Fix n flip loans - Are They Real?

Question

Greetings,

I am interested in the fix and flip aspect of RE Investing. I found an ad on Craigslist, for a company offering loans for fix and flips. Is this an option for someone looking to invest with none of their own money? How can I tell if this could be just another scam?

June

Nick C. · Answer

Agree with Adam above. You can try to go through with it, but as soon as the "lender" starts asking for money up front before the deal closes, tell them no thanks.

Adam Sanders · Answer

If you are completely inexperienced and unable to commit any money yourself there are not going to be many legitimate lenders out there for you unless you have a truly amazing deal. If it sounds too good to be true (and they are advertising on Craigslist) it usually is.

Matt C. · Answer

I am always suspect of a lender that advertises a loan with no money down.  Lenders are taking a risk when they loan on your investment.  They will want you to have some "skin in the game".  To quote an old professor "If it is going to hurt me, it had better kill you".  If you have a track record of finishing deals and paying on time, after awhile, they may loan to you with no money down.  Look at their terms, is there a minimum term or prepayment penalty?  These are not common on typical consumer loans but you will sometimes see them on investor financing.  What type of fees do they have?  Reach out to some hard money lenders in your area, they should be willing to give you their terms.  That will help you get a feel for the rates in your area.  Then compare that to what the Craigslist add. is offering.  If they are way below on rates and fees, ask yourself how they are making money.  If you can't figure that out, I would be cautious.  They are going to make a profit even if you don't.

Fix n flip loans - Are They Real?

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