Financing A Property To Flip
I recently made an offer on a property that I plan to flip. The issue is that now my lender has changed their mind and is now requiring 20% down on the property.
Can someone advise me on the best method of including the down payment in the loan? Or if there are other methods to obtain the 20% needed to closed please advise.
Brian (Riverside County California)
It all depends on the property and the borrower. Is it a multi family or a single? What are your FICO scores? Are you going full doc or stated? How much do you have in reserve? Most lenders will only go to 95% cltv (combined loan to value)
maybe you could inflate the purchase price and have the seller carry a fictitious second.
lender see's it as 80% when in reality its 100%, seller destroys and never records 2nd td.
maybe this will work for you maybe not, just depends on how trustworthy your seller is, and all other details... hope this helps.
thats how i bought my owner occ. prop.
thats my 2 pennies worth.
banks want payments and they don't want to hear the word flip. If you don't tell them, (go owner occ) then they will hit you with a prepayment penalty 1-5% of the loan when you sell. If you have good credit you can get a Zero Doc loan and get in as an owner occ for 0-5% very fast,since there's no verifications to get but you burn your bridges when you resell inside the pre-pay period. Best is to get a hard money guy. If the deal is good you'll be closed inside 10 days with very little closing costs but heavy points and rates. But so what it's only for 2-3 months. Make sure that you have the down payment, closing fees and the payments for 3-4 months mortgage. Remember you have to have time to fix, sell, and then wait for thir bank to close-cover your butt make sure the profit spread is there!! good luck!