Financing Multiple Flips

[Dan Thomer]

I am a new investor looking to fix and flip to raise capital for buy and hold.  

My father/partner has 40 years experience in the construction business including home inspector, architect and self-employed project manager for several real estate investors in Philadelphia. He has managed dozens of rehab and complete rebuilds throughout Philadelphia ranging from SFH to 50 units apartment buildings.

Our goal is to flip 5-10 properties per year.  My father will be handling the property assessment and construction.  I will be responsible for networking, finding the deals and securing financing.

What are some options we have for financing?  Would we be able to use his track record to get bank financing?  Would private money be the best bet?  

Thanks!

[Ben Stoodley]

@Dan Thomer I would strongly suggest using Private or Hard money to get up and going. It will allow your team to hit the ground running, do multiple flips without tying up all your capital, and start making higher ROI from the beginning. Obviously, there is a cost for borrowing money, so make sure to budget it all in. So you'll make a little less on each flip (paying for the loan), but it will allow you to make more in the bigger picture by being able to flip many houses in a shorter period of time.

With that being said, you will still need to have some money to bring to the table. Typically, between 20-30% down, towards the purchase of the property. You may be able to find some HML that lend at a higher LTV, but make sure to check all their fees for this. Also, most HML will lend on the rehab as well, as long as it is under their max ARV loan. Make sure to use one of these lenders, as you will find it increasingly difficult to find a construction loan for the rehab to go into second position behind our acquisition loan.

Hope this helps. Good luck!