Real estate investments are quite expensive. Not only will you need the money to buy the house you will be flipping but you will also need money for the renovations, repairs and remodeling that need to be made along the way. Unfortunately, the real estate business is very tricky and there aren't many traditional lenders that would be willing to go all out to support you in your real estate investment business venture.
This means you are going to have to either fund a good portion of the expenses yourself or you are going to have to find some other means of financing your house flip. First things first, the less you pay in interest the more money you bring home. You want to try to not max out all your credit cards trying to get profits from a property flip if it can be avoided. Merchant accounts aren't any better but they can help you to keep better track of exactly the amount of money you are spending on the flip and some will even give you 90 days same as cash (and this is a very good way of doing things if you can complete the process within 90 days).
It should be said that these aren't methods that are endorsed by the writer but they are definitely possibilities when it comes to funding your house flip. The best-case scenario is that you would have the money to play with and assume no real risk in the house flipping process but very few people trying to get started in real estate investing have that luxury.
That being said, one way that is probably to risky for most (especially if you are nearing retirement age) is to cash in your retirement funds. This is not attractive for many reasons not the least of which are the facts that there are hefty penalties for doing this and you are risking your retirement security. It is one of your options however if you are in a tight spot to find money for your flip. If your property flip is successful it will be water under the bridge, the money can be repaid to the lender or reinvested and the profit that came from the house flip can then be used to fund your next flip or other types of real estate investments.
If you talk about things carefully with your family and friends and you decide you are all willing to take the risk you can also use your home as collateral by taking out a second mortgage for the money. Again this is not the preferred method because the assumed risk is great for the security of your family. It is very important that everybody involved be made well aware that flipping property is a risky endeavor. Not only is it verr risky because you aren't experienced enough but the real estate market is also very picky. Your property could just sit on the market for several months which would incure costly carrying costs before it actually sells.
Forming a partnership is another way to share the risks and help lighten the burden when it comes to flipping houses. Keep in mind that this is a stressful business venture and should be treated as a business venture. For this reason a volatile or fledgling friendship may not be the best risk for a venture such as this. If you do choose a partnership you need to carefully discuss the type of financial and labor investment that is expected of each partner and the share of profit that each partner expects to receive as well. You should also consider carefully whether you are willing to risk the friendship for the sake of profits or would you rather go with a partnership that isn't a close friend (most real estate investment groups have people willing to help with the financial side and assume the risk for the lion's share of the profits).
Banks will typically fund a portion of the property costs if you can come up with an adequate down payment and show them a well thought out business plan. Do not rely on banks however if you have poor credit, lack a business plan, or do not have a sizable chunk of your own money to invest in the venture.
Please make sure you check out my real estate blog at http://cashmoneyhousebuyerblog.com
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