Investor · Warwick, RI · Member since 2019 · 129 posts · 68 votes
Hey BP Fam this might be a dumb question. My co worker flips house and every time I pick her brain I fully don't understand the process behind house flipping esp the lending process. She basically broke it down like this . She has a private lender that's been working with her & husband for some time now . She told me just like this hire workers that do great work , have a timeline for the flip she said about 3 months is a good time another thing that I found interesting if they don't get it done in that timeframe the lender charges them an extra 1500 each month until home is sold to get money back. So my question is for flipping a home do you get the desire amount you need for the entire flip using lenders money or do investors throw some of their own money into the deal? I'm just lost on that part she really never goes into much more detail after that. I'm just curious on how it works.
There are many ways to structure a deal. If your co-worker is open to discussing the issue you should write down your questions and then ask to set up a time when you can have an uninterrupted conversation.
From my perspective I like as little debt as possible. I focus on distressed properties and then complete the rehab to quickly raise the properties value. Then rent or sell. I have bought properties by signing a lease option where I took control over the property, made the needed repairs, and then got it financed to cover my cost and what I owed. I've done some with owner financing, I have taken personal loans, and I have paid cash for the property. The method all depends on your personal situation and the needs of the seller.
On a side note I have never paid an additional fee for a loan because the property was not done. Of course I rarely use loans and have never used hard money. I have on the other hand penalized a contractor a certain amount a day or week for them not being done by the agreed date.