Wholesale deals close fast, often within a few weeks, on houses that may need work an ordinary lender will not finance. How you will pay decides which deals you can take, so settle it before you offer.
Cash
The simplest and the fastest. There is no appraisal or loan approval to wait for, and a wholesaler with several offers often favors the one sure to close. Cash can also be the first step: buy, renovate, then refinance (below).
Hard money and private lenders
Short-term loans secured by the property, lent mostly on the deal rather than on your income. Many cover part of the purchase and part of the repairs, paid out in stages as the work is done. They cost more than a mortgage:
- interest, usually well above a mortgage's,
- points, a share of the loan paid up front,
- and fees for the appraisal, the checks on the work, and the closing.
Terms vary from lender to lender. Get approved before you offer, ask how quickly they can close and whether they lend on an assigned contract, and count their points and interest in your costs: in the calculator, raise the flip's closing and holding share.
Ordinary mortgages
Slower, with an appraisal and the lender's own conditions on the house. A property that needs a roof or a kitchen may not qualify until it is fixed, a close a few weeks out can be tight, and some lenders will not lend on an assigned contract (see assignment or double close). If you plan to use one, say so before you offer.
Proof of funds
A wholesaler wants to know you can close. Proof of funds is a recent bank or brokerage statement, or a lender's letter, showing you have the money for your offer. Here you can keep one on your profile, in Settings under Buying, and it goes with each new offer for 90 days from when you upload it; or attach one to a single offer. It reaches the wholesaler exactly as you upload it, so black out anything you do not want them to see, such as account numbers.
Buy, fix, rent, refinance
Some investors buy with cash or a short-term loan, renovate, rent the house out, then refinance into a long-term loan on the new value and take much of their cash back out to use again. It depends on the appraisal, on what a lender will lend on a rental, and often on having owned the house for some months first. The rental numbers guide works through one, and the calculator's Rental tab shows the loan and the refinance.
This guide is general education, not legal or financial advice.