Loans

[Gisele Marcelin]

Hey everyone,

I'm brainstorming the options for my first flip and I need your help. I'm having difficulties finding a reasonable loan. Is it suitable to use FHA loan rather than a HARD MONEY LOAN to avoid a large down payment? Is there a great Hard money lender that you recommend that covers the area of Atlanta? Thank you in advance.

[Chris Mason]

Hi @Gisele Marcelin,

Yes, you can use low down payment Agency loans to finance flips IF AND ONLY IF it's a live-in flip. So eight months later when you apply for your next mortgage, things like paystubs, tax returns, bank statements, etc, need to substantiate your physical residence in the property in question. 

Property needs to be a complete home in financeable condition. 

That means (for example) no kitchen = no deal. 

But if it has a nasty 60 year old gross kitchen with cigarette stains in the paint, but all the old/gross things in the kitchen technically work, and you plan to upgrade while living there to a gorgeous modern kitchen? We've got a deal, because that gross kitchen still counts as a kitchen.

At the end of the day when all analysis is done, 5% down Fannie is the best model match financing for Nomadic REI SFR flippers or buy-and-holders. 3.5% down FHA is problematic for various reasons.