Would You Do Your First Flip With No Money Down?

[Drago Stanimirovic]

Imagine you found a solid fix-and-flip deal and a lender offered to cover 100% of the costs. Would you jump in, or wait until you had more cash saved? Why?

[Michael Hernandez]

Hey Drago,

I’d look at it less as “100% financing = free money” and more as “what’s the true cost of capital and risk?”

On paper, 100% funding sounds great, but most lenders who offer it charge higher rates, points, and often want profit splits or very strict terms. That can eat into your margin quickly. On top of that, going in with zero of your own cash means you've got no cushion if the rehab runs over budget, the ARV comes in low, or the market shifts while you're holding.

Personally, I’d only take a 100% deal if:

The numbers leave room even after the lender’s premium costs.

I’ve got reserves outside the deal to handle surprises.

The scope of work is in my wheelhouse (no first-time full guts with borrowed money).

Otherwise, waiting until you’ve got some of your own capital in play is safer. Leverage is a tool, not a crutch—if the deal is strong enough, you don’t need to stretch thin to make it work.