Every house flip starts with actually finding the property. Once you find the property, you’re left with figuring out how to finance the project.
And unless you’re independently wealthy, you’ll have to borrow money to finance four parts of your house flip:
1.The purchase price of the house (you’ll need to bring 20% to 45% of the purchase price as a down payment depending on the lender)
2.The “holding cost” of the home (e.g. insurance payments, HOA fees, and other costs of owning the home while renovations are underway)
3.Materials and labor for the renovation
4.Realtor costs and closing costs to find a buyer and sell the property post-renovation
The first thing you should know before searching for financing is that getting traditional bank loans for fix and flip projects usually isn’t the best route.