Best Hard Money Lenders For First Flip

Tyler, TexasWantProfessionalsLender
Classifieds
2yFollow

Best Hard Money Lenders For First Flip

Connor Kline
Real Estate Agent · East Texas · Member since 2020 · 53 posts · 14 votes

I am looking to purchase my first flip. I am currently negotiating with the sellers. I have been in contact with a few lenders, and hard money lenders. I am curious to know if anybody has a good lender they would recommend for a first time investor? The deal I am currently looking at is purchase price between 50k-60k. Rehab between 75k-90k. ARV 205k. The goal is to flip it, but alternative exit strategy would be to refi into long term hold.

Ideally the lender I am looking for needs to work with first time investor, and also okay with the amount of rehab needed. (a couple lenders have told me it is to big of a rehab for a first time investor).

I have 25k in reserves, and need a lender that is okay with that. 

Any advice would also be appreciated!

1Reply
37 views

Most Popular Reply

Jose JacobPro Member
Investor · 11040 · Member since 2019 · 188 posts · 111 votes
2y

I am a fix&flipper for last 10 years in NY and getting into out of state fix&flipping. When I look into out of state flipping, i am trying to find a property below $100K and a cosmetic repairs of $20-$30K to start with even if I have ton of experience in NY as a flipper. . I do have PML and HML to help me. My point is that, as a new investor in the field of fix&flip, you may face several challenges, one of those are finding the right lender with this large scale reno. Also most lenders will not finance reno cost to new fix&flippers due to risk. They may give you 70 to 80 LTV and you may have to come up with the reno cost. The one who told you that they wont lend you for that kind of extensive reno cuz you are a new flipper. An other hurdle you will face is to find a good contractor. My humble advise to you is to start with a cosmetic repairs and go full gut after you completed two to three cosmetic and get a good team with you. That's what I am planning to do out of state. Good Luck

718-200-6100
2Reply
See this reply in the discussion

12 Replies

Jump to latestLatest
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    2y

    @Connor Kline

    That will be tough as most lenders want acq loan above $75k - with rehab may go higher but that could limit you.

    7e investments53 Reviews
    WebsiteView Page
    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    2y

    try Kiavi 

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    0Reply
  • Jose JacobPro Member
    Investor · 11040 · Member since 2019 · 188 posts · 111 votes
    2y

    I am a fix&flipper for last 10 years in NY and getting into out of state fix&flipping. When I look into out of state flipping, i am trying to find a property below $100K and a cosmetic repairs of $20-$30K to start with even if I have ton of experience in NY as a flipper. . I do have PML and HML to help me. My point is that, as a new investor in the field of fix&flip, you may face several challenges, one of those are finding the right lender with this large scale reno. Also most lenders will not finance reno cost to new fix&flippers due to risk. They may give you 70 to 80 LTV and you may have to come up with the reno cost. The one who told you that they wont lend you for that kind of extensive reno cuz you are a new flipper. An other hurdle you will face is to find a good contractor. My humble advise to you is to start with a cosmetic repairs and go full gut after you completed two to three cosmetic and get a good team with you. That's what I am planning to do out of state. Good Luck

    718-200-6100
    2Reply
  • Bill J FayPro Member
    Lender · San Diego · Member since 2023 · 216 posts · 209 votes
    2y

    Check out BP's tab: Find a Hard Money Lender - Best Hard Money Lenders Near Me (biggerpockets.com).


    As others have suggested, the price point will be the tough ask. Most lender's start at $75k on the purchase. Make sure you dial in your renovation budget when purchasing cheap properties. One change order and your expense percentage jumps quite dramatically.

    0Reply
  • Mike Klarman
    Specialist · NJ · Member since 2022 · 1k+ posts · 653 votes
    2y

    So, for a very first project you have a couple red flags that lenders will not like. As a 0 exp investor, if your first one or two is not a cookie cutter deal then it will either be hard to fund or have not so great terms.

    Right away I know a few lenders that will let a 0 buy a property, but not if it is an upside down project (rehab > purchase).  And the lenders that I know who will do upside down projects will not work with a 0.

    Give you have 25k and the total project cost is 150k, you have only 16.5% of the project cost in reserves, it is a little tight because I suspect anyone who does price this is only going to give you 60% max on the front end and they may not fund the entire rehab.  With down payment, closing costs, holding costs, miscellaneous costs like title and insurance and utilities that 25k is very thin reserves.

    0Reply
  • Jacob Sherman
    12 Penns Trail Suite 138 Newtown, PA 18940 · Member since 2023 · 1k+ posts · 319 votes
    2y

    feel free to reach out with any questions . We are a direct lender specializing in bridge, fix and flip, ground up construction and DSCR welcoming the first time investor

    0Reply
  • Elizabeth SeiferthPro Member
    New to Real Estate · Carlsbad, CA · Member since 2021 · 26 posts · 21 votes
    2y
    Quote from @Connor Kline:

    I am looking to purchase my first flip. I am currently negotiating with the sellers. I have been in contact with a few lenders, and hard money lenders. I am curious to know if anybody has a good lender they would recommend for a first time investor? The deal I am currently looking at is purchase price between 50k-60k. Rehab between 75k-90k. ARV 205k. The goal is to flip it, but alternative exit strategy would be to refi into long term hold.

