Whether you are getting into fix and flip real estate to get a primary residence or are doing it for the investment potential, you will need funding. These properties will need to have the costs of the real estate, as well as the renovations, factored into the financing amount and you have several options for funding.

Hard Money Loans

These loans have a term of one to three years, are secured by real estate and are used to buy and renovate properties. Hard money loans are good for experienced investors with more than one current project, new investors working with a licensed contractor and those competing with cash buyers.

Cash-Out Refinance Loans

Refinancing a loan on real estate you already own with a cash-out option lets you pay off the existing mortgage and take out a new loan on that asset and use the equity to buy a second property. These loans are long-term lasting between fifteen and thirty years and are approved in as little as thirty days. This is a good option for investors who own at least thirty percent of the equity in an existing property.

Home Equity Lines of Credit

A home equity line of credit is taken out on the owner-occupied real estate and paid back according to what you use, like a credit card. You can use these funds to finance a fix and flip project and the line of credit does not require refinancing your home.

Investment Property Lines of Credit

Like a home equity line of credit, an investment property line of credit is taken out of the equity you have in an existing property and paid back according to what you use. The main difference is that this credit line can only be taken out on the non-owner-occupied real estate.

Bridge Loans

Bridge loans are designed to cover the gap between the sale of one property and the purchase of another. These are generally short-term loans paid back by a real estate sale and carry a higher rate than other financing options.

Permanent Bank Loan

This type of loan has terms between fifteen and thirty years and can be used for both owner-occupied and investment property purchases. Because the term is longer, this is ideal for buy-and-hold investors in either owner-occupied or single residence investment real estate.

Fix and flip properties can be a good way to invest in real estate, once you find the right loan option for your needs. Many people will take out longer-term loans on these properties and use them as a primary residence until selling for a bigger and better place. Experienced investors or those looking for investment properties only benefit from sort-term financing solutions.