My hubby and I are considering to house-flip. We have home construction experiences. We basically wanted to start small and low price. We're wondering how does it work with bank give you a loan, how much down, and so forth. What type of loan is good to start with?
It's harder to get a loan on a house you plan to flip than one you plan to rent out. If you plant to rent it, the mortgage company will often count about 75% of the potential rental income in considering the loan. The easiest way to get the loan would be if you purchased a property that was already a rental property, thus making it easier to determine a reasonable amount of income to be generated. For this type of property it wouldn't be too hard to get financing. You'd need at least 20% down, and would probably pay about 1% higher than the typical rate on the mortgage, due to the added risk. For a home you plan to flip, you should probably anticipate putting 25-30% down in order to get the loan. You'll need to prove that you can make both your current mortgage and expense payments as well as the payment on the investment property, pretty much indefinitely. Since you plan to flip it, I'm assuming that you're buying a home that needs repairs. The lender will probably also require that you have a decent amount of liquid savings, beyond the down payment, to cover repairs. Of course your credit should be in at least the mid-700's, and the interest rate will probably be closer to 2% or more than the typical mortgage rate. The first loan will be the hardest to get, but once you have successfully flipped a few properties and have a decent amount of liquidity, getting the loans and better rates should be a bit easier.
Oh my Gosh, that's too funny I third the shed door! Maybe he is practicing for flipping the house by learning to build a shed first!
