Fix and Flip Financing

[Alan Chambers]

I am a Realtor. I have a Ltd company for this business. I want to start rehabbing/fix and flip. Aside from hard money lenders etc how would I obtain financing through the business? Is it like a personal mortgage or is it a standard bank loan or something else? I want to start researching but have no idea, any suggestions on where I can learn about my options would be gratefully appreciated.

[Scott Lewis]

Hi Alan,

Getting commercial lending (which you'll need to do if you want the Ltd (this should be an LLC) to own the loan) is really tough when you're starting out.

For our first deal, I called 27 banks to try and get construction financing, we owned the property outright, until I found one local bank to underwrite a loan to our LLC but guaranteed personally by the managing members, and we had over $250k of profit in the deal and the loan was only for $160k.

My advice, find a local bank and only come to them with a smashing deal. Something with $10k of profit isn't going to get you anywhere because you'll never pass any bank's risk tolerances.

For your first deal, you're going to need a ton of profit margin in the deal to get any bank to play ball because they want to be assured if you mess up, there's plenty of meat to feed someone who can close the deal.