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House Flipping?? Where do the houseflippers get the start up$$?

Do they operate as a business and get a business loan or do they just get a mortgage on the property? How would you be able to get a soft prepay clause ? Is that based on your credit score? If you get a mortgage – how long would you have to live in the house before you can sell it? I live in Texas. Thanks in advance!
Thanks for all the great answers! – One more question? what is a “hard money” loan?

8 Responses to “House Flipping?? Where do the houseflippers get the start up$$?”

  • FaZizzle:

    You open a second mortgage on your existing home, get a second loan, get a silent partner, etc. Usually they don’t operate as a business though.

    You don’t have to live in your house to sell it. For example: rent an apartment to live in while you flip the house. It will be easiest.

    You can live in the house, if you chose to do that, as long as you want. There’s no minimum or maximum.

  • scarletfangg:

    They either have saved the $ for years and then make more after remodeling to do more or they take out a loan and pay it back b4 its through the roof.

  • Carlton C:

    There are various ways to get money to do “quick sales” (Flipping is an illegal term in GA). Many people use “hard money” loans, others use silent partners as investors. There are various options. You have to be creative and match the proper strategy with the proper situation.

    What are your goals? What is your exit strategy?

    Best wishes

  • Beachbum:

    The are an endless amount of answers to this question. There are loans for flippers. Some start by using their own home equity. But they key is, why put 50K on one loan (one home), when you can put 10K on 5 homes. It’s a numbers game. How long to have to live? Well, depends on many factors like how fast values are going up, and how much you WANT to make. Most homes start appreciating relatively quickly but not always.

  • eddygordo19:

    Either find investors for a loan or as partners, or you will need the cash and credit score to qualify for the mortgage with no prepayment penalty.

    Even if you are a business, the bank will want a mortgage to secure the loan.

  • batwanda:

    Ok you need to read more. A house flipper (ick) is actually doing contract assignements. This takes no money. THey find a house that is for sale, the negotiate a contract that is either below market (20-30% or more below market), then they sell or ASSIGN their contract, not the house, but their contract. THey must find a buyer for the contract.
    Flippers flip a contract.
    Flippping a house after purchase too soon will increase the taxes to ordinary income because you will be seen as a dealer and not an investor.
    Mortgages for investments typically do NOT give a soft prepay on those loans (occassionally). You can sell the house before you leave the title company.

    **You really need to read some good books on this** or check into inexpensive coaching. Try Larry Harbolt (type his name in . com) Excellent coach in Florida, very veyr reasonable and does phone and fax coaching. . . but you have things confussed. . . becareful.

    ****Hard Money Loan is a loan given on value of property, not your good looks financially. 65% of the after repaired value (or whatever formula the lender uses) is loaned on generally 12-18% interest only payments, with from 2-5 points on the origination of the loan***

  • sean c:

    Not recommended in this market. Wait a little while until the market corrects itself a little more. It is always easier when the housing market is somewhat healthy. Trust me.

  • mable.syrup:

    lots of them have an “investor”. . someone else who can front the money and then once the house sells- they make a cut for their ‘investment’ in the property.

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