Los Angeles has plenty of charming fixer-uppers just waiting for the right person to turn them into spectacular new listings. However, you might find it challenging to get past a crucial factor—funding.
Without the funds for a renovation, you will not pull off a house flip. There are workarounds to this, though—you can get several types of fix and flip loans in Los Angeles. Here are five tried and tested ways you can bankroll your house flip.
Look at a Hard Money Loan
Fix and flip financing takes your specific needs and builds a payment plan that suits you personally. These loans can be structured correctly to help you pull off a total home renovation. What’s more, a hard loan is more accessible for debtors with low credit scores.
Banks pay more attention to the potential value of the house and not your credit history. If you get a mortgage broker who knows where to go, you can get your loan approved in 15 days.
Consider a Permanent Loan
People look for fix and flip loans because your usual mortgage scheme is not structured to work with house flipping. Some permanent bank loans, though, can be a boon to house flippers.
For instance, an FHA 203(k) loan allows you to renovate your home and resell it. You can also explore Fannie Mae’s Homestyle Loan. This one can enable you to purchase single-unit properties specifically for investment.
Consider a HELOC
You might get intimidated with a first time fix and flip loans for several reasons. If you have just started, you might want to take out a home equity line of credit, or a HELOC. This type of credit line allows you to borrow up to the equity of your current home. You can use that to finance renovations or buy a new house, which you can flip.
You can take out a HELOC without needing to clear your existing mortgage. Keep in mind that you can only get a HELOC for your primary home. That said, it is an excellent way to get your feet wet in the flipping industry, especially if you have a large amount of equity on your primary residence.
Open an Investment Line of Credit
For a more seasoned house flipper, opening an investment credit line is a great way to channel resources into your efforts. Investment lines of credit are structured similarly to HELOCs, and they allow you quick access to a higher amount of credit. With this type of credit line, you can start an entire portfolio of properties.
Consider Cash-Out Refinancing
Like opening an investment line of credit, cash-out refinancing is a good option for someone who has flipped a couple of houses in the past. It involves refinancing an existing home to buy a new one. However, you must pay off your current mortgage before applying for a refinance.
The difference between your old and new loans will be the “cash-out” money you can use for a flip. This method works well if you have multiple properties, and it allows you to quickly finance a current venture without needing to open new lines of credit.
Fix and Flip Loans with Shannon Christenot
Fix and flip loans allow you to build an investment property from the ground up. Whether you are new to the trade or have a few sales under your belt, you will surely find a type of loan that helps you make the process more efficient.
Learn more about fix and flip loans in Los Angeles through Shannon Christenot. I help clients fund their projects and turn diamonds in the rough into stunning assets. Schedule a consultation today and call (818) 601-2231 for more details.