Fix & flip funding

[Brandon Jensen]

Happy Friday everyone! :)

I am looking for any tips on how to go about getting the green light on getting funded for my first of many fix & flips, I started a LLC a few months back and my credit score is pretty low as I've broke both my legs over a period of time.(healed now) I have someone with a 620 (not the best) credit score willing to help me get into a business loan to try and get around 50k funded so I can use a DSCR loan to get started as id need 20% down. So I was thinking if I could get a small business loan to get my 20% covered and then get into a DSCR loan and be off to the races. Any input, ideas or suggestions on how to get going? Im damned and determined to get going asap and am doing what I need to, to get my credit back up so this is all easier for future flips!

Truly thankful for this group of extremely helpful minds! 

[Elizabeth Seiferth]

Quote from @Brandon Jensen:

Happy Friday everyone! :)

I am looking for any tips on how to go about getting the green light on getting funded for my first of many fix & flips, I started a LLC a few months back and my credit score is pretty low as I've broke both my legs over a period of time.(healed now) I have someone with a 620 (not the best) credit score willing to help me get into a business loan to try and get around 50k funded so I can use a DSCR loan to get started as id need 20% down. So I was thinking if I could get a small business loan to get my 20% covered and then get into a DSCR loan and be off to the races. Any input, ideas or suggestions on how to get going? Im damned and determined to get going asap and am doing what I need to, to get my credit back up so this is all easier for future flips!

Truly thankful for this group of extremely helpful minds! 

Hi Brandon,

Congrats on the LLC! To my knowledge, most flippers use hard money loans as they are often buying distressed properties that will not meet the requirements of a conventional lender. I have not heard of anyone using a DSCR loan on a fix and flip, not to say it’s not possible!

Hard money loans typically come with higher interest rates (10-14%) and often have a balloon payment at the end of the term. They would require skin in the game (cash) and your analysis on a specific deal before funding 80-90% of the purchase price + construction costs. It would be worth connecting with hard money lenders on bigger pockets to learn more. 

As for your down payment, I can’t personally speak to a small business loan…you would just want to ensure you include those payments in your analysis and prepare to be repaying the small business loan and other holding costs during the flip. 

Good luck! 

[Robin Simon]

DSCR Loans are going to be strictly for "turnkey" properties - no properties can qualify with any significant rehab or deferred maintenance needed

[Francisco Hernandez]

Quote from @Brandon Jensen:

Happy Friday everyone! :)

I am looking for any tips on how to go about getting the green light on getting funded for my first of many fix & flips, I started a LLC a few months back and my credit score is pretty low as I've broke both my legs over a period of time.(healed now) I have someone with a 620 (not the best) credit score willing to help me get into a business loan to try and get around 50k funded so I can use a DSCR loan to get started as id need 20% down. So I was thinking if I could get a small business loan to get my 20% covered and then get into a DSCR loan and be off to the races. Any input, ideas or suggestions on how to get going? Im damned and determined to get going asap and am doing what I need to, to get my credit back up so this is all easier for future flips!

Truly thankful for this group of extremely helpful minds! 

 My advice would be to network first. Find PMLs PMPs or buyers first and bring them deals, if you consistently bring deals they could eventually fund your flips 100% but they wont fully fund your first one and let you take off. They will probably only partner with you for the first few to see that you can pull it off. 

[Yoav Gilad]

Quote from @Brandon Jensen:

Happy Friday everyone! :)

I am looking for any tips on how to go about getting the green light on getting funded for my first of many fix & flips, I started a LLC a few months back and my credit score is pretty low as I've broke both my legs over a period of time.(healed now) I have someone with a 620 (not the best) credit score willing to help me get into a business loan to try and get around 50k funded so I can use a DSCR loan to get started as id need 20% down. So I was thinking if I could get a small business loan to get my 20% covered and then get into a DSCR loan and be off to the races. Any input, ideas or suggestions on how to get going? Im damned and determined to get going asap and am doing what I need to, to get my credit back up so this is all easier for future flips!

Truly thankful for this group of extremely helpful minds! 

Hi Brandon, congratulations on making the decision. Now, comes the hard part. As a couple of others have already said, a DSCR loan is for turnkey properties and is also (typically) a 30-year fixed rate loan, similar to what you would get for your primary home.

I think a short-term fix-and-flip loan would serve you better because, first, the credit requirements are typically lower than a DSCR loan's credit requirements, and fix-and-flip loans will fund a portion of the purchase price as well as some or all of the rehab costs (usually through the draw process).

Right now, saving your cash, rebuilding your credit, and finding both a partner (ideally with a higher credit score AND experience) and lender you're comfortable with should be your priorities. Feel free to let me know if I can answer any other questions. Thank you and good luck!