How Do I Afford a Flip? Funding Your First Deal

 You’re ready to flip your first house. You’ve binge-watched all the flipping shows, run the numbers, and even started scouting properties. There’s just one small problem—you need money to actually buy and renovate a house.

Unless you’ve got stacks of cash lying around, you’re probably wondering: How do I afford a flip without draining my savings?

Let’s break down your best options.

1. Hard Money Loans – Fast Cash, But at a Cost

Hard money lenders specialize in funding flips. They’re less concerned with your credit score and more focused on the property’s potential. That means:

• Quick approval, usually in days, not months
• Loan amounts based on the After Repair Value (ARV)
• Short repayment terms (6-12 months)

The catch? High interest rates (8-15%) and fees. Hard money isn’t cheap, but if you flip fast, it can be a solid option.

Pro Tip: Hard money is best for investors who have a clear exit strategy. If you’re new, make sure you have your contractors lined up and a strong plan before taking this route.

2. Private Money – The Art of OPM (Other People’s Money)

Private money is borrowed from individuals instead of banks. Think family, friends, or other investors who want to put their money to work.

• More flexible terms than hard money
• Lower interest rates (if you negotiate well)
• Often no strict credit requirements

Private lenders care about trust and solid deals. If you can show them how they’ll get their money back with a profit, you’re in business.

Pro Tip: Start by networking—real estate meetups, investor groups, and even social media can connect you with potential lenders.

3. Partnerships – Team Up, Split the Profits

Got the hustle but not the cash? Find a partner who has the money but not the time or experience.

• You handle the deal-finding, project management, and resale.
• They provide funding and guidance.
• You split the profits.

This is one of the best ways to get your first flip under your belt without taking on all the financial risk alone.

Pro Tip: Always have a written agreement outlining who does what and how profits will be split.

4. HELOC or Home Equity Loan – Borrow Against What You Already Own

If you own a home with equity, you can use a Home Equity Line of Credit (HELOC) or a home equity loan to fund your flip.

• Lower interest rates than hard money
• Flexible borrowing options
• You only pay interest on what you use (HELOC)

The risk? Your home is on the line. If your flip flops, you still have to repay the loan.

Pro Tip: This works best if you have plenty of equity and a clear plan to repay the loan fast.

5. Seller Financing – When the Seller Becomes the Bank

In some cases, a motivated seller might be willing to finance the deal for you.

• Instead of getting a loan, you make payments directly to the seller.
• Terms are negotiable, with low or even no down payment.
• Works best for distressed properties or off-market deals.

Pro Tip: Not every seller will go for this, but if you find one who wants to sell fast and avoid traditional financing headaches, it’s a great option.

6. FHA 203(k) Loan – The Live-In Flip Strategy

An FHA 203(k) loan is a government-backed mortgage that includes renovation costs.

• Requires only 3.5% down
• You must live in the home for at least a year
• Works best for people who want to flip slowly or transition into investing

Pro Tip: This is a great strategy for new investors who don’t mind living in a work-in-progress.

7. Wholesaling – Flip a Contract, Not a House

If you don’t have money for a flip yet, wholesaling is a way to build capital.

• Find a distressed property
• Negotiate a great deal with the seller
• Assign the contract to an investor for a fee (usually $5,000-$20,000)

You never actually buy or renovate the house—you just connect the dots and get paid for it.

Pro Tip: Wholesaling is great for building cash reserves to fund future flips.

Which Option is Best for You?

It depends on your situation.

• Want a fast flip? Hard money or private money is your best bet.
• Have equity? Consider a HELOC or home equity loan.
• Willing to live in the property? FHA 203(k) might be your answer.
• Need to build capital first? Start with wholesaling.

At REAP, we don’t just teach flipping—we show you how to finance deals, avoid rookie mistakes, and flip with confidence.

Dad Joke Bonus:

Why don’t I ever play chess with my coworkers?
Because they take forever to make a move.