What Are Two Ways to Find a Reliable Lender for Your First Flip?

Posted by Bobby Montagne on Jun 22, 2017

Having a reliable lender back your real estate investments is crucial to ensure your venture is successful. But where can you find a reliable fix and flip lender? If you’re new to flipping properties or don’t know where to start looking for lenders, there are two ways to find reliable and trustworthy hard money lenders:

Online

Leverage the power of Google to easily research reputed fixed money loan lenders. Search by location and research hard money lenders with an established history. Look for reviews from past clients and customers before you contact them.

Then, consider the additional services they offer, such as help selling the property or constructions advice, especially if the lender has roots in the building and development industry. Beware of fraudulent and fake lending websites. Ask for references from prior borrowers.

Networking

real-estate-investing-network

Find professionals who have been profiting from flipping houses for years and network with them.Get their experienced opinion about the various lenders in the market, including which lenders to approach and which to avoid.

What’s more, your go-to may be able to introduce you to lenders they rely on. This builds trust and can result in easier negotiations with the lender down the line.

Plus, networking with an experienced flipper will improve your business savvy and help you avoid rookie mistakes.

The CAZA Investor Network is a good group to join to meet flippers and learn the business. 

Leveraging a Lender

Approaching lenders for a fix and flip loan can seem daunting. Showing up informed and organized is the first step. To strengthen your case, you’ll need to provide three key, detailed documents:

1. A budget showing all expenses.

Prepare a detailed report of all the funding you’ll need for repairs and renovations and how the money will be allocated. Even minimal expense items (like a gate repair) should be noted.iStock-639601634.jpg

Clearly state why your improvements are necessary. Giving the lender a transparent report shows professionalism and builds trust.

Double check your costs and confirm your estimates with the professional who will do the work. If you come across as unprepared and naïve, chances are you won’t be able to secure funding for your fix and flip project.

Bigger Pockets has a great calculator that can help you set up nicely packaged budgets that will help you estimate profit potential, input all costs and above all else, avoid paying too much for your next flip. ACCESS IT HERE.

2. The property value after repairs and renovations.

The projected property value after all repairs and renovations are completed can make or break a loan. Show the lender the property value at the time of purchase and your estimates of how much repairs and renovations will raise the initial value.

[ What the heck is ARV? We explain it here. ]

Then disclose the projected selling price of the property and back up your claim with recent sales of comparable properties. Proving you can increase the value of the property significantly increases your chances of securing a loan.

3. Personal financial statement.

Providing a personal financial statement provides an overview of your assets, liabilities and income. Although good credit is not always a requirement to qualify for a private loan, the lender needs to know that you have the financial means to pay the loan back. 

[ Can you get a private loan if you have bad credit? Read the blog. ]

Select reputed and reliable lenders in your area and make an airtight case for your fix-and-flip property to secure a private lender loan. When you get a fixed money loan, stick to your planned repair and renovation budget to avoid overspending. Keeping your costs in check and budget organized will ultimately help make your first flip a success.

You know what time it is now, right? Time to do some fix and flip math!

Download the Guide:  Essential Math for the  Fix and Flipper

Bobby Montagne

Author

Bobby Montagne is a real estate entrepreneur with three decades of experience in commercial and residential property development, finance and sales. Having successfully overseen $15 billion in career transactions, he is among an elite class of real estate innovator that has consistently delivered high quality returns to partners and investors.