Financing a Build

In your business plan for flipping a house you have to make the decision if you are going to finance a build or if able pay cash for the entire build. In making this decision you have to weigh your trade-offs between using your own cash and financing. With financing it can yield more profit with little to no money down. If a buyer has $100,000 and uses that to renovate one home and flips the home for $120,000 the buyer has just made $20,000 and had no borrowing cost to be paid. Although if the buyer uses $20,000 of that $100,000 as leverage instead of paying cash for one project, they use that for savings to cover the repairs and down payment of multiple homes purchased by financing. With 5 homes bought with financing and spending about $6,000 per project equaling $30,000 in repairs. Then the buyer is able to flip each home for $120,000 the buyer has just made about $600,000 that is before having to pay back the financing fees. In financing those 5 properties and being able to get them built and sold in a timely manor will have banks and lenders ready to invest money in you if you decide to keep financing flips.