Starting a new business is tough. There are countless decisions to be made before you ever meet your first client or make your first sale.
What do you want to do? Should you use your own money or take out a loan? Who can help you?
Despite the difficulty, more than 600,000 new small businesses open every year. Those small businesses employ almost half of America’s workforce and are major players in the economy.
You’ve already made your first two big decisions. First, you decided to join those 600,000 small businesses. Second, you decided that your business is flipping real estate.
That means that what you want to do is make money from buying property, renovating it, and reselling it. That’s a booming business, so it’s safe to say your first and second decisions are good ones.
Now that you know what you want to do, you’re ready to answer the other questions. Where will you find start-up money, and who can help you? The first piece of help comes from this article.
Here are three ways you can successfully finance your own real estate flipping business.
1. Get A Fix And Flip Loan
Do you have savings to use to start a real estate flipping business? If you don’t have enough, then you might want to consider taking out a loan. Even if you have savings, you can still borrow money and use your savings as a backup for extra expenses in running this type of business.
If you’re ready to get started right away, a fix and flip loan is your solution. The loan allows you to jump right in and start your new business by covering the cost of buying and renovating your first flip.
Here’s how the process works. You apply for a loan, and the company reviews it. If they approve you, you get the funds to buy and remodel your first property.
When the remodel is done, you sell the property and use some of the profit to repay the loan. You’re then free to use the rest of the profit to continue buying flips or for whatever else you’d like.
If you’re ready to start your new business journey, apply for a fix and flip loan from a professional lending service today. But you need to make sure that you review and compare the interest rates, terms, and fees that may apply when dealing with a lending company or bank. In this way, you’ll avoid facing major financial problems associated with these things.
2. Find Investors That Believe In Your Business
Finding investors takes a bit more time than finding a loan. The trick is to get good at networking. You need to make contacts who really like you and think you know what you’re doing.
In the real estate industry, these contacts are everywhere. Attorneys, lenders, contractors, inspectors, and the list goes on. It takes a lot of different people to keep the business going.
Anytime you meet these people, strive to make a good impression. Have a genuine conversation, ask questions, invite them out to lunch, be yourself, and be friendly. Before long, you’ll have a group of professional contacts.
Once you have those contacts, it’s your job to make them believe in your real estate business. Tell them about your successes in property flipping and what it is that makes you different. Explain your plans for the future, and how good the market for house flipping is.
Make them understand why you’re doing this, and that you’re good at it. If they see you growing and succeeding, they may want to invest with you. If not them, then perhaps someone they recommend you to will want to join you.
Finding investors is about using your network to help sell your business, so work hard at building that network. You can deal with cash buying companies, like The Local House Buyers and other real estate investors to help with your real estate flipping business. For instance, you can seek their expert advice on selling your inherited property for quick cash to fund your real estate flipping business. You can refer sellers or buyers to them for an incentive or referral fee too.
3. Save Up On Your Own
How do you want to use your savings to finance a real estate flipping business? You might want to consider this option to avoid borrowing money or taking out a loan, which could result in high-interest rates. At least, when you use your savings, you don’t owe anybody anything and the profits you’ll generate will be solely all yours.
Saving up on your own takes time, but it can be a good move if you’re still in the planning stage or if you’re looking to expand in the future. Here are a few tips to help you save money to put toward your business.
- Set aside a percentage of every payment you get, even if it’s a small one.
- Keep records of every purchase, so you know exactly where your money is going and where you need to cut back.
- Eliminate unnecessary bills, and try to bundle what you need to keep.
- Practice mindful purchasing. When you go to buy something, ask yourself if that item is more important than putting money toward your goals.
The best way to save money is to be aware of where it’s going. When you see how often you spend it on unimportant things, you can begin to make serious changes.
Whether you choose to practice one of these financing methods, or all three, more success is sure to follow. So get started now, and watch your real estate business grow.