How much down or should I say how little down

Question

I haven't gone to a bank yet, but am wondering for those warriors out there in the market buying flips, how little are you putting down with traditional loans?   How loose are the restrictions these days since the big crash?     I'm saving 25k to 30k for renovation costs, but would like to put the least down since it will be turned over within 3 to 4 months.

J Scott · Answer

Some loan options:

1. Private loan (friends/family/colleagues);

2. Hard money loan (professional independent lender);

3. Portfolio loan (small bank that makes it's own lending guidelines);

4. Owner financing (seller providing loan).

Dawn Anastasi · Answer

Usually investors need 25-30% down.

Melanie Noblin · Answer

We are putting 20% down on a conventional rehab loan.

Fred Ramos · Answer

Based on the numbers you posted of $160K (Low Side) ARV, A hard money lender could loan you 65% (flip, 70% for buy and hold) of ARV ($104K). With That, The only money you will need out of pocket is anything over $104K. this will negate the 20% down requirement and means less out of your pocket. This is a true definition of OPM :)

besides, like others have said, most banks won't give you a conventional loan on a rehab project.

Sally, You should be able to find a lender to loan on a buy and hold property with 20% down (even on an investment). This generally applies to the first 4 mortgages that you hold. on the 5th, the requirement jumps up to 25-30%.

Hope this helps.

Cathy Svercl · Answer

@Sally Peltz - 203k is not SBA, it is FHA Rehab loan thru a lender (like your bank) based on ARV (after repair value) for Single Family Homes & Multi family up to 4 units.

Marcus Johnson · Answer

Nope I haven't thought about a home equity loan.   So if not a conventional loan, then what type of loan do people get when they flip homes?

John Moore · Answer

Have you thought of a home equity loan?  Rates are low and if you have good income and equity in your home this may be the way to go.

J Scott · Answer

You're going to find it to be very difficult to finance a flip using a conventional loan these days.  Lenders will require that the property essentially be move-in-ready, and if they're not, they likely won't approve the loan.  If the property is a flip, it likely requires renovation and therefore may not meet conventional lending standards.

Also, conventional lender won't like the fact that you take out a loan and repay it within a few months -- conventional lending for investors is generally used for buy-and-hold, where the loan is in place for many years.

Sally Peltz · Answer

@203 loan is that an SBA loan

How much down or should I say how little down

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