Funding a Home Flip - Topouzis & Associates Funding a Home Flip - Topouzis & Associates

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June 24, 2019

Funding a Home Flip

Funding a Home Flip

One of the common sources of residential real estate investment—on the rise once again—is the home flip. Flipping is a popular source of entertainment on home and garden channels, where the goal of such television shows, while portraying some of the drama inherent in the activity, is also to convey the sense that those doing the flipping are heroes of sort. Unfortunately, this can lead some viewers to perceive house flipping to be easier than it actually is.

One of the main barriers to entry into house flipping is funding. According to a recent survey by Porch, which assessed various elements of house flipping by questioning 370 people who had flipped houses over the previous five years, the sources of funding for house flipping lean heavily toward coming out of the savings people have built up from their primary source of income, which, as one might expect, leaves many Millennials out of the running.

The breakdown was as follows: Those who used savings gleaned from their primary income: 41.6 percent of respondents. Those who managed to qualify for a bank loan: 30 percent of respondents. Those who were fortunate enough to be able to rely upon an inheritance or windfall: 8.6 percent. Those who borrowed the money from their families: 6.2 percent. Those who went through a private lender: 6.2 percent. Those who used personal savings from a secondary source of income: 5.9 percent. And those who were able to secure some other, unidentified source of funding came in at a mere 1.4 percent.

It’s important to know that Porch found that profits made on house flips are not rising as the trend itself ramps up. There are many added expenses, especially surprise expenses, that can result in a house flip not netting an investor quite as much as they may have hoped for.

Nonetheless, if you’re looking to buy that perfect home to flip, we here at Topouzis & Associates, P.C. offer not only the services that ensure the property’s title gets conveyed clear of defects, but Owner’s Policies of title insurance. Contact us if you want your property purchase in Cranston, Rhode Island; Springfield, Massachusetts; Miami, Florida; or any other town in any of those three states to go through without a hitch—both before and after closing.