Flipping houses is an expensive endeavor. You need money to purchase the property, renovate it, pay the bills for the duration of the project, and sell the property. When financing a flip, work with a qualified mortgage broker or loan officer to consider the following sources of cash:

  • Your own money: Cash and savings, equity you've built up in your home (your home's value minus what you owe on it), and retirement savings.

  • Personal loans: Cash from family members or friends who are either willing to help you or wanting to invest in real estate without having to do the work.

  • Conventional loans: Money you qualify to borrow from a bank or other conventional lending institution based on your income, net worth (the value of what you own minus the value of what you owe), and credit history.

  • Government loans: If you're buying properties from government-sponsored programs, you may qualify for government loans, even as an investor.

  • Hard-money loans: High-interest, short-term loans that are often attractive to investors who can't qualify for conventional loans. (One benefit of hard-money loans is that the lender often accepts the investment property as collateral for the loan, so you don't have to place your own home at risk.)

  • Credit cards: Using credit cards to finance a flip is too risky for recommendation, but some investors have used this strategy. Consider using credit cards only in an emergency to cover the cost of last-minute repairs or renovations or to pay holding costs until you can sell the property.

After you purchase a property, you may be able to finance the repairs and renovations by refinancing to pull the equity out of the property.