Craven Academy: Real Estate

Since flipping loans are based on the value of the house, the borrower's credit is not as big a factor as in other loans. That is not to say that credit is ignored altogether. The lender will usually run a credit report to look for red flags. They may not be willing to lend to someone who has had a significant number of credit problems but they will be much more lenient that traditional lenders.

While flip loans make it possible to do deals that could not ordinarily be done, they add a large financial burden to the deal. If a project last 6 months from start to final sale the financing burden could easily be 10-15% of the total cost of the project.