How To Flip Houses with Bad Credit

Photo by Curtis Adams from Pexels

If you have decided to invest in the flipping business in the real estate industry, you will notice various significant things. Firstly, with the complexity brought about by mortgages, it may be challenging for you to acquire a home with bad credit. Secondly, it would seem impossible to start a flipping business with a low credit score. Thirdly, it may be difficult to obtain capital through conventional means when you have bad credit. However, if you understand the industry properly, you will find several other financing options, especially for a new investor. You only need to network with people who can refer you to money lenders to help you finance your business. For this case, consider the following financing options to assist you in the flipping business when you have bad credit;

Look for Hard Money Lenders

These lenders concentrate on real estate since they are aware of the returns. As much as their loans are short-term, they are flexible in giving large sums of money needed for property purchase. Depending on the amount of money they have given out, the lenders give their clients a period of six months to two years to pay back the loans. Moreover, compared to banks and famous mortgages, their guidelines are not strict. However, just like any other business, the lenders still have to make their profits. According to their terms, they normally manage to obtain their profits within a short period. It is not the case with mortgages, which take a long time. In this case, hard money loan interest rates are normally between 8% to 15%, depending on which lender you use. Also, when giving out the loans, they will request you to finance at least 30% of that particular investment.

Try Private Lenders

Private lenders are also a common option when it comes to financing flips with bad credit. They operate just like normal banks but have fewer regulations. Through investments, private lenders can make a lot of money. When it comes to loaning individuals, they set their own rules since they do not operate under any financial institutions or, rather, government agencies. In that case, their approval process is fast, and due to the high risks they undertake, their fees are quite high. If you have been in the real estate industry for quite some time, you will understand the flipping process needs to happen quickly, especially the purchasing part. You will need to be the first to buy that property you need to invest in before another individual does. Therefore, you will need to look for a lender who is willing to give you money to finance your business in a short period, just like what private money lenders do.

Go for Home Equity Loans

It is easy to purchase a new property when you have saved equity in other properties to invest in the flipping business. In this case, you can receive loans based on what you have been able to pay on your mortgage.

Try Wholesaling Houses

Wholesaling in the real estate industry will involve selling a property to another buyer by getting into a contract with that particular buyer. In this case, the money made by the wholesalers will be based on an agreed percentage after the property has been sold. However, the properties to be sold wholesale will not find you where you are. Therefore, as an investor, you will have to understand the market from different angles, connect with buyers, and negotiate know-how contracts. This way, you will be able to make good profits through the transactions you will make. Once you have succeeded, you will manage to finance rehab properties with ease.

Be Sure to Find A Partner in The Flipping Business

If you are new to the flipping business, you will come across several other investors who have been in the business for quite some time. Please partner with these individuals, especially when you have bad credit. The experts will manage to provide funding for the investment. They will share the experience they have in business, both good and bad. Moreover, they will teach you various ways of finding the properties to flip. Partnerships are better compared to other financing options such as private money lenders. However, before you form a partnership with another individual, it would be better to sign it on paper to show you entered into a contract. This way, you will be sure about your profits and the costs incurred from the process.


Flipping of properties has proven to be a lucrative business for such a long period. However, you may be wondering whether venturing into business is simple, especially when you have bad credit. In this case, the majority of the investors fear starting this type of business due to financing. The good news is, you can still begin your career even with bad credits. You only need to consider the financing options mentioned above.

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