Finding Your Flipping Finances |
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By: Chris B. Jenkins Posted: 2009-11-18 06:11:24 |
| If you're planning on doing a fix and flip, it goes without saying that you'll need a sizeable investment for the project. Acquiring real estate and renovating it is an expensive venture. Very few of us would be able to pull out the necessary investment from our own pockets, especially for those just new to the enterprise. It then falls on our powers of inquiry and persuasion to find and enlist the right lenders to sustain our flipping finances.Easier said than done you'd say, and true enough it is. For a new entrepreneur, the odds will be against you. Convincing a creditor that you can make their money grow at an acceptable level of risk is not an easy thing to do if you've only got your word to back you up, being that successful past accomplishments are still non-existent for you. Add to that the inherently risky nature of real estate, and the fact that your net worth isn't quite established yet. Of course, having to contend with competition that is two or three transactions wiser than you are doesn't help in the least.So how do you turn these odds around? Here are some suggestions that might work for you. For one, try to form a partnership. Yes, you'll have to split the profits, but you also won't have to shoulder the entire expense, something that a fledgling real estate investor can really do without. Plus, you know what they say about having two heads, although in this case the extra pair of hands is what you want. More people mean more work done in less time, and time is always an important commodity, in real estate and anywhere else.Another suggestion is to start off with a simple fix and flip project, probably something that will entail nothing more than superficial renovations, paint jobs and the like. The fact that it won't cost you an arm and a leg to get the renovations done means that the expenses would be easier to meet, hence easier to fund. There's also that added bonus of not being swamped by work on the first try and getting a feel of things before tackling the tough projects.In finding a source for funding, you can look into home equity loans as a possibility. A home equity loan can get you enough to finance in its entirety a simple project, say a project described in the preceding suggestion. If that isn't enough, consider contacting private lenders. Although not as accessible as banks, private lenders are known to provide invaluable assistance to new investors, making them a good choice for a starting project. There are, of course, your traditional lending institutions, but you'll have to make do with a ceiling they set when releasing loans for real estate. Normally, this is 80 percent of the property's value; the rest you'll have to produce yourself.Here they are; some simple suggestions that could help tide you over in those uncertain beginnings of flipping. |
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