First Fix & Flip

[Deena Townsend]

I have an opportunity to buy, rehab, and flip my first property in Florida. I am extremely new to this. Is there a loan that will include the purchase price and rehab cost? Isn't DCHS or something?

[Katie Smith]

Hi Deena! Katie from FL here! 

You will need to go into a bridge loan first - that can cover up to 90% of the purchase price and 100% of the rehab budget. After the renovation is complete - you can either sell the property or refinance it into a long term DSCR (debt service coverage ratio) loan. I know getting into your first fix and flip can be nerve racking, i'd be happy to go into this more in detail!

[Erik Estrada]

Quote from @Deena Townsend:

I have an opportunity to buy, rehab, and flip my first property in Florida. I am extremely new to this. Is there a loan that will include the purchase price and rehab cost? Isn't DCHS or something?

 Hey Deena, 

You can finance this with a fix and flip loan. Most lenders will typically lend up to 75-80% of the initial purchase price and 100% of the rehab if you are considered a first time investor. You will also need to work with a GC. 

If you have some experience, you can get up to 85-90% of the initial PP and 100% of the rehab. You can also do the renovations yourself. 

Once the property is rehabbed you can look into a DSCR loan to cash out on the new appraised value. Most lenders will require a minimum of 90 days, however there are some options that do not have any seasoning requirements as long as there was rehab wor completed.

[Deborah Wodell]

Hey Deena! For a first time investor you'd probably get up to 80-85% of purchase and need to have atleast 20% cash ready for dp. So if you don't have liquid cash available for it, you can try finding a partner who can JV with you on the deal or find a gap funder. If you're planning to hold and rent it out, you can refinance to get a better rate after some months.

[Bill J Fay]

You are looking for a Hard Money loan. These are short term, interest only loans used primarily to renovate properties. The loan amount is levered off the "Loan to Cost" (Purchase price + renovation). 

Find Hard Money Lender's here: BiggerPockets - Find a Hard Money Lender

[Trent Jones]

Quote from @Deena Townsend:

I have an opportunity to buy, rehab, and flip my first property in Florida. I am extremely new to this. Is there a loan that will include the purchase price and rehab cost? Isn't DCHS or something?

 Deena, sent you a PM about how I could help you with this fix n flip.

[Keyano Burgess]

Hi Deena,

Yes, you can use a bridge loan to cover both the purchase cost and renovations. I work with many investors here in the Cleveland market who regularly use bridge loans upfront, then cash out on a DSCR loan.

Feel free to shoot me a DM if you would like to connect, I am always eager to help newer investors build their portfolio.

[Deena Townsend]

Quote from @Nick Bednarczyk:

5 Important Lessons for New House Flippers

1: Thoroughly research financing options 💵

Using a hard money loan can be a smart way to fund your flip, especially if you don’t have a lot of cash on hand. But be sure to understand the terms and interest rates. Always shop around for the best deal. Check out different lenders, compare their rates and terms, and read reviews to make sure that you’re working with a reputable company. It’s vital to find a lender that fits your financial goals and project needs.

2: Expect the unexpected ✅

Flipping houses is full of surprises! No matter how well you plan, there will always be unforeseen issues – from hidden structural problems to unexpected repair costs, or project delays. Build a contingency budget into your plan by allocating an extra 10-20% for these surprises.

To get ahead of potential problems, conduct thorough inspections from top to bottom before buying a property. Stay involved in the renovation process with regular site visits and open communication with contractors to keep close tabs on the project. Flexibility and a proactive approach will help you navigate challenges and protect your investment.

3: Make strategic improvements 🏡

Not all renovations will boost your property’s value equally. So, it’s important to focus on strategic improvements that offer the highest return. In this couple’s case, painting the house white and adding a bedroom were game-changers.

Prioritize high-impact areas like the kitchen and bathrooms, and add to the home’s curb appeal. Upgrade appliances, install new countertops, and modernize fixtures wherever you can. Balance cost and quality—high-end finishes aren’t always necessary.

The key to making the most impactful upgrades is understanding what buyers in your area want. You can then invest in improvements that align with market demands to make the property more appealing to a wider audience and maximize your return.

4: Staging and presentation is important 🛋️

Staging your property can transform it from just a house, to a dream home in the buyers’ eyes. Effective staging can lead to higher offers and quicker sales because buyers can envision themselves living in the space. This doesn’t need to be too expensive or complicated, simple touches like decluttering, rearranging furniture, and adding tasteful décor can create an inviting atmosphere.

Invest in professional photography to showcase the property online, as captivating images can attract more potential buyers. A well-crafted listing description highlighting the home’s features and recent upgrades can further entice buyers. Staging and presentation are key to creating an emotional connection and maximizing your sale price.

5: Learn from your mistakes ✏️

Mistakes are part of the flipping journey, but each one is a learning opportunity. Reflect on what went wrong in each project afterwards, and consider how you can improve. Document every aspect of your project to analyze what worked and what didn’t.

Networking with other flippers and industry pros can also provide valuable insights. Join real estate groups, attend workshops, and engage with online communities to learn from others’ experiences. Set clear goals and create a comprehensive plan for each project, outlining your budget, timeline, and desired outcomes. By learning from past experiences and planning meticulously, you’ll be able to do your next house flip more efficiently and successfully.

Thank you so much for such specific advice. I need all I can get at this starting point. 

[Deena Townsend]

Quote from @Katie Smith:

Hi Deena! Katie from FL here! 

You will need to go into a bridge loan first - that can cover up to 90% of the purchase price and 100% of the rehab budget. After the renovation is complete - you can either sell the property or refinance it into a long term DSCR (debt service coverage ratio) loan. I know getting into your first fix and flip can be nerve racking, i'd be happy to go into this more in detail!

Thank you for your advice. At this point, I have learned a few things already. I now know I need to raise my credit score a few more points and raise the 10% down payment amount for the bridge loan. But I'm getting there.