In the competitive realm of real estate investment, securing adequate financing for fix and flip projects can often pose significant challenges. Traditional lending institutions may have stringent requirements, and navigating through the process can be cumbersome for investors. However, with innovative approaches and tailored solutions, it is possible to streamline the financing process, ensuring a smooth transaction for our investors.
Challenge:
In a recent case, a real estate investor approached our firm seeking financing for a fix and flip project. The property in question showed promising potential, but the investor faced a hurdle; remain as liquid as possible for other projects on the horizon.
Key Initiative:
Recognizing the opportunity to provide value to the investor while still maintaining our lending standards, we devised a mutually beneficial solution. Our standard Fix and Flip loan program typically covers 75% After Repair Value (ARV). In this scenario, the projected costs and estimated ARV were in line with our program and allowed us to finance their origination costs. This ensured that the out-of-pocket expenses at closing were minimized, with the investor required to pay only a nominal sum of $606.00.
Business Impact:
The impact of this initiative was two-fold. Firstly, by effectively reducing the upfront financial burden on the investor, we facilitated a smoother closing process. The investor was able to proceed with the project without undue financial strain, leading to enhanced satisfaction and trust in our services. Furthermore, this approach resulted in significant cost savings for the investor. By rolling in the origination fees, the investor avoided the need for additional out-of-pocket expenses, preserving capital that could be allocated towards renovation costs or other project-related expenses. This not only improved the investor’s cash flow position but also maximized their overall return on investment.