Your First Flip: A Lender's Checklist Before You Make an Offer
Lenders finance first-time flippers every day. The ones who get the best terms show up with the same few things ready. Here's the checklist.
Short answer
Lenders finance first flips when the numbers are realistic and the plan is credible. Before you offer, have a supported after-repair value, a line-by-line scope of work, a contractor bid, a budget with contingency, cash for the down payment and carrying costs, and an exit plan. Experience helps pricing, but preparation gets the deal done.
Key points
- A realistic ARV and a detailed scope of work.
- A contractor bid and a contingency budget.
- Cash for the down payment, carry and surprises.
Before you make an offer
- Run the numbers backward. Start from a supported ARV and subtract your target profit, rehab, financing and selling costs to find what you can pay; see after-repair value.
- Walk it with a contractor. Get a written bid before you're under contract, or as early as possible after.
- Write a scope of work. Line by line, room by room. Lenders size draws from it; see how rehab draws work.
- Add contingency. 10 to 15% of the rehab budget is common for a first project.
- Know your cash. Down payment, closing costs, interest, holding costs and the first phase of work before the first draw.
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What lenders look for
- A purchase price that leaves real margin
- A rehab budget that matches the scope
- An exit that still works if the sale takes longer than planned
- Liquidity to absorb surprises
How experience changes your terms
Lenders often offer higher leverage and better pricing to investors with completed projects. Your first flip starts that track record, so keep everything: invoices, photos and the closing statement.
Watch for the budget mistakes lenders flag most; see ten red flags in rehab budgets.
Frequently asked questions
Can I get a fix and flip loan with no experience?
Yes. Many lenders finance first-time flippers, often with somewhat lower leverage or higher pricing than for experienced investors.
How much cash do I need for my first flip?
Plan for the down payment, closing costs, interest and holding costs, plus enough to fund the first phase of work before the first draw is reimbursed.
What do lenders want to see on a first flip?
A supported after-repair value, a detailed scope of work and budget, a contractor bid, cash reserves and a realistic exit plan.
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