Newbie figuring out best way to finance a flip

[Thomas Reiter]

Hi all, I am just getting my feet wet in the world of real estate investing. I want to start out doing fix and flips locally in my city (Kansas City, MO), and I'm exploring my options for financing my first project. After some research, it seems like my best option is going to be an ARM. I would like to do conventional, but unfortunately, I will not have the cash in hand for a 20% down payment. My second option seems to be refinancing my current home which is currently valued at 300k, but owe 250k, and use the difference to fund the project. My one concern about this option, however, is that I do have a successful flip, and I put the amount back into my current mortgage, would I be able to refinance again to bring my mortgage payments back down to the original? My third option, and really last resort, is a HML. This option worries me because of the interest rates, and the short term of the loan. I still have bills to pay, and a family to feed, so this option seems a bit too risky for me.

So, between;

-ARM

-Refinance current home

-HML

Any input or opinions would be helpful, or any aspects I may have missed, or might be ignorant to at this point. 

Thanks! 

[Dan Beaulieu]

@Thomas Reiter there is no way that a hard money loan is riskier than taking equity out of your primary residence. I’d definitely leave that alone!

A good hard money lender will help you succeed. They can look closely at the deal with a trained set of eyes, offer extensions if you haven’t sold the property yet, etc. yes the interest is higher, but it’s interest ONLY so your payments may actually not be much more. It’s a useful tool for buying good deals quickly and easily, and often getting up to 100% of purchase price and rehab costs funded.

As both a lender and an investor, I’ve financed my deals every way you can think of, and HM is still and always a great option on the right deal.