    Ideally the lender I am looking for needs to work with first time investor, and also okay with the amount of rehab needed. (a couple lenders have told me it is to big of a rehab for a first time investor).

    I have 25k in reserves, and need a lender that is okay with that. 

    Any advice would also be appreciated!

    Hi Connor - congrats on finding a flip! You’ve received a lot of good advice above. We (my boyfriend and I) are under contract for our first flip in California and while I’m excited my veins are also fueled with fear, but I just need to keep reminding myself of the numbers. 😅

    From my experience so far in contacting HML’s, many won’t lend beyond 85% LTC and below a 75k PP. However, I am sure there are loan products out there that may work. A few suggestions:
    1) Could you raise private money instead? Family, friends, networking contacts instead of using a HML? Full disclosure - I have not done that but could be a work around for the red tape with a HML. I imagine a similar level of due diligence may be required. 
    2) perhaps a construction loan product might be a better route? Again, I’m not familiar with them by any means but there are definitely lenders out there that do construction loans. 
    3) do you have a primary property that you could take out a HELOC? We have a HELOC on our property that we are using for the down payment + reserves. 

    Good luck!! 
    liz

    1Reply
  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    2y
    Quote from @Connor Kline:

    I am looking to purchase my first flip. I am currently negotiating with the sellers. I have been in contact with a few lenders, and hard money lenders. I am curious to know if anybody has a good lender they would recommend for a first time investor? The deal I am currently looking at is purchase price between 50k-60k. Rehab between 75k-90k. ARV 205k. The goal is to flip it, but alternative exit strategy would be to refi into long term hold.

    Ideally the lender I am looking for needs to work with first time investor, and also okay with the amount of rehab needed. (a couple lenders have told me it is to big of a rehab for a first time investor).

    I have 25k in reserves, and need a lender that is okay with that. 

    Any advice would also be appreciated!


    This will be very difficult to finance. You may want to try a local HML. Most hard money lenders do not like to finance a purchase where the rehab cost is more than the price. Especially if this is your first rehab deal.. The property value is also very low so that knocks out most nationwide private money guys..

    $25k in reserves is also not enough. What if your rehab is higher? What if you need to come with cash to close on the refinance (values have been coming in low for many cash out refi deals). 

    [email protected]818-269-7983
    LuxePrivate Investments LLC 572 Reviews
    WebsiteView Page
    0Reply
  • David Pearl
    Lender · Member since 2024 · 121 posts · 14 votes
    2y
    Quote from @Connor Kline:

    I am looking to purchase my first flip. I am currently negotiating with the sellers. I have been in contact with a few lenders, and hard money lenders. I am curious to know if anybody has a good lender they would recommend for a first time investor? The deal I am currently looking at is purchase price between 50k-60k. Rehab between 75k-90k. ARV 205k. The goal is to flip it, but alternative exit strategy would be to refi into long term hold.

    Ideally the lender I am looking for needs to work with first time investor, and also okay with the amount of rehab needed. (a couple lenders have told me it is to big of a rehab for a first time investor).

    I have 25k in reserves, and need a lender that is okay with that. 

    Any advice would also be appreciated!

     @Connor Kline - Hi Connor. Congrats on your first fix & flip! This may be something we can help with. We have a $100K min loan amount, with no minimum property value. We also work with new investors. Happy to help! 

    0Reply
  • Connor Kline
    OP
    Real Estate Agent · East Texas · Member since 2020 · 53 posts · 14 votes
    2y
    Quote from @Jacob Sherman:

    feel free to reach out with any questions . We are a direct lender specializing in bridge, fix and flip, ground up construction and DSCR welcoming the first time investor


     I have emailed you, thank you for your reply!

    0Reply
  • Connor Kline
    OP
    Real Estate Agent · East Texas · Member since 2020 · 53 posts · 14 votes
    2y

    @David Pearl I just emailed you, thank you for your reply!

    0Reply
  • Carrie Matuga
    Lender · Riverside, CA · Member since 2017 · 248 posts · 98 votes
    2y

    I think you are going to find your financing options extremely limited by the purchase price and the fact that the renovations are more than the purchase price. If you have the downpayment, I'd recommend amending your buy box to be a MINIMUM of 75K purchase price with ARV being greater than 130% of your cost basis (purchase + renovation). This way, too if you are keeping it when you go to refinance, your loan is a minimum of 75K, but ideally at least 100K. As a first time investor most lenders are not going to be comfortable with a financing scenario that is considered upside down (meaning renovation > purchase price)

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free