Buying & Flipping – Houses & Websites

By: Matt Sheuerman
nturing off and finding your first fixer-upper, it's important to make sure your finances are in order. Financial preparation is critical at three junctures: acquiring the property, rehabbing the property, and holding the property. Purchasing a property doesn't always require a big pile of money - there are many loan programs out there that offer low, or even no, money down. If you are well-prepared, rehabbing and holding a property can be extremely inexpensive. The goal of financial preparation is to use as little of your own money as possible - thus reducing your risk.

Becoming a candidate for a favorable loan program requires having an good-to-excellent credit score. Building a good credit score can take weeks - even months to achieve. Your first move is to find out what your score is currently at: your loan officer should be able to help you with this. There are even free websites out there that will provide you your credit score free of charge. Furthermore, there are even more websites that provide you with tips on how to increase your credit score - though be forewarned: avoid sites that try to charge you money for increasing your credit score. Also, ask your loan officer what immediate actions you should take to boost your score.

Funding the actual repairs, upgrades, and beautifications to the property will likely require thousands of dollars. Since your goal is to use as little of your own money as possible, look into obtaining a home improvement credit card. Some of the big-name stores such as Lowe's or Home Depot offer credit card application and acceptance right there on the spot. While these cards may carry a higher interest rate then your mainstream MasterCard or Visa, there are usually interest deals with home improvement cards such as "no interest for 6 months on purchases of $300 or more" - which will actually end up saving you money.

The last aspect

of preparing yourself financially is to prepare for holding expenses. These basically include mortgage payments and utility bills. You will be depending mostly on your credit score to reduce your mortgage interest and ultimately your monthly mortgage payments. Reducing utility bills is something you have a bit more control over. After purchasing the property, make sure the interior temperature is controlled. Also, check the windows and doors for any openings - it might help to bring some caulk with you - for some quick spot-fixes if necessary.

The more you prepare, the less risk you'll assume. Don't forget to pay off loans or credit cards once you have the funds from the sale of a property. Some beginning investors lower their financial risk by taking on a partner. Regardless of how you prepare, remember the golden rule: use as little of your own money as possible.

For more free articles and previews to The Field Guide to Flipping Homes, visit the official site at www.homeflippingfieldguide.com!