The 4 Things You'll Have to Finance When You Flip a Home

If you want to purchase a home with the express intention of fixing it up and flipping it, you are going to need money for a variety of expenses. When you decide to flip a home, there are four main things that you are going to either need to finance or pay for out of pocket. You will need to pay for purchase of the home, the holding cost of the home, the materials and labor to fix up the home, and the relator and closing costs when you sell the property.

The Purchase of the Home

The big thing that you will have to finance is the purchase of the home. However, when you are flipping a home and already have a primary residence, it is important to note that lenders are going to want to see you walk in with more cash-in-hand. When you purchase an investment property to flip, you are going to want to be able to put down anywhere from twenty to forty percent of the asking price of the home. You need to show that you are not just putting your energy or ideas into flipping the house, but your money as well.

The Holding Cost of the Home

The holding cost of the home is what it is going to cost you to own the home while you renovate it and wait for it to sell on the open-market. The holding cost of the home includes insurance payments, HOA fees, mortgage payments, and all of the utilities that you will need to have on while you are fixing up the home, such as the electricity, water, and gas.

You need to be able to either finance the holding cost of the home, or have the money saved up to pay for the holding costs while you renovate the home.

The Renovation Costs

The third major expense is the cost of renovating the home. You will need to go into the lending process with a detailed plan concerning exactly what you plan to fix-up on the home, how you plan to fix it, and what that is going to cost you.

When you flip a home, you may be able to get a loan that wraps the renovation and purchase price of the home into one neat package for you, but you need to have a detailed plan if you expect a lender to finance your renovation costs.

Realtor and Closing Costs

Finally, you are going to need to pay a relator to sell the home for you and you are going to need to have money to pay the closing costs once you find a buyer that wants to purchase the home.

You don't need to have cash to cover all of the expenses above, although you are going to need to have a significant amount of cash saved up in order to a renovation and flip on a home. There are specific lenders, such as NW Private Lending, who will work with you to finance the cost of not just purchasing a home, but flipping a home as well. Just be prepared to walk in with lots of cash saved up in order to get the loan you need to flip a home.

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