Has your fondness for popular home renovation and house flipping television shows gotten you daydreaming about getting into the business? Financing is an aspect of renovating and flipping homes that you may not have considered because these shows don’t cover it. Here’s what you need to know as you think about flipping houses. 

Fix and Flip Loans

When you start thinking about a fix and flip, there’s a couple options to secure financing. You can either take out a traditional mortgage or try and secure a private loan. You can also secure a fix and flip loan from a real estate investment firm.

A fix and flip loan is the same as a rehab loan. The biggest factor when thinking about this type of loan is the property you’re considering flipping and the current home market. You’ll also want to consider the current interest rates. 

Renovation Loans Have Advantages Over Traditional Mortgages

A fix and flip loan can work better than a traditional mortgage because they are often easier to secure. Banks see a lot of risk when looking at a house that needs a healthy dose of DIY. Banks are only likely to feel comfortable backing the investment if the home is already in reasonably good condition. 

With a renovation loan, lenders are looking at the big picture. They consider everything that you should be considering. This means you’re both thinking about everything from the price of the property, the work that can go into it and how it will do on the market once the work is complete. 

Fix and Flips Offer a Shorter Loan Term

Because of the nature of the project, these loans are likely to be for a shorter period of time with a higher interest rate. That doesn’t mean they’re a bad investment though. They’re actually more suitable, as long as you get out from under the property quickly. 

They Get You the Money You Need Faster

It can also be much quicker to secure a fix and flip loan than it can be to secure a traditional mortgage. And when thinking of home renovations and flipping houses, you know you need to move fast. If a house is worth flipping, others will be trying to purchase it as well. With a renovation loan, you can typically close on the house you’re interested in within a week or two, rather than waiting a month or longer. 

Now that you have the nitty gritty on loans, you can become the house renovator and flipper you’ve always daydreamed about.