Financing Flip and Rent

[Ross Bernard]

I've been digesting this site for about two years now and have recently become interested in flipping. I would like to purchase a property, rehab it, and then rent it. My question: From a lender's standpoint, what exactly constitutes a "flip"? My understanding is that it is not possible to get a conventional mortgage from a bank to finance a flip. But what exactly is a flip? Is it defined by a period of holding time? By the house being deemed uninhabitable? Can I get a conventional mortgage if I finance the repairs myself?

My long term goal is to have a portfolio of rentals, which brings me to another set of questions: Do any of you employ both flipping and buy-and-hold strategies? Do you think I might be better off honing my abilities in one strategy or the other instead of trying to become successful at both?

[Sebastian Gast]

I have seen a lot that conventional banks will require that you hold a property for 1 year before re-selling, regardless if you finance the repairs yourself.  If you want to be in and out as fast as possible (what most people call a flip), hard money lenders may be the only ones that will give you a loan.  An exception to this is if you're flipping a Fannie Mae property (like that one I'm doing right now) there is a 90 day hold rule if you plan to re-sell for 20% more of what you paid for the property regardless of the type of loan.

As to your second question, being good at flipping may help you make buy and holds rent ready faster, cheaper, and more efficiently.  I would really try to strengthen both areas.