Non-Conventional Financing Fix & Flips

Real Estate Agent · MI · Member since 2024 · 8 posts · 7 votes

I have been seeing more opportunities for fix and flips lately. When it comes to financing a flipper home it can be tough. Does anyone have a source for hardmoney or some type of house flipping loan they would recommend?

I have reached out to KIAVI and was denied from their process due to lack of credit history. Normal Conventional loans do not support these types of projects because of the conditions of the homes.

I have enough capital to finance the upgrades needed & to put 20% down on these home. Also I would be able to comfortably pay a monthly "mortgage" for a 12 month loan as well, while the project is rolling.

What are some of your recommendations for financing when you do not have 100% of the cash on hand for a deal?

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Carlos Valencia

Lender · 92703 · Member since 2022 · 326 posts · 538 votes

Hello William,

When it comes to flipping properties Hard money is the best option and maybe a 203k loan which is a rehab type loan but its owner occupied. Hard money is best to use in order to win the deal. For hard money loans they only look at your credit score and assets and the property to in regards to purchase price plus repair cost and look for the after repair value. If the Hard money lender thinks the deal is profitable they will most likely fund it. You will also need to bring in 25% down and have 6 to 12 months reserves. If you are a new investor the interest rates will be in 13s and its only interest only payment, but once you start gaining experience then the hard money lender will give you better terms assuming your previous projects were good projects. Just make sure you inform yourself on how hard money works for flipping and be ready to move fast on your project as you will have limited time to finish your project before the note is due.

@Albert Bui @Matthew Kwan

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Carlos Valencia
Lender · 92703 · Member since 2022 · 326 posts · 538 votes
2y
Hello William,

When it comes to flipping properties Hard money is the best option and maybe a 203k loan which is a rehab type loan but its owner occupied. Hard money is best to use in order to win the deal. For hard money loans they only look at your credit score and assets and the property to in regards to purchase price plus repair cost and look for the after repair value. If the Hard money lender thinks the deal is profitable they will most likely fund it. You will also need to bring in 25% down and have 6 to 12 months reserves. If you are a new investor the interest rates will be in 13s and its only interest only payment, but once you start gaining experience then the hard money lender will give you better terms assuming your previous projects were good projects. Just make sure you inform yourself on how hard money works for flipping and be ready to move fast on your project as you will have limited time to finish your project before the note is due.

@Albert Bui @Matthew Kwan
1 Reply
Albert Bui
Lender · Bellevue WA & Orange County, CA · Member since 2013 · 2k+ posts · 1k+ votes
2y
Quote from @William Burns:

I have been seeing more opportunities for fix and flips lately. When it comes to financing a flipper home it can be tough. Does anyone have a source for hardmoney or some type of house flipping loan they would recommend?

I have reached out to KIAVI and was denied from their process due to lack of credit history. Normal Conventional loans do not support these types of projects because of the conditions of the homes.

I have enough capital to finance the upgrades needed & to put 20% down on these home. Also I would be able to comfortably pay a monthly "mortgage" for a 12 month loan as well, while the project is rolling.

What are some of your recommendations for financing when you do not have 100% of the cash on hand for a deal?

The more instuitionalized hard money or bridge sources are like fannie/freddie/agency loans where they have minimum requirements to sell their note/paper to investors in the markets. If you have a pure private lender that is local or one that operates as a real PML or private money lender you will and can avoid these pesky credit min scores, credit history, or other requirements that the institionalized HML/PML sources require you to have.

The rate/points may be higher but such is life. The institionalized players typically have 100-200 BPS lower rates than standard hard money lending players but they're clunky and have lots of requirements its almost like the instituional HML should be called "hybrid hard money or hybrid bridge money," because of all these requirements.

When we're working with those instutionalized players we usually have to do almost as much work as a conventional loan (1-4 fannie, not quite but almost as much).

If you'd like to learn more about the different options or get a sounding board on what options are out there feel free to reach out and we can talk shop.

@Matthew Kwan

@Carlos Valencia
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Bill J FayPro Member
Lender · San Diego · Member since 2023 · 216 posts · 209 votes
2y
Take a look at BP's recommended "Hard Money Lenders" here.
Many HMLs are tight on the Detroit market. Make sure to mention that 1st when speaking with them.
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AJ ExnerPro Member
Lender · Springfield, MO · Member since 2023 · 656 posts · 318 votes
2y
Quote from @William Burns:

I have been seeing more opportunities for fix and flips lately. When it comes to financing a flipper home it can be tough. Does anyone have a source for hardmoney or some type of house flipping loan they would recommend?

