How do I apply for a fix & flip loan?

Estimated reading time: 6 minutes.

Post outline

Finding a fix and flip lender
Navigating a fix and flip lender’s website
The preliminary application
Preliminary application follow-up/working with your loan officer
Conclusion

Finding a fix and flip lender

There are many ways to find a fix and flip lender that meets your needs.

Below is a list of resources that you may use on your lender search:

BiggerPockets: If you aren’t already part of the https://www.biggerpockets.com/ community, then you may want to consider joining. BiggerPockets has a ‘Network’ tab on its website with a list of reputable lenders that you can search by state.
Local Meetups: Local meetups can be a great place to find local investors and real estate service providers, including fix and flip lenders. By speaking with other real estate investors, you can typically get a good sense of which lenders in your area have a good reputation, and which lenders you should stay away from.
Local Realtors: Local realtors may be able to refer you to lenders who can help you with your fix and flip project. If you are speaking with a realtor, you will probably want to speak with one who focuses on investment properties as opposed to owner-occupied properties, as realtors who focus on investment properties are more likely to have lender contacts for investors.
Title Companies: Speaking with title company reps can be beneficial because they interact with a large number of lenders. Experienced title company reps will often have a good idea of who the best, or at least most-used lenders in your area are.

The above list is not exhaustive, but can serve as a solid starting point for your fix and flip lender search.

Navigating a fix and flip lender’s website

For this section, we will be using our website to demonstrate how to navigate a fix and flip lender’s website.

If you want to follow along, you can visit our website at https://albeca.com/

Above is the top half of our homepage.

You can see that there are a couple of options from the home screen, but we try to make the ‘Apply Now’ obvious, and for good reason!

Most fix and flip lenders’ websites that you visit will have a similarly prominent application button.

You can also note our ‘Contact us’ button as one of the top options; we want to make it easy for prospective borrowers to contact us, and most fix and flip lenders’ websites will also have an easy to access “contact us” option.

The preliminary application

To apply for your fix & flip loan, the first step is to fill out a preliminary application. Most fix & flip lenders will try to make both accessing and filling out the preliminary application a straightforward process.

At Albeca, we feature our preliminary application right here: https://albeca.com/rei/

Some of the categories of information that you will frequently encounter on a preliminary application are as follows;

Your personal/contact information
Your liquidity; cash, money in stocks/bonds, money in retirement accounts, etc.
Your target property
Your loan request

Let’s talk briefly about why a fix & flip lender might collect information from each of the above categories.

Your personal/contact information: When a lender asks for your personal/contact information, most of the time they are trying to get information that allows them to follow up with you. Filling out this information allows the lender to gather some basic details about the best way to contact you should the deal move forward.

Your liquidity; cash, stocks/bonds, retirement accounts, etc.: Having money makes it easier to get money, and fix & flip lending is no exception. As a rule of thumb, try to make sure that your liquidity (the sum of cash and money in liquid accounts like a stock portfolio or a retirement account) exceeds 1/3rd of the requested loan amount. Many lenders will apply a ‘discount factor’ to non-cash accounts, which may mean that the value in your stock portfolio, for example, only counts for 50% of its face value.

Your target property: No surprise here. Fix & flip lenders are going to want to know where your property is located, how much you’re purchasing it for, how much rehab work you’re doing, and what you plan to sell the property for. These deal fundamentals allow a lender to quickly evaluate whether the deal makes sense or not, as well as provide confirmation that the property is located within the fix & flip lender’s geographic footprint.

Your loan request: Savvy fix & flip borrowers understand that being reasonable about their loan request numbers makes lenders view them with increased seriousness. Some typical numbers that you might see are;

85% LTC → 85% ‘Loan-to-Cost’ or 85% of the total project cost funded

65% LTARV → 65% ‘Loan-to-Value’ or 65% of the after-repair value funded

If your loan request is within those guidelines, a lender is more likely to take your request seriously and respond promptly.

Once you fill out the above information, the company will typically have an account rep reach out to you to discuss the next steps in your application, one of which is getting preliminary terms.

Preliminary application follow-up/working with your loan officer

After you fill out the preliminary application, it is then up to the fix and flip lender to reach out to you. For most fix and flip lenders, you can expect follow up within a business day or two.

It is at this point that you will likely be assigned a loan officer or account representative. This account representative is your loan liaison, and also represents your point of contact with the fix and flip lender.

The documents that the loan officer requests next will vary, but oftentimes the most urgent items are some form of a loan application, a scope of work, and a purchase contract.

The loan application is arguably the most heady portion of the loan procurement process. The loan application is in many ways a more in-depth version of the preliminary application.

The scope of work shows the renovation line items and their associated costs. Sometimes, a scope of work will also ask for the timing of construction draws. The scope of work represents the “fix” portion of the “fix and flip”, and lets the lender know how much rehab work will be done and what kind.

The purchase contract shows that you have a live deal. Sometimes, before moving too far forward in the loan application process, a lender will ask for a purchase agreement that is signed by both the buyer and seller, also known as a “fully-executed” purchase agreement. When a purchase agreement is signed by both the buyer and seller, this tells the lender that the deal is serious, both parties intend to consummate the transaction. Additionally, there is often money at stake for the buyer.

Conclusion

There are several ways to find reputable fix and flip lenders from real estate investing communities to conversations with local real estate professionals. Once you find a lender that suits your needs, you will then likely need to fill out an online application, and begin to work with a loan officer or account representative.

The account representative will help you through the loan process and likely request a series of documents following the preliminary application. Some of the documents likely to be requested are; the loan application, the scope of work, and the purchase contract.

Do you need financing for a current or upcoming fix & flip?

If so, you can fill out our preliminary application at this link to get started.