In this video, Brock VandenBerg, President of TaliMar Financial, discusses the Fix and Flip Loan, a common loan type funded by TaliMar Income Fund I, our mortgage fund. The Fix and Flip Loan is a loan secured on a single family or similar type property in which the borrower intends to renovate and then either sell or refinance the property. In both cases, the borrower is improving the property to add value. Those improvements may include a cosmetic renovation or a full interior and exterior renovation that may include adding square footage.
The loan is typically underwritten to future value and includes a renovation reserve to fund future construction costs. Those renovation funds are disbursed to the Borrower over the course of the renovation to ensure the work is completed.
The advantages of the Fix and Flip Loan for the mortgage fund is that the borrower intends to improve the property and the borrower has a clear exit strategy. The biggest hurdle on these transactions is the Borrower’s ability to complete the renovation. That is why when funding these types of loans, the Lender needs to minimize the risk of the construction component. That is typically done understanding how the Borrower intends to complete the renovation and by holding the renovation funds.
As of January 2022, TaliMar Financial has funded over 500 Fix and Flip Loans totaling over $200 million. We currently service a loan portfolio of over 80 loans totaling $50 million. Though not all are Fix and Flip Loans, we have created processes that minimize the risk the renovations are not completed and of accurately valuing the property once the renovations are complete.
TaliMar Financial has developed an easy way to view and subscribe to our Trust Deed offerings. Simply create a Lender Account and access trust deed investment opportunities through our online Lender Portal. You will also have access to view your portfolio of trust deeds and other tools available to our trust deed investment community.