Lenders for Flips in the Chicago land area

[Josh Salinas]

Hi everyone, 

I'm looking to flip a SFH in the Chicago land area. Does anyone have any good recommendations for lenders who deal with loans that include purchase price and rehab? Thanks!

[Scott Trench]

In addition to the post here, you might check out our Lender Match Program from @Joseph Coleman. Just fill out that form, and our team will poke around and try to help connect you with lenders who can help! 

[Scott Trench]

Please note that this is in beta - so any feedback while we work on launching the pilot is valuable! 

[Andrew Garcia]

Hi @Josh Salinas, I can refer you to a lender that can finance up to 90% of the purchase + rehab depending on a variety of factors.

They can also do the back-end DSCR or conventional refinance if you plan on keeping it as a BRRRR.

Hope this helps! Let me know if I can be of any assistance.

[Josh Salinas]

Thanks @Scott Trench! I'll give it a try. 

[Jonathan Klemm]

Hey @Josh Salinas - I have several great referrals for fix and flip loans in Chicago.  Most hard money lenders will loan on the purchase price and rehab.

Definitely reach out and I can provide their contact information.

[Mike Klarman]

The BRRRR market has become pricey for the new investor. Used to get a 100k deal done with 25k now you need 35k. The float money needed, including the cost of debt while you rehab, is damn near 35k - 40k. Then you better hope you can unload quick or else that float number will rise. The banks are trying to price out new investors unless they have real money. The people that scrounge just to get the exact number needed to close are being excluded. Too Risky. If a recession hits in the next 6 - 12 months then all those loans that are based on those inflated ARVs start getting into the danger zone. Inventory sits, carrying costs increase, sales prices have to be lowered.

[Josh Salinas]

Quote from @Mike Klarman:

The BRRRR market has become pricey for the new investor. Used to get a 100k deal done with 25k now you need 35k. The float money needed, including the cost of debt while you rehab, is damn near 35k - 40k. Then you better hope you can unload quick or else that float number will rise. The banks are trying to price out new investors unless they have real money. The people that scrounge just to get the exact number needed to close are being excluded. Too Risky. If a recession hits in the next 6 - 12 months then all those loans that are based on those inflated ARVs start getting into the danger zone. Inventory sits, carrying costs increase, sales prices have to be lowered.

Thanks Mike I appreciate the insight. I would love to give BRRRR a shot but I'm just trying to do a flip for now since this would be my first rehab. As for money I have 40k in reserves that I don't really want to touch. I was planning on getting a HELOC on my house which I've only had for a year and a half but since the markets crazy right now I already have over 120k in equity. I think conservatively I should be able to get 40k, probably more and I would use that as the down payment and funds towards the hard money loan. Would you consider that too risky of a plan considering I'd be using one loan to pay another or is that something worth trying?

[Mike Klarman]

No, I don't.  The first bullet you fire is always the hardest and scariest.  You're doing the right thing bu unloading as quick as you can.

I've saved up 100k that I plan to invest in real estate.  My plan is to flip and build capital, then when I can afford to buy something for cash in the neighborhood of 125k -150k and put some money into it (be all in at 200k cap) to improve the value into the mid 200s then get a renter in there and the rent is all pure cashflow, no debt.  Now I'm back down to my 100k and start again until I can do the same exact thing, buy for cash - fix with my money and then get a renter providing pure cashflow.  And the plan is to keep repeating that process.  Once you own 4 - 6 properties free and clear you are talking about 6k - 8k cashflow per month plus you own a million worth in real estate with 750k in equity you can take at anytime.

Get the first one done, that will be the hardest.