The challenge was that the real estate investor was seeking minimal upfront closing costs for a quick flip (3-4 months) in the San Francisco Bay Area.
The solution, a flexible private money financing option tailored to fit the specific needs of the house flipper borrowers. The borrower estimated that they could be in and out of this property very quickly and preferred lower upfront fees in exchange for a higher interest rate on the loan. We structured the loan at 1 point upfront at 11.00% instead of 2 to 2.5 points upfront at 9.50% to minimize the upfront expenses for the private money loan. This arrangement worked well for the borrower, who knew they’d only be making three payments since the project was a quick cosmetic fixer that they’d be reselling into the white hot Bay area seller’s market.
Fix and Flip Financing Terms:
- $400,000 Loan Amount (53% LTV)
- 11.00% Interest-Only
- 12-Month Term
- No Prepayment Penalty
- 1 Point Origination Fee