Fix and Flip Programs

Our Fix and Flip Loan Program

Fix and Flip loans are loans made to Realtors or real estate entrepreneurs who purchase single family houses below market value in need of repair. They correct what’s wrong and then sell the property, hopefully at a substantial profit, to an “end user”- usually someone who wants to make the house his or her primary residence. Some people also keep these houses as rentals for appreciation.

Since 1998 we have made over 500 of these kinds of loans usually to everyone’s satisfaction.

How it works

In the current real estate climate our borrowers usually find and place under contract a house owned by a lending institution. ( an REO). As everyone knows, the Denver market is literally flooded with them. That’s both good and bad.

It’s good in that there is lots of choice and that the banks are very anxious to get rid of all that inventory. It’s bad in that buying may be relatively easy, selling isn’t!

What appears at first blush to be a killer, no lose deal, can in fact eat your lunch.

Very few bank owned deals make sense as a fix and flip prospect and it takes a great deal of work to find one that allows the entrepreneur enough room to make a good profit.

The key is to have an end product that you can afford to sell cheap enough so it will sell quickly in today’s depressed market.

You must buy sub- wholesale and sell wholesale to survive!

An Example.

You find a house that you figure will quickly sell, after it has been fixed up, for $175,000.00

It will cost you $20,000.00 to make it really nice.

From long experience we know that you cannot afford to pay more than 75.00% of $175,000.00 or $131,250.00 less that $20,000.00 or $111,250.00

If you find such a deal we will finance your purchase as follows:

We will lend you: $117,000.00

Less a 5.00% loan fee: $ 5,850.00

Amount we bring to closing: $111,150.00

If you are foolish enough to pay more or if we disagree on the eventual sale price after fix up, then we will ask you to put down the difference or offer us additional collateral.

Your loan will be written for 12 months payable in monthly interest only installments at the rate of 12.00%. So in this case your payment will be $1,170.00

There is no prepayment penalty so you can payoff your loan in one month and only owe one month’s interest.

There are no other fees of any kind other than those imposed by the title company.

We do our own appraisals in a timely manner at no cost to you. We prepare our own loan documents for free and we attend the closing saving you even more.

Credit and other requirements

If you are new to us we will ask you to bring us an in file credit report. We do not have any minimum requirements but we just want to see who you are. If you have had credit problems that does not automatically disqualify you. We just want to know who you are and hear your story.

We do however hope that you have had some experience. You must either be a Realtor, contractor or be in a line of work that fits. Starting cold in today’s depressed market could cause both of us problems.

Fix up money.

Should you need it, we will provide fix up money. Here’s how it works:

Using the example above we will do the following:

House after fix up value: $175,000.00

75.00% $131,250.00

Fix up escrow established from which you can draw: $ 20,000.00

5.00% loan fee: $ 5,850.00

Amount we will bring to the closing: $105,400.00

Please be aware that none of these figures are set in stone. We are flexible as we are anxious to do a deal.

How to get started.

Before you start, please call us and let’s talk. We can provide you with a “lender letter”, which will show any prospective seller you have the wherewithal to buy the house.

We may give you some hints on where to look and where to stay away.

We may also discourage you from even starting. This business is not for everyone!

Feel free to call me, Tom Van Erp,
at 303-816-4420 during business hours