What is an asset based loan? An asset-based business line…
Idaho Fix and Flip Loans
If you are looking for a fix and flip loan in Idaho, there are several to fund your project. Standard loans usually don’t work well when flipping a home because they are long-term, so real estate investors tend to look for other ways to fund homes in the portfolio they are building. Some creative ways to fund a fix and flip house are an equity loan, crowdfunding, and or a hard money loan. Many times, new investors will combine creative funding to get the project done.
Before you start your project, there are several things you need to do to present a lender with the information they need. A business plan for each house you flip is essential in finding funding sources. You should also make a name for yourself by networking in your community as a real estate investor. Sometimes funding comes down to who you know and who is interested in working with you.
Include in Your Business Plan:
- Information about the house you want to fix and flip.
- Information about the neighborhood the house is in.
- Your time line and financial needs.
- Your strategy for if it doesn’t work out.
- Information about the people working with you.
In your business plan, include amounts for your whole project from start to finish. You will need money to buy the home, money for the renovation, funds to pay for the expenses of the home while you own it, and money for the real estate agent and closing fees.
Hire an appraiser and contractor to help you produce the right financial figures in your business plan. They will give you the correct estimates of the value of the home before and after you renovate it, as well as the costs for the renovations. Having this information is important for lenders to decide whether your project is a worthwhile investment or not.
Find Your Fix and Flip Funding:
- Family and Acquaintances
The people you know may fund your project. Social media is an effective way to get the word out that you have an investment worth funding. You may have family members that want to make a quick investment as well. It doesn’t hurt to tell people about your project and show them your business plan before looking for other ways to fund the project.
- Find a Partner
First-time investors may seek a partner that has experience in renovating or to fund the fix and flip in Idaho. Partners can have equal responsibility, little responsibility, or supply the funding.
- Use Your Home Equity
You may have equity in the home you already own to draw on. A loan or line of credit might be enough to combine with another source for your total funding.
- Personal Loans
A personal loan is capped at $50,000. The interest rates aren’t bad, and they can help you build credit. This is funding that you will have to combine with a partner’s funding or an added source.
- Owner Finance
If you find a seller willing to owner finance your fix and flip this is a desirable choice. You will still have to find the financing for the renovations and the closing costs, but a big part of your project is funded. A balloon payment at the end of your fix and flip will pay off the seller.
A 401k is the answer for some new investor’s funding needs. You can usually draw 50% or up to $50,000 depending on the value of your 401k.
- Hard Money Loan
A hard money loan is a loan that you can take out for a year. They are a useful source of funding for a fix and flip project, but you will pay more interest. These loans are easier to qualify for and come from independent sources, not a traditional bank.
- Business Line of Credit
Once you have an established portfolio, you may qualify for a business line of credit.
These are like a home equity line of credit, where you draw what you need to use when you need it.