Financing Question for Fix-&-Flips- Atlanta Area

[David Kilgore]

So can anyone help me out with this. Say I want to buy a property to fix and flip. I understand that with most HML that I would need about 10% down on purchase price. Now when it comes to the rehab cost how could I come up with the funds? Can I ask the HML to roll the cost of rehab into the loan?

If so how does that go down? Does the HML give the acquisition cost to the seller and just cut me a check for the rehab or provide me with a line of credit? What does the process look like?

Also if you have any recommendations for HMLs in the Atlanta area who would you recommend?

[Brenden Mitchum]

@David Kilgore

@Ari Newman is absolutely correct in his explanation of the 65% ARV loan product. Typically you won't snag a deal that has purchase + rehab below 65% of ARV so you likely won't have to worry about the skin in the game amount. That being said, if you do get a screaming deal that is all in below 65% of ARV, they will still ask you to put some skin in the game. You can think of this as a downpayment and the amount/percentage will depend on the lender so this is always a great question to ask when you're interviewing them.

Keep in mind there are other HML products. These folks are essentially private lending institutions so they more or less get to decide their terms. I have seen 90LTV (purchase+rehab). I've seen 80LTV (purchase only) with 100% of rehab covered. It really just depends so the best thing to do is call up a bunch of lenders and ask them about their terms. Make sure you specify early on that you're a new investor so that they can provide you with the right information.

There are many ways to find HMLs. I'd say the best is talking to active flippers/BRRRR investors. Second best would be to use BP's search tool. I'm happy to recommend some that myself or clients have spoken to. However, you will still need to do your due diligence to determine if they're the right lender for you. 

Hope this helps a bit! Please, feel free to reach out anytime if you have other questions or just want to chat!