Specialist · I give advice - [email protected] - I focus on states where investing is profitable, reasonably safe & secure · Member since 2026 · 205 posts · 72 votes
What is your plan for financing your fix and flips or buying rentals? That seems to be what holds most people back.
I'm aware of three options - our business really took off when to changed to the first option There are variations to all of these but in 30 years of flipping what I generally see are:
Option 1. Taking Over someone's loan -
a. Generally will provide full financing on the loan b. 8.5% down. c. $25,000 down. d. 4% - 5% interest e. Can buy "off market" f. Credit not at all important g. No real estate agent fees h. So a $300,000 house i. Is $25,000 down j. $1,300 to $1,475 a month payments k. Then taxes, utilities l. You bring in the rehab money m. Tend to be faster to very quick n. Probably need to be trained on how to put it together
You are in control
You can use all three .
Option 2. Using a bank -
a. Bank qualifying financing b. 20% down. c. 7% interest d. use MLS e. Normal bank loan (2% 0r $4,000) f. Normal real estate agent fees ($20,000) g. Normal purchase routine h. So a $300,000 house i. Is $60,000 down j. $2,000 a month payments k. Then taxes, utilities l. You bring in the rehab money m. Tend to be slow to decide n. Must qualify
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Option 3. Hard Money -
a. Generally will provide 70% financing on the lesser of value of finished product (ARV) or of purchase price whichever is less b. 30% down. c. 9% - 12% interest d. Can buy "off market" e. Credit not as important f. No real estate agent fees g. So a $300,000 house h. Is $90,000 down i. $1,700 to $2,200 a month payments j. Then taxes, utilities k. You bring in the rehab money l. Tend to be faster to decide m. Must have experience
Be careful of which hard money lenders you deal with though
John, I'm working that same first option here in San Antonio, taking over payments on houses where the seller needs out and the loan stays in place. Still learning it myself, so I'll leave the training part to you. The one thing that has stuck with me so far is the paper after closing matters as much as the payment. If the payment doesn't get made and credited the way it should, a good deal turns into a mess for everybody, and the rate on the loan is almost beside the point when the payment is one a real buyer can actually carry.
Specialist · I give advice - [email protected] - I focus on states where investing is profitable, reasonably safe & secure · Member since 2026 · 205 posts · 72 votes
John, I'm working that same first option here in San Antonio, taking over payments on houses where the seller needs out and the loan stays in place. Still learning it myself, so I'll leave the training part to you. The one thing that has stuck with me so far is the paper after closing matters as much as the payment. If the payment doesn't get made and credited the way it should, a good deal turns into a mess for everybody, and the rate on the loan is almost beside the point when the payment is one a real buyer can actually carry.
Yeah, it has to be treated with care and the buyer needs to be adequately funded. Did you get a title report before buying?
Good question, John. That is the part I am still learning to get right every time — knowing what is actually on the loan and the title before anything moves. I appreciate you asking it plainly like that.
Real estate is where you diversify from your core strength financially, and therefore directionally invest in RE for it's main purposes(incredible inflation hedge, tax advantages, utility).
If you're doing it the opposite way-- finding money to invest. You'll always be paper thin in managing the physical asset. It's an almost guaranteed way to sell low later.
John, this is a helpful comparison, and I agree the financing choice is what holds most first-time buyers back. The one thing I'd add from the agent side is that the financing option doesn't change the deal test: whatever the structure, the property still has to cash-flow at the real monthly payment, including taxes, insurance, and a reserve. A low down payment only helps if the payment behind it works. I'd also be careful with two of the claims here. First, credit and paperwork still matter on a takeover — the loan stays in the seller's name, and that has real risks if anything goes wrong, so an attorney should review it. Second, skipping an agent on a first deal to save a fee usually costs more than it saves, because comps, inspections, and title are where first deals go sideways. What market are you buying your first rental in?
Your side by side is useful because it shows newer investors the down payment isn't one fixed number, it moves with the structure. One route missing is a DSCR loan for the rental itself. Most DSCR lenders qualify it on the property's rent, not the buyer's income, and commonly want 20 to 25 percent down. Plenty of rental buyers pair that with short term money. They buy and rehab with a bridge loan, then refinance into DSCR off the new appraised value once seasoning is met, commonly 6 months and sooner with some lenders. On option 3, many fix and flip lenders also fund a good share of the rehab in draws, so the cash in is often less than 30 percent plus the whole rehab. How much cash the refi hands back depends on how much value the rehab actually adds.