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FIX-AND-FLIP LOANS 1 - 19 Unit Financing
Residential
and Multi-Family mortgage financing
Up to 65% of Flip Value (based on After Fix's value)
Ideal
for the investor that purchases property below market - constructs, fixes,
repairs, or remodels property for a quick profit turnover (Fix/Flip).
Typical Fix-N-Flip Rehab example - Up to 80% of
Purchase Price
and 80% of Improvements on Short-Term, Interest Only Loan
(Subject to 70% "As Complete" (Fixed) Appraised Value)
EXAMPLE:
Purchase Price = $100,000 x 80% = $80,000
+ Improvement Costs = 20,000 x 80% = 16,000
TOTAL = $120,000 x 80% = $96,000 LOAN AMOUNT
Then, one appraisal
is obtained, assuming "as if complete" value,
based on the improvements provided
by the borrower. The $96,000
LOAN AMOUNT must be 70% of the
"As Complete" appraised value.
$96,000
LOAN AMOUNT
divided by .70 (70%) = $137,000
The "as if
complete" appraised value will need to be $137,000 minimum for
the borrower to break even. Realistically, the appraised value will
need to be higher than the purchase price plus improvement costs, because
the borrower will expect to make profit.
This
fix-n-flip program is offered Nationally
Investor Benefits
- 100% Financing
is Possible Through Cross-Collateralization With Other Acceptable Real
Estate Collateral
- 1-4 Unit
Residential and Small, Multi-Family (5 to 19 Units)
- Properties
May Be Titled in Limited Liability Company, Corporation, or Partnership
- No Limit
on Number of Investment Properties Financed
- Flexible
Underwriting Guidelines with Total Debt-to-Income Ratio of 65% Allowed
- Great for Self-Employed Borrowers
- No Prepayment
Penalty and Partial Releases Allowed As Units Are Sold
- Quick
Pre-approvals, Approvals, and Closings (Loans Can Typically Close Within
One Week of Application)
- 180 Day
Loan; Interest Only Payment Due Monthly OR 270 Day Loan; Interest Only
Payment Due Monthly
- Interest
Rate = Prime plus 3% Floating with a Floor of 7.75% (For Non-Owner Occupied)
- Separate Rate Quotes For Owner-Occupied
- Funds
for closing can come from equity lines, gifted funds, possible cross-collateralization
with other properties, etc.
Minimal Fix-N-Flip Investor Documents!
- Last 2
Years Tax Returns
- Current
pay stub if applicable
- Copy of
contract when investor obtains one
- Rehab
list when investor obtains a contract on a property
- Self-Employed
can do "flexible income" with 620 credit score
- Total
debt-to-income ratio can be up to 65%
For Commercial Mortgage industry...
see our page on CMBS (Commercial
Mortgage Backed Securities)
2nd mortgages not allowed...we show a way around this
see Mezzanine Loans
...for Commercial Mortgage Loan Financing
How to get a Junior Lien (similar to second mortgage)
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