Fix and Flipping in Southeast FL - Need Advice on Financing

[James Mansfield]

Hello, 

Two partners and I are looking to start a fix and flip strategy in Southeast FL (in between Ft. Lauderdale and Vero Beach).  We have done a lot of research and have developed a fix and flip system, but we still have some questions about our best options for financing.  We are not yet in a position to finance property acquisitions with cash and know that it is typically very difficult to acquire conventional lending as a fix and flip investor (especially since our target properties will likely not be move-in ready (e.g. REOs, foreclosures)).  

From what we can tell, our potential options are (i) portfolio lenders (small banks with less strict lending requirements), (ii) private debt financing, (iii) private equity financing, and (iv) hard money loans.  Of these four, are there any that we should prefer over the others or any that we should avoid/use as a last resort?  Hard money loans seem to have a "last resort" reputation, but I have spoken with investors who have had success taking advantage of hard money financing.  

Thanks!

[Nate Sanow]

For sure hard money when getting started. Try to get the rehab funds built in on a decent draw schedule. You are probably considering options besides hard money to save on interest rate, but if you are good at getting rehab done quickly the rate doesn’t matter as much on a flip compared to a long term hold. 12% sounds like a lot yes, but the added difference might be only a few thousand bucks to the total budget and it gives you so much speed and flexibility, which is what matters.