How do you finance your first home flip?
Sorry to repeat in another category - just looking to get the most answers: My husband & I may be interested in house-flipping. What we cannot figure out is how seemingly young, median income folks get the financing for the first house. I assume they must get a loan from the bank for the home but what about the money to actually renovate the house? On the home-flipping shows, I've seen renovations cost anywhere from $20k-100k....that's on top of the monthly mortgage they are paying. I can understand a bank risking a loan on you if you've already successfully flipped a house before but for your first one...I just don't see any bank doing that. Please enlighten me. How do first time home-flippers get their financing? To answer Tim's very rude, arrogant response: No, my husband & I aren't thinking of doing this NOW. Yes, we watch the news. Yes, we understand the market. I was just getting some advance research out of curiousity. Nowhere did I say we wanted to do this RIGHT NOW in today's current market.
Public Comments
- Be very cautious and don't put great faith in "house-flipping" TV shows. A lot of the current foreclosures are people stuck with "flipping" houses they now can't sell for what they owe on them.
- The best i can think of is to talk to the bank itself. They are in a better position as they are the one that will finance the project if it is okay by them
- Let me see if I understand your strategy correctly. You intend to purchase real estate property for immediate resale at a profit, during a period in which almost all real estate is declining in value and is expected by most experts to continue that trend into the near future. Is that about right? Also, even pretty-as-a-picture houses are taking 6-8 months to attract a buyer in this market. Houses with defects are going up on the auction block. Are you joking or are you just delusional about current market conditions? Sorry to burst your bubble but I'm being blunt in an attempt to save you tens of thousands of dollars and perhaps total financial catastrophe. As for the shows and the CDs and DVDs promising a foolproof formula, if it really were that foolproof, they'd be putting together a REIT (Real Estate Investment Trust) and making millions instead of hucking their discs for $99.95 plus shipping and handling. Yeah, a lot of people made a lot of money in real estate from the late '90s to about a year ago. Those that didn't get out in time lost their shirts. Haven't you heard about the rise in foreclosures lately?
- Many of the "house-flippers" I have heard about in my local area are construction workers who do their own renovations or firemen with steady income and time off to also do their own renovations. So renovation costs are way below $20-100k range. Since there are plenty of people who come to this site and ask "What is the next hot stock as I need to make $5000 before the end of the week?" type questions, and your question did not state that you may be interested in the future when conditions change nor if you are knowledgeable about the market, I also thought you might want to do this soon, so I think Tim's answer is not as rude as you seem to believe.
- If it was easy everyone would do it. On Tv they only show the successful flips not any where they mess up. Try looking in texas or somewhere where the houses are cheap. I live in an area where the median home price is over 900k. Flipping here is almost impossible.
- Most of the time people get a HELOC or Home Equity Line Of Credit based on the equity they have in the home. These loans usually only require you to pay interest only for 1 - 2 yrs. In a real estate market that is in favor of the seller, would be plenty of time to fix the house up and sell before you have to start paying back the loan. The more you are able to put down on the house the more you can borrow. That is how several of my friends did it in Florida.
