Fix and flip loans make it possible for anyone to become a real estate business owner. Even entrepreneurs with bad credit can use these real estate lending solutions, despite their poor personal financial circumstances. If you are looking to start a house flipping business, you should consider finding flipping loans to cover startup costs. Find out how to find the best fix and flip loans with bad credit below. That way, you can get approved and start your own business to give yourself a shot at a whole new level of financial independence.
Ask Family & Friends
The very first place you should look for business financing is among your friends and family. Friends and family will be much more willing to provide flip loans to you despite your poor credit rating. They know who you are beyond an arbitrary number rating. Also, friends and family are more emotionally invested in your success. Therefore, they are more likely to take on the risk associated with providing you fiscal sponsorship. Most business owners get startup funding by using their personal relationships. If you want to get approved for flip loans with bad credit, you should first look for them through unofficial lenders like your family and friends.
Have Some Capital On Hand
If you have some startup investment capital on hand, your odds at getting approved for flip loans are much higher. Try to have at least 10% of your flipping business startup costs in a business bank account. That way, you are limiting the amount of risk your fix and flip loan servicer will be required to take on. There are many more real estate flipping lenders that will only cover a maximum of 90% of your first property’s purchase price. Very few lenders offer 100% financing for potential flip properties. By having at least 10% of the purchase price ready to go, you will find that it is much easier to find flipping loans for your new real estate investment venture.
Create A Business Plan
If you want to get approved for the best fix and flip lending solutions, create a business plan. Creating a flipping real estate business plan proves to lenders that you are serious about your potential business. It also acts as a roadmap for lenders to understand how you plan to pay back your outstanding business debts. This will help to curtail the unfavorable consequences of your poor credit score. Use your flipping business plan to highlight the financial details surrounding your potential flips. Include information about the operational structure of your future real estate business. Doing so will make it much easier to find a fix and flip lender willing to offer you startup financing.
Give Your Credit A Boost
Before you start applying for fix and flip loans, try to boost your credit score by a couple points. If you have a minimum credit score of at least 600, it will be much easier to find fix and flip lending services to take advantage of. Most rehab lenders offering private loans have a minimum credit score requirement of just 600. That is entirely do-able for even someone with the worst credit. Take the time to improve your credit score. Make large payments to outstanding debts and avoid opening any new accounts. Then, once you have hit the desired 600 credit rating, you will have a much easier time finding fix and flip lenders that will actually approve your application.
Find A Partner
Try forming a business partnership with someone who has a great credit score. When you have a business partner in better financial standing, it becomes much easier to find fix and flip financing. Partnerships are one of the best ways to invest in real estate. It allows for both business partners to fill in what the other is lacking. Just be sure to be careful when choosing a business partner for real estate investments. Make sure that your potential business partners bring skills to the table that you are lacking. Ensure that they have a complimentary work ethic and style. By carefully choosing a real estate investment partner, you will find it much easier to find and get approved for fix and flip loans.
Getting approved for flip loans is no simple task for any entrepreneur. It is even harder for an entrepreneur with bad credit to get approved for an SBA microloan or similar. Use the financial tips and tricks above to make it easier for yourself to find the best flip loans, even with a low credit score. First, start by asking you friends and family for business loans. By taking the time to save part of real estate business startup costs on your own, improve your credit score and create a business plan, you will greatly improve your odds at getting approved for a fix and flip loan. If all else fails, you can try to find a business partner to create a joint real estate investment venture that makes it easier to find real estate financing. Then, you can make your dream of starting a flipping business come true.