Many successful people who want to invest in real estate and want to flip houses do so because they want to put their own money to work.
That’s understandable. If you have $200,000 you’re willing to invest and it’s sitting in the bank, it’s just collecting dust.
But should you risk your own money to finance your house flipping project or should you use short-term, asset-based financing (at a higher interest rate)?
When you’re starting out as an investor, it’s much smarter to use other people’s money instead of your own. Frankly, it’s better to get a hard money loan.
Why? Why would I want to pay 12-14 or even 18% interest on money when I could use my own or use my relatives’ money?
If for no other reason, you get FREE advice on your deal.
To get a hard money loan, you’ve got to demonstrate to expert whether or not you actually have a good deal! Are you acquiring for the right price? Did you get the ARV correct? Are you budgeting correctly?
Chances are, if you can qualify for a hard money loan, then you’ve planned out a fix and flip properly.
You’ll also highly mitigate risk on your own money (should things go wrong) and earn a much higher ROI than if you fund the entire project yourself.