Hi there, Brock Vandenberg with TaliMar Financial, your California hard money lender. Today, I want to give you some tips on getting your fix and flip loan approved. Here at TaliMar Financial, we funded well over 500 fix and flips. I’ve seen every type of fix and flip from just a quick, easy cosmetic project all the way up to a ground up construction project. So here’s some tips that I would offer when submitting your loan request for a fix and flip loan.
Tip 1 – Get Pre Approved
Number one, get pre-approved. It is much easier for me to underwrite you as a borrower and your transaction if you’ve already submitted all your personal information to TaliMar Financial to get pre-approved. That way, once you get pre-approved, we can expedite the underwriting of that transaction and focus just on the property and not underwriting you as a borrower.
Now, here at TaliMar, we do offer what’s called a preferred borrower lending program. Going through the preferred borrower lending program, you get pre-approved for our fix and flips, and that’ll give you access to a letter of credit and a proof of funds letter that you can submit with your offers. That’s important because when a listing agent receives offers, they’re going to want to see that you’re getting pre-approved through a lender. Number two, it’ll give you access to our wholesale deal distribution list. So as wholesale deals come through our shop, we go ahead and blast those opportunities out to our real estate investment community, and it also gives you access to a five to seven business day closing. So it’ll give you expedited closings, which again will help you on your offers.
Tip 2 – Be Prepared to Explain Your Experience
Number two is be honest about your experience. So I want to know have you ever flipped a house and if you have, tell me about those types of projects. Now we definitely work with new borrowers. We just may modify the loan structure a little, or we may suggest that you partner up with a seasoned investor on your first or second transaction.
Tip 3 – Understand the Hard Money Loan Structure / Pricing
Number three is understanding the loan structure and pricing early in the process. So as a fix and flip lender, we’ll typically fund a large portion of the purchase price and 100% of the renovation costs. However, you are still going to be required to put funds in the transaction. Those are typically called gap funds or your equity contribution. You’re going to want to understand how to calculate that. Typically, it’s going to come as a percentage of the purchase price plus the closing costs plus the holding costs for that loan over the duration of the loan.
Tip 4 – Complete a Your Own Valuation Analysis
Number four is doing a comparative analysis or a valuation analysis before submitting your loan request to us. Now, here at TaliMar, we’re not going to do the loan valuation for you. We’re going to want to see that you’ve done your due diligence. Submit that what we call after repair value along with the comparable sales that you used to substantiate that value. What we’ll do in-house is do our own valuation to ensure that the value you came to is actually in line with the valuation that we came to. Now, if there’s some differentiation, we’ll sit down and understand where that came from. Maybe there’s some elements of that property that give it a higher value than other comparative sales in the market.
Tip 5 – Review your Scope of Work, Project Budget, and Timeline Carefully
The fifth tip that I would offer is be realistic about your scope of work, your project budget and your timeline. In a lot of cases, and especially with new investors, is they have this confidence that the project’s going to be done in 30 or 60 days. But when I look at that scope of work, it’s going to take a good five to six months to renovate the property and get it listed and sold, so be realistic about that. Also, your scope of work and project budget, a lot of cases, I have newer borrowers that’ll come in with a very low budget.
But when I do look at that scope of work, when they start talking about changing out kitchens and bathrooms, modifying the floor plan, maybe fixing a foundation issue or a roof issue, you start to recognize that the scope of work and project budget is much higher than what they had submitted. And then number six and the last tip that I have is be very prompt with submitting your due diligence material. We understand that getting an opportunity or getting your offer accepted, most cases, they’re going to have to close very quickly.
By submitting all your diligence material to us quickly, we can quickly underwrite that transaction, get you approved and get you funded and on your way. So those are the tips that I would offer in getting your fix and flip loan approved. If you’re interested in learning more about our pre-approval borrower program or about the fix and flip loans that we offer, my contact information is here. We appreciate you listening and take a look at some of the other video content that we have filmed. Thank you.