money:
- High Interest rates 6-12%
- Possible 0% down payment
- Possible Rehab Financed
- No fees
- No Appraisal
Each option have there pros and cons. Really the decision comes down to you and your property your are looking to flip. Some properties may not qualify for traditional financing or you may not qualify (debt to income) using traditional financing, etc. It my come down to how much cash you have to put towards the project. There are a lot of different variables that come into play.
Which ever option you go with, good luck on your next project.
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