Craven Academy: Real Estate

The interesting point here is that by following our winning formula, (ARV x 70%) - Cost of Repairs = Maximum Price, you will rarely need to be putting in a lot of your own money. Using this formula will limit your purchase price to the maximum that you can borrow, repairs included. It should be noted, however, that many lenders would expect you to have some of your own money at risk until you have established a track record with them. This means that you may not be able to do a true no money down deal at first.

So now you know how much you can borrow; what is it going to cost? Since a flip loan is a hard money loan, it is considered a high risk to the lender. This means that you can expect it to be expensive. First there will be points associated with the loan. A point is equal to 1% of the amount borrowed. On flip loans to an experienced flipper who has a track record with the lender, you can expect to pay about 4 points, or 4% of the amount borrowed. Someone who is new to flipping, or is dealing with the