The number of rehab investors who utilize house flipping loans has been on the rise over the last decade. In fact, a recent report out of ATTOM Data Solutions found that a full third of house flippers used financing to flip properties in the first quarter of 2017. That was a significant increase from the previous quarter (31.9%) and a jump from the same quarter one year prior (29.5%). The percentage of house flippers using some form of financing was the highest it has been since the third quarter of 2008 when 37.6% of house flips were purchased with financing.
This house flipping news isn’t surprising, because there are numerous benefits of completing house flips with financing. A house flipping loan allows investors to:
- Invest in multiple properties at once.
If all of your assets are tied up in one flip, that closes other doors. Especially with home prices as high as they are, it makes sense to take out a fix and flip loan to increase your available capital and work on multiple projects at the same time.
- Mitigate risks.
If your entire life savings go into a fix and flip project, you’re asking for a disaster. It never makes sense to put all of your eggs in one basket. Fill part of the basket with someone else’s eggs, and you’ll be in much better shape if things go wrong with your flip.
- Invest in bigger projects.
As previously mentioned, home prices are incredibly high at the moment. Many of the most successful investors in the house flipping industry are turning their focus to high-end properties and apartment complexes, both of which offer exceptional ROI potential. But making those investments requires a great deal of capital up front. This is where a private money loan can completely change the game.
- Ensure cash flow.
Nothing ruins a fix and flip schedule faster than a lack of cash flow. A house flipping loan can provide needed funding for renovations, helping investors stay on top of unexpected expenses, keeping their projects moving forward.
To learn about the fix and flip loans offered by ZINC Financial, give our office a call today at 559.326.2509.