Are you a real estate investor or house flipper looking for better hard money fix and flip financing pricing on your next acquisition? Or, are you new to flipping houses and want to know the costs for hard money fix and flip financing for your first project?
If so, you’ve come to the right place.
First Capital Trust Deeds (FCTD) knows hard money lending, especially fix and flip financing. Since 2013, we've worked with numerous real estate investors and house flippers on their hard money fix and flip financing needs, securing loans from $100,000 up to $8.7 million.
This pricing guide will cover the many different pricing variables that go into hard money fix and flip financing, including:
There is a lot to explore, so let’s get started!
When new prospective borrowers call in, the first question they ask is, “What’s your hard money fix and flip pricing?”
Our answer usually is, “We’re at 2 points, 10.99% interest-only, and 80-85% Loan-To-Value (LTV) on the purchase and 100% Loan-To-Cost (LTC) on the rehab with a 12-month term, give or take. Let’s talk about your scenario to see if we have the terms that you're looking for.”
Usually, upon discussing their scenario, they fall into three camps. They may be relatively inexperienced (0-2 successful flips). Or, they're looking for 100% financing on the entire project because their liquidity is limited.
The third is that they're long-time house flippers with established relationships with a local hard money lender, who gives them 95-100% financing on their projects — but charges them 4 points at 13.00% during times when the market was 2 points at 9.00%. This prompts them to search the internet for lower-priced hard money fix and flip financing. Therefore, they’ve called FCTD to see if we could give them the same leverage of 95-100% LTV but at a much, much better price to boost their profit margins.
Since you came here to find out about pricing, let’s get right to FCTD’s hard money fix and flip financing pricing guide, which breaks down terms for three different borrower experience levels, using a hypothetical flip scenario in a major urban or suburban market (not ex-urban or rural) with the following attributes:
Borrower A (5+ flips per year):
This experienced flipper could receive the best pricing at 1.5-2 points, 10.99% interest-only, at 85% LTV on the purchase — plus 100% rehab financing. That’s pretty good pricing!
Borrower B (2-4 flips per year):
This level of expertise would receive an offer of 2-2.5 points, 11-11.50% interest-only, at 80% on the purchase plus 100% rehab financing.
Borrower C (0-1 flips per year)
This inexperienced borrower would be at 3 points, 12.00% interest-only, at 70-75% on the purchase plus 100% rehab financing.
Below are descriptions of the additional closing costs and fees you should expect with FCTD hard money fix and flip loans:
In addition to closing costs and fees, borrowers must pay the following items prior to or through the close of escrow:
Each hard money fix and flip loan has its own set of challenges and circumstances that can cause variations from the sample chart above. In some cases, we may be able to get the interest rate for an “A” borrower down to 10.50% if they're buying the property at a 10% discount from AS-IS value. Or, if they're overpaying by 10% on the purchase, the interest rate could be 11.50% and the LTV reduced to 75%. For this reason, we tell inquiring borrowers that our pricing is “2 points, 10.99%, at 80% LTV — give or take.”
The FCTD loan team has extensive hard money lending experience, closing over 3,000 loans since 2013, and securing fix and flip financing for projects big and small. We're happy to discuss hard money financing for your next project. If you have questions about what you've read here —or have a specific financing scenario to discuss — please request a consultation today.