What Actually Slows Deals Down More — Financing or Renovation?

Question

Curious what other investors are experiencing lately.

When deals fall apart, what tends to be the main friction point?

• Financing delays
• Contractor timelines
• Appraisals
• Unexpected repairs

Interested to hear what others are seeing across their markets.

Garrett Crosby · Answer

Renovation, by a significant margin. And I think it's specifically contractor timelines, not the cost itself.

On flips or BRRRR deals with hard money, every extra week has a real carrying cost attached to it. A deal that pencils at 90 days starts looking a lot different at 150 days. Financing — once you have established lender relationships — becomes fairly predictable. You know what to expect, when to expect it, and what you need to have ready. Renovation is never fully predictable no matter how well you scope it. Demo reveals things. Inspectors get backed up. Key subs get pulled to another job.

The other thing I'd add — appraisals can be brutal on the back end of a BRRRR, especially in markets where comps are thin or values have softened. That can surprise you at refinance even if the renovation went smoothly. Worth stress-testing your numbers with a conservative ARV assumption before you're 90 days in and already committed.

Denise Supplee · Answer

Great question.

For me, it's often the unexpected. After many years as a Realtor, property manager, and investor, I've learned that deals rarely fall apart for the reason you anticipated at the beginning. I've seen financing issues, repair surprises, contractor delays, inspection findings, and sometimes simply a change in circumstances for one of the parties involved. One thing I've found is that having a little extra time, money, and patience built into a deal can go a long way when something unexpected pops up.

Cody Waller · Answer

Renovation for me, hands down. In 22 flips I've maybe had 2 where financing was the holdup and that was early on before I had lender relationships locked in. Now my HML just wires money once I send the address and scope.

Contractor timelines though, that's killed my numbers on probably half my deals. Subs not showing, change orders after demo, inspectors backing up. Every extra week is another 2-3K in carrying and it adds up fast when you're on hard money at 11%. I've had deals that looked like 25% ROI on paper and ended up at 12% because the rehab ran 6 weeks over.

Once you get a few deals under your belt with the same lender, financing becomes the easy part. Renovation never gets easy.

Stacy Raskin · Answer

Renovations seem to run over often. It seems to often be a challenge to find the right rehab team but once an investor does can make rehab easier. There are still a lot of moving parts so a project may run but better than working with a rehab team that is not realistic about timelines or budgets.

Financing if done with the right mortgage broker or lender is often set up at the beginning if for a fix and flip project. Fix and flip lending can go up to 90% of the purchase price and 100% of the rehab done on draws. The most important on financing is borrower credit score and property location. A line item rehab budget is often required for at the beginning for underwriting and for funding.

What Actually Slows Deals Down More — Financing or Renovation?

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