I have reached out to KIAVI and was denied from their process due to lack of credit history. Normal Conventional loans do not support these types of projects because of the conditions of the homes.

I have enough capital to finance the upgrades needed & to put 20% down on these home. Also I would be able to comfortably pay a monthly "mortgage" for a 12 month loan as well, while the project is rolling.

What are some of your recommendations for financing when you do not have 100% of the cash on hand for a deal?

Hey William,

The type of properties (heavier rehab + often lower purchase price) is tricky for a lot of lenders. I do know of a few that could help, just sent a DM.

Also 100% agree with @Bill J Fay, being up front about costs and region will help as much as possible going into a tricky deal to try to lessen any potential 'surprises'.
[email protected]417-427-2612
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Marty JohnstonPro Member
Lender · Wauwatosa, WI · Member since 2016 · 571 posts · 204 votes
2y
Quote from @William Burns:

I have been seeing more opportunities for fix and flips lately. When it comes to financing a flipper home it can be tough. Does anyone have a source for hardmoney or some type of house flipping loan they would recommend?

I have reached out to KIAVI and was denied from their process due to lack of credit history. Normal Conventional loans do not support these types of projects because of the conditions of the homes.

I have enough capital to finance the upgrades needed & to put 20% down on these home. Also I would be able to comfortably pay a monthly "mortgage" for a 12 month loan as well, while the project is rolling.

What are some of your recommendations for financing when you do not have 100% of the cash on hand for a deal?

You're in similar spot to many! But you have many options based on what you've provided here. Next it will all come down to the numbers for the deal to really confirm 80%-90% LTC/LTV on purchase, 100% of rehab (funded in draws) not to exceed 65-75% ARV (depending on the lender, most are 70-75% ARV) Kiavi is a great lender, but it comes at no surprise as their internal credit analysis throws me for a loop sometimes (and shocks me, as very qualified borrowers sometimes still don't make it through that analysis)
In short, you simply need to connect with the right lenders and each will have varying rates, costs, fees, etc
Bill Fay referenced the Hard Money Lenders link here on BP which is a great direct resource! Feel free to shoot me an DM if interested in discussing further.
[email protected]414-600-0123
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Michael SmytheBusiness Member
Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
2y
@William Burns we know a couple of local hard money lenders, so PM us
Logical Property Management4.9455 Reviews
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Ryan Davies
Investor · Salt Lake City, UT · Member since 2019 · 339 posts · 126 votes
2y
All you need is 20% down and decent credit as well as a good deal and the money will show up. Happy to help in any way that I can
0 Reply
Judith Aguilar
Member since 2023 · 21 posts · 5 votes
2y
@William Burns

this should be a fairly easy fit for most lenders - KIAVI may have more stringent reqs than most.

0 Reply
Alex Church
Lender · Springfield, MO · Member since 2023 · 28 posts · 19 votes
2y
There are several options for hard money lending out there for lack of credit history. I have clients with no credit history and low scores who get hard money financing for flips just based off of the return on investment. It really depends on how much value you're adding to the property. Typically the total loan will need to fit within 65-70% of the after repair value for the financing options for low credit history or low credit score.
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Sophia Buesing
Lender · Denver · Member since 2023 · 127 posts · 26 votes
2y
Hi William! Fix and flip loans are the best way for these type of projects. They are fast and a efficient use of your capital. Would love to connect and see if we could potential help!
0 Reply
Mike Klarman
Specialist · NJ · Member since 2022 · 1k+ posts · 653 votes
2y
Is it in Detroit?
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Jacob Sherman
12 Penns Trail Suite 138 Newtown, PA 18940 · Member since 2023 · 1k+ posts · 319 votes
2y
do you have a 620 or more for credit ?
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William Burns
OP
Real Estate Agent · MI · Member since 2024 · 8 posts · 7 votes
2y
Quote from @Mike Klarman:

Is it in Detroit?

Predominantly Detroit area in a specific zip code and certain neighborhoods in Pontiac.
0 Reply
Erik EstradaBusiness Member
Lender · Member since 2022 · 6k+ posts · 1k+ votes
2d
Hey William,
Sorry to hear you were denied by Kiavi. Their credit algorithm is very tricky and they don't really give much disclosure to both brokers and borrowers alike. You can sometimes dispute it if you can show cash reserves, however there are many lenders that honestly have a better credit grading process.
At the time being there are a few fix and flip lenders that welcome first-time investors on light renovations. You can expect up to 90% of the initial purchase price and 100% of the renovations financed as long as you have a high FICO score. The credit process is also a lot more transparent (they can provide a full report without a hard credit inquiry).
[email protected]818-269-7983
LuxePrivate Investments LLC 572 Reviews
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