Real estate investments are quite expensive. Not only will you need the money to buy the house you will be flipping but you will also need money for the renovations, repairs and remodeling that need to be made along the way. Unfortunately, the real estate business is a tricky business and there aren't very many traditional lenders that are willing to go full out in support of your real estate investment business venture.
This means you are going to have to either fund a good portion of the expenses yourself or you are going to have to find some other means of financing your house flip. First things first, the less you pay in interest the more money you bring home. You do not want to max out your credit cards in search of profits from a house flip if it can be avoided. Merchant accounts aren't any better but they can help you to keep better track of exactly the amount of money you are spending on the flip and some will even give you 90 days same as cash (and this is a very good way of doing things if you can complete the process within 90 days).
I should tell you that these aren't strategies that are endorsed by me but they are definitely possibilities when it comes to finding money to fund your house flip. The best-case scenario is that you would have the money to play with and assume no real risk in the house flipping process but very few people trying to get started in real estate investing have that luxury.
That being said, one way that is probably to risky for most (especially if you are nearing retirement age) is to cash in your retirement funds. This is not one of the best methods for many reasons not the least of which is the fact that there are pretty big penalties for doing it like this and you are also risking your retirement security. It is one of your options however if you are in a tight spot to find money for your flip. If your flip is successful it's water under the bridge, the money can be returned or reinvested and the profit from your flip can then help fund subsequent flips or other types of real estate investments.
If you discuss things carefully with your family and decide that you are all willing to take the risk you can also risk your home by taking out a second mortgage for the funds. Again this is not the preferred method because the assumed risk is great for the security of your family. It is very important that everyone involved be aware that flipping houses is a risky investment. Not only is it risky because you aren't experienced but the real estate market is fickle. Your property could just sit on the market for several months which would incure costly carrying costs before it actually sells.
Forming a partnership is one of the ways to share in the risks and help lighten the load when it comes to flipping properties. Please keep in mind that this is a very stressful business venture and should be treated as a business venture. For this reason a volatile or fledgling friendship may not be the best risk for a venture such as this. If you do choose a partnership you need to carefully discuss the type of financial and labor investment that is expected of each partner and the share of profit that each partner expects to receive as well. You should also take into consideration whether you are willing to risk your friendship for the sake of profits or would you prefer to go with a partnership that isn't one of your close friends (many real estate investment groups have investors that are willing to help with the financial side and assume most of the risk for a bigger share of the profits).
Banks will usually fund a part of the property costs if you can come up with a sizable down payment and show them a well thought out business plan. However, don't rely on banks if you don't have good credit, lack a good business plan, or do not have a good size down payment to invest in the venture.
Please make sure you check out my real estate blog at http://cashmoneyhousebuyerblog.com
