How to Make More Money Fix and Flipping Homes

make more money fix and flippingFix and flipping can offer a great primary income or extra money as a side job.  Check out this article if you want to know how much money you can make fix and flipping.  I have seven fix and flips now with another three under contract that I will buy in the next three weeks.  It has taken me many years to build up a fix and flip business that can handle this much inventory.  One of the reasons I am able to handle so many fix and flips is I use a lot of my money to buy and repair the properties.  Using my money with a mix of bank financing and private money also increases my returns and lets me make more money fix and flipping.  Here is another article with more information on how to finance fix and flips.  The easiest way to increase returns on fix and flips is to use more of your own money.

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Is it smart to use other people’s money to fix and flip

One of the great parts about investing in fix and flips and rental properties is the ability use other people’s money to finance properties.  I use a mix of bank financing, private money and my money to finance my fix and flips and rentals.

The more leverage you use to finance fix and flips, the more properties you can buy, but the more financing you use, the more expensive it is.  I use a bank to finance 75% of the purchase price of my fix and flips and none of the repairs.  I use private money or my own money to pay the down payment and repairs on a property.  I am able to finance the property at 5.25% right now with my bank and the private money at 6%.   This is very cheap money for fix and flipping, but I also have to use a lot of my own money with this set up.

Why don’t I finance a higher percentage of my fix and flips?

One option I have to finance a higher percentage of my fix and flips is hard money.  The problem with hard money is the interest rate is 12 to 18 percent  and you must pay 2 to 5 points in origination fees (I pay a 1.5 percent origination fee).  Hard money may let you finance the full purchase price and some repairs, but the increased cost with add up to thousands and thousands of dollars on each fix and flip.

Not only is the interest rate higher with hard money, but if I am financing more money on each flip, I am paying that higher percentage interest rate on a higher balance.

Partnering with an investor on fix and flips

For years I did fix and flips with my father and we split the profits.  The nice part was I did not have to put much of my money into the business.  The bad part was I had to split profits, and I did not have full decision-making ability.  There were many properties that we did not buy that I wanted to buy, but my father did not.

For more information on how to buy properties below market value, check out my book; How to Buy Real Estate Below Market Value, which is available as an 116 page E book on Amazon or as a PDF here.

A partner can be a great asset to a fix and flip business.  A partner can offer money and expertise.  However a partner will greatly decrease the profits and possibly cause problems when there are disagreements.  When I built up my business enough to take over the fix and flips I gained control of what was purchased and I got to keep all the profits.

How do you make more money on fix and flips?

This is an easy question to answer, but the answer is not easy to carry out; use more of your own money.  In order to use more of your own money, you have to save money and keep it in the business.  I like to think of it as a bankroll.  Poker players have to have a bankroll to enter tournaments and play cash games or they can’t make any money.  The best poker players have hundreds of thousands of dollars to pay for tournaments and cash games and the same goes for fix and flipping.  You are going to have to use your own money at some point if you want to make a lot of money.

By using your own money you can avoid using a partner, save a ton of money on financing costs and have full decision-making power.  With your own money, you can avoid using hard money and save 10% on the interest rate.  The more money you save, the more likely it is that a bank will help finance your fix and flips like my bank will.  The more money you save, the more fix and flips you can do at one time, the more money you can make and the more money you can save.  It is a fantastic cycle if you can get it started.

How do you save money to invest into fix and flips?

There are many ways to save money which are discussed on many blogs.  I will only talk about one way to save money in this article.  When you successfully fix and flip a house; keep the profits from the flip and invest them in the business.  Remember you will have to pay taxes on those profits so you can’t keep it all invested, but you can keep most if it.

Many people start to and flipping as a side job to make extra money.  When you make money on a flip; don’t spend that money, keep it in the business!  The more money you can put back into it, the more you will make on each deal.  It will become a snowball effect and soon you will have a sizable bankroll to fix and flip homes.

How much money can you save by using your own money on fix and flips?

Here is an example of how much I would make on a fix and flip versus someone who had to use hard money.

Financing cost on $100,000 purchase price and $25,000 in repairs with my financing and holding a property for six months;

Interest on $75,000 loan       $1,968

Origination fee                         $1,125

Total                                         $3,093

Financing cost on $100,000 purchase price and $25,000 in repairs with hard money holding the property for six months;

Interest on $125,000 loan     $9,375

Origination fee                         $5,000

Total                                          $14,375

I would save over $11,000 dollars by using more of my own money than someone who had to use hard money.  The downside is I must have $50,000 to invest into the property.  I can use private money to fund part of that $50,000 which I can use at 6% (many times private lenders will want much more than 6%).  6 percent interest on $50,000 for 6 months would be $1,500, a little cheaper than the $11,282 the hard money loan will cost you.

How to find private money for your fix and flips

The easiest way to start getting money cheaper than hard money is to use private money.  Private money is a loan from a person who you most likely know.  That individual wants a higher return than a CD or a safer return than the stock market.

Fix and flips, if done correctly by an experienced investor can be a very safe investment, backed by collateral in the form of real estate.  Don’t be afraid to ask your rich uncle or friend if they are interested in investing in your business.  It may be mutually beneficial to all parties involved.  You may have to do a few deals first to prove to them you know what you are doing and you won’t lose all of their money.


It is not easy to do, but using your own money to finance part of your fix and flips will make a huge difference in the profit on each property. Using your own money has many other advantages as well.  If you have your own money, banks will be more likely to finance you and it will be easier to find private money.  If you have your own money invested in a deal, it is much more likely that you will see it through to completion and not give up.  Many hard money lenders will not finance all of your purchase price and repairs, so may need your own money with them as well.  With your own money you can avoid partners, avoid giving up 50% of the profits and not have complete decision-making ability.  Having your own bankroll will allow you to buy multiple properties at the same time.  Overall, using your own money to fund part of the fix and flip business will make you a lot more money in the long run.

For more information on flipping houses, including how I average over $30,000 profit on each flip, check out my bestselling book Fix and Flip Your Way to Financial Freedom on Amazon. It is available as a paperback or eBook. 


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