20% down including reno financing standard procedure?

[Aaron Malki]

Hey everyone,

My business partner and I closed on a deal in socal. Our HML is requesting we put down 20% of the purchase price - not 20% LTV. We are going to finance 80% LTV and 100% labor for the flip through the lender but they are bundling that reno budget into the down payment (by essentially putting a lien on the property). Is this a common practice? Thanks again!

[Mike Klarman]

80% of the purchase is normal for someone of little to no experience.  And you should get 100% of the reno with the max loan amount to be no more than 70% - 75% LTARV.