Financing Terms Evaluation - First Time Flipper Looking for Advice

[Matt V.]

I am trying to put together my first deal on a flip. I have the construction experience but not so much on the financial experience with this type of thing. I don't have a ton of money to pay a 20-30% down payment so I'm looking at other options. I was referred to Global Equity Alliance for a purchase+rehab loan. I went through the application process and was pre-approved which I figure most people are but maybe I'm wrong there. Anyway they approved up to 65% ARV with 6-7 points to be rolled into the loan (except for a $995 processing fee with those points) and at a 14-16% interest for a 1 year note. It would be 12-14% for a 6 month note. I think I can do the flip in 6 months but not 100% certain. I spoke with the guy that referred me to them and he said I should negotiate the terms a little. Again I am new at this so I was wondering if you guys could help guide me in what I should be working towards with regard to the terms.

Initially I am thinking I should see if I can get it to 3-4 points and 12% on a 1 year note. I know any other hard money outfit would want that and more but I need some negotiating points to work with when talking to these guys. I don't have have stacks of deals or a line of lenders knocking on my door so there isn't a ton to work with.

It's going to be a non-owner occupied short term flip. I ran the numbers through the BP flip calculator and things seem to look good with a solid $20K profit even with a 12% loan for 180 days.

Please critique this and help a newbie navigate this exciting but scary first run through. Thanks in advance!