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House Flipping Financing - Getting The Money

By Edited Jun 2, 2016 0 1

You are standing in front of the house drooling. You really want to get your house flipping business off the ground. But money is stopping you. Financing can be difficult to get. With the recession and housing crisis, many banks are reluctant to lend money for house flipping. Most banks would prefer you hang onto it and rent it out.

The is another option for your business, to hang on to it, and rent it to cover the mortgage and expenses and hopefully put some money in your pocket, and then sell it later.

If you can afford to do this, many banks will tend to approve you quicker. But you still need to come up with the down payment no matter which way you go. Getting financing is that first hurdle you have to get over and it can be hard.

house flipping financing

In Canada, the rules have changed, and investment houses now need 20% down. This can take a lot out of a budget. So, when working out your money, you are going to look at price ranges of houses that you can afford to put 20% down on if you plan on using a bank.

Other Options are:

Private Investors for House Flipping Financing

You will have to have a plan that will interest these investors.  Remember, they don't really want to hear that you only need the money for a month or two. They will not make much that way so they could hit you hard with higher interest rates and higher fees, lots of fees!.


This may be the better way to go if you have a good relationship with your family. You have to do this properly on paper, and do your presentation of how you plan to buy, renovate and flip. If you don't have enough money amongst family members to totally finance the purchase, you could at least get enough to have your 20% and renovation money and head to the bank. But keep paperwork and spreadsheets for your family to see your progress.

When you borrow money from family, you should have the rules made up front. Let them know the interest rate you will pay, or percentage based on profit of your flip, and then decide whether they can get involved or not.

Sometimes it may not be worth getting a few thousand dollars from Uncle Joe, if he wants to help everyday and is not helping.. So, you should make the rules up front, and if they agree, then you should state what you say you are going to do. Your family will be like shareholders that you have to report back to.

Vendor Take Back for House Financing

Sometimes, a homeowner will hold a mortgage for you. This can work out well. It doesn't happen very often, but this could be an investment for them too. If the house is paid off and free and clear , the homeowner will sometimes offer this deal to sweeten a sale. Once again, you will need to make sure paperwork is in order, and you will need a good lawyer to make sure this is all done right. If you need house flipping financing, this may work, but most people want to hold mortgages for the long run to make money.

If you want to do your dealing with your bank, then maybe consider the first property as a rental investment. This way, if you do upgrades, and improve the value, and get decent tenants to cover the fees, your house will have gone up in value, and when you go to purchase a second property, the bank will consider the equity in this house when you apply for house flipping financing, and they will realize that you do what you say you are going to do, which gives you more credibility.

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Aug 11, 2010 8:31am
It is very important to properly document family contributions/financial transactions. Too many families have been torn apart due to poorly communicated business ventures. If you document everything the right way, it can be a great way to raise capital!
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