FAQ for House Flipping Loans in Texas
Is an appraisal required for a fix and flip?
No, in most cases an appraisal is not required. Since most fixer uppers are damaged in some kind of way, an appraisal isn’t necessary for a hard money loan in Texas. However, a home inspection will be required to confirm the condition of the property.
How do I get a distressed loan?
If you have a credit score of at least 660 and want to purchase a distressed investment property in Texas, contact us or call (512) 399-4476.
How do fix and flip loans work?
Fix and flip loans use the after-repair value ratio (ARV) to calculate the maximum loan amount. The lender will predict the market pricing of a real estate property after repairs have been completed. Depending on interest rates, down payment and other lender factors, expect the maximum LTV to be 75%.
For example, let’s say you want to finance a $100,000 fix and flip property. The lender estimates it’ll be worth $200,000 after repairs. This means the maximum a private lender will lend you is $150,000.
The additional $50,000 will come in the form of construction draws. Since the maximum LTV is 90%, you’ll need a minimum down payment of $10,000 for the $100,000 real estate property.
What is after-repair value?
Lenders will use comparable properties in Texas to predict what the after-repair value is after renovations have been completed on the subject property. They will take into account the materials you plan on installing, such as granite. Additional square footage or bedrooms increase the after-repair value (ARV).