Here’s Why You Can Consider Taking Out Flipping House Loans

When it comes to flipping houses, some investors tend to use flipping house loans, while the others tend to use their own cash reserves. Over the past couple of years, it has been seen that the number of investors taking out flipping house loans has been exponentially increasing. This is because such loans are considered to be an excellent option for maintaining liquidity and also for increasing cash-on-cash ROI. One thing here to be noted is that some investors have to necessarily rely on these loans because they just don’t have that kind of cash with themselves.

Here’s why it makes sense to use flipping house loans

• You can get the best deals :- In the house flipping business, time is money and there’s really no time to waste. You need to have cash immediately with you if you want to pounce on these deals. The more you wait, the higher the chances of you missing out on the deal because sellers in this market are highly-motivated sellers and they are need of cash urgently.

• You can easily scale up your business :- Many people use these loans and leverage their cash on hand for making most of all the different opportunities out there. At the end of the day you need money to expand your business and if you don’t have that kind of money lying around with you, then you can consider taking out a loan for scaling up your business.

• You can hold on to your cash and use it elsewhere :- There have been many investors who have found themselves in unpleasant situations where they have exhausted their reserves and don’t know how to manage the unexpected expenses that come their way. Well when you use flipping house loans, you won’t have face to face such situations because with the help of such loans you will be able to hang on to your cash reserves and as you can use the borrowed capital for taking care of your other expenses. 

What are the different things that you can do with flipping house loans

• Purchase the property :- One of the biggest pros of these loans is that you can use them to purchase properties at very good discounts and later once you have done the needed renovations and modifications, you can choose to put the property back on the market at a much higher price

• Renovation :- You can use these loans to renovate old properties and make them much more appealing. You can go for any kind of renovations that you think will work best for the property in question right from replacing floor tiles to installation new cabinets in the kitchen to painting the house on the inside as well on the outside.

• Construction :- You can use the borrowed money to purchase vacant land and buy an entirely new house on it.

What are the pros of flipping house loans

• Very secure investments :- These loans are actually a very secured investment for all parties concerned, including and especially the lender. This is because the real estate involved in the process is actually a collateral and if there is any default, then the lender can easily take care of the collateral.

• Very short duration :- Another key benefit of these loans is that they are actually quite short in duration as their time span ranges between 12 to 24 months. Further, there is no penalty involved, if you manage to repay the loan a little early.

• Diversification :- As all the offerings of these loans have pretty low stock market correlation, they make for pretty good options for diversifying traditional portfolios.

What are the different costs involved in flipping a property?

In addition to the different construction and renovation costs, there are several other hidden costs associated with flipping houses or properties. Since all properties are different, naturally there will be some inconsistencies in the type of costs that investors might have to pay. You might have to pay the following expenses while flipping houses

• The purchase price of the property in question
• Renovation costs
• Construction costs
• HOA fees
• Insurance payments
• Utilities
• Realtor Fees
• Closing Costs
• Staging

As a potential investor, you absolutely must have a good estimate in your mind. Having an accurate estimate will prove to be very beneficial when you are applying for flipping house loans. On the other hand, if you end up requesting for a loan with an inaccurate amount then that might slow down the entire renovation process and might get you unnecessarily indebted. So make sure to crunch all the numbers and have a very close estimate before you officially apply for the loan.