First-Time Flip Financing Advice

[Andy Zapata]

My wife and I have rehabbed (mostly cosmetic) both of the properties we have purchased. They were both live-able and for our primary residences at the time so we used conventional financing. We enjoyed the process, kept our first as a rental and are at a place where we can begin investing and are interested in either a flip to sell or flip to own.

It seems like everything in the marketplace is for cash sales and while we have about $30K at our disposal, it seems that this would cover the rehab budget in the deals we have been interested in. We have excellent credit and no debt except for our 2 mortgages. (Rental and primary)

Does anyone have any tips in financing their first flip deal?  

[Kenny Lee]

Hi Andy.....familiar spot for many flippers.  You'll more than likely need a hard money lender to help you get the deal done.  They are generally looked at the same as cash for those deals that are as-is or won't accept conventional financing.  Rates are higher.....probably 10-14% currently.....but they cover anywhere from 60-90% of the total deal depending on the lender and the deal.  Some charge points on the front end as well as fees, etc., and maybe a little on the back end.  But if the numbers work out on a deal, they're well worth it.  As an example, the first hard money flip I did, the total profit was about 18K on about $115K total investment.  The hard money lender put up about $95K of the total deal, but also took about $6500 of the profit in interest, points and fees, leaving me with the remaining $11-12K .  Still not bad for both what I had to put up and also the total return on the deal.

I've used a couple of different ones for deals I've done in the area and feel free to PM me and I can give you more info.  Not sure what the rule is here for recommending lenders.