How to Submit a Winning Fix-and-Flip Application
At The Hard Money Co., we see A LOT of applications. Some are practically guaranteed to close, while others… not so much. You can bet we take the time to thoroughly review each one, but the truth is, we can usually tell what the end result will be after just a quick glance at the application.
Sometimes, it’s the deal itself. But other times, it comes down to how the applicant communicates and the effort they’ve put into the application and the deal before sending it our way. In this post, we’re going to break down the issues we see most often and show you how, as a smart and dedicated borrower, you can submit an application with the best chance to close.
Is This an Investment-Ready Deal?
First things first; we need to know that you’re looking for an investment project. You might not be surprised to hear how often we get applications for things like kitchen renovations or personal home improvement projects. While those are great projects, they aren’t what we specialize in. At The Hard Money Co., we focus exclusively on helping real estate investors fund their projects. If you’re looking to flip or rent a property, we’re here for you, but personal home renovations aren’t in our wheelhouse.
Along with that, we need to ensure that the property is non-owner-occupied. This is a key point for us. A non-owner-occupied property signals to us that this is an investment, not a personal residence.
Finally, we need to know that you have a deal in hand. This means your property should be under contract. While it’s not absolutely essential to have the deal under contract when submitting an application, having the deal locked in tells us you’re serious and ready to move forward. It’s one thing to inquire about funding, but it’s another to show us you’re already in the game.
The Numbers Have to Work
Having a deal is great, but the numbers need to make sense. To determine whether we can fund your deal, we look at four key data points: purchase price, repair budget, after repair value (ARV), and cash on hand.
We check the purchase price and repair budget to see the total funds required. Then, we compare this with the ARV to ensure there’s enough profit margin. If the deal is too tight, it’s not a fit for our loan product. But if the gap between purchase/repairs and ARV is wide enough, we know you’ve got a solid deal.
Lastly, we assess your cash savings. We require our investors to have skin in the game, which ensures our goals are aligned for a fast, successful project. If you don’t have the funds yet, that’s okay! Look into raising initial funds through other people’s money (OPM) to get started.
Your Strategy and Experience
Finally, we look at your strategy and experience. Your strategy should be clear and well thought-out. First and foremost, we need to know your exit plan. Are you flipping the property to sell at the end of the loan? Or are you using a BRRRR strategy that will require refinancing? We’re flexible on the strategy, but you need to have a solid plan in place.
Next, we need to understand what you’re doing to the property. Distressed assets need repairs to unlock value, and you must have a clear plan for what repairs are needed, how long it will take, and how much it will cost. This is called your scope of work, and it’s crucial for demonstrating to us that you know exactly what you’re doing.
Lastly, we assess your experience. If you’ve done this before, great! If you’re just starting out, don’t worry. While you can’t fake experience, you can show us that you’re committed to putting in the work and making real estate investing your path to long-term wealth.
Conclusion:
At The Hard Money Co., we’re committed to helping dedicated real estate investors succeed. By ensuring your application is thorough, realistic, and backed by a clear strategy, you’ll set yourself up for a smooth process and a successful deal. Ready to get started? Submit your application today and let’s turn your next project into a success.
