Fix-N-Flip Loans

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Fix-N-Flip Loans Made Easy!

Fx-N-Flip LoansA Fix and Flip Loan, also known as hard money or bridge loan, is a specific type of asset-based loan financing in which a borrower receives funds secured by the value of a parcel of real estate.

Fix and Flip loans are typically issued at much higher interest rates than conventional commercial or residential property loans and are almost never issued by a commercial bank or other deposit institution. Hard money is similar to a bridge loan which usually has similar criteria for lending as well as cost to the borrowers. The primary difference is that a bridge loan often refers to a commercial property or investment property that may be in transition and does not yet qualify for traditional financing, whereas hard money often refers to not only an asset-based loan with a high interest rate, but possibly a distressed financial situation, such as arrears on the existing mortgage, or where bankruptcy and foreclosure proceedings are occurring.

Many Fix and Flip mortgages are made by private investors, generally in their local areas. Usually the credit score of the borrower is not important, as the loan is secured by the value of the collateral property. Typically, the maximum loan to value ratio is 65-70%. That is, if the property is worth $100,000, the lender would advance $65,000-70,000 against it. This low LTV provides added security for the lender, in case the borrower does not pay and they have to foreclose on the property.

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FIX & FLIP Lending Matrix

EQUITY
  • 75% Purchase Price
  • 100% Rehab Budget
  • 70% ARV (after repair value)
LOAN AMOUNT
  • Minimum $75k Loan Amount
  • Max $1 million Loan Amount
CREDIT RISK
  • 600 FICO
  • No BK/ FC /SS in past 3 year
TERMS/RATE
  • 12-24 months I/O term
  • 1-3 points upfront (risk based)
  • 9.99% - 13.99% (risk based)
EXPERIENCE
  • Minimum of 2 projects in past 2 years
  • Exceptions on a case by case basis
COLLATERAL
  • Investment Property Only
  • SFH/Townhouse/Condo 1-4 units
EXPOSURE
  • No max on number of loans per borrower
  • Max exposure $3 million

Documents Needed

PROOF OF FUNDS LETTER - POF
  • Entity Docs – filed articles & signed op/ by-laws
  • 2 Years Personal & Business Tax Returns
  • 2 Months of Asset Statements
  • Personal Financial Statement
  • Proof of Experience – any of the below
    - Buy & Sell HUD’s for past 4 deals
    - Rent Roll
    - Real Estate Resume
  • Driver’s License
EXECUTED CONTRACT – TERM SHEET
  • Purchase Contract – fully executed
  • Scope of Work
  • Proof of Insurance (Builder’s Risk)
  • Updated Assets

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