How does one get loan for renovating a property for flip

[Jack Srimani]

HiHi,
I just checked out a property. This is a bank REO SFH. I am pre approved for the loan to buy this house. However after the purchase it will take around 20k-30k to make renovation in order to sell this house at a profit. I would like to know for those who are flipping houses how does one get the money for renovation. Also I got preapproved for rental investment property. However, for flipping purpose what type of loan does one look for. Thanks.
Regards.

[J Scott]

Jack -

You probably want to speak with a small, local bank that is accustomed to working with investors. Most lenders won't lend against properties that require a lot of repairs, so trying to get a conventional loan or even a typical investor loan won't work.

Also, most lenders will require you to come to the table with at least some of your own money (20% of the purchase and rehab costs is the minimum I tend to see these days), so you'll need to come up with the renovation money somehow.

Do you have friends/family you can borrow from? Do you know other investors you can partner with? Do you have equity in other real estate you can borrow against?

If none of these things, have you considered trying to wholesale the deal? You'll make less profit, but it's still better than no profit!