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Experienced flippers partner with Fund That Flip to reach a large network of investors who are interested in funding their projects. There are several different sources of OPM and they generally fall into one of two categories: Negotiating each deal will be specific to the person with whom you are partnering. Putting together a deal that is mutually beneficial will largely be a function of what each of you are bringing to the table i.

Therefore, there is not a one-size-fits-all formula for how to negotiate these types of deals. Debt, however is rather straight forward.

A lender will agree to make you a loan for a fixed rate of return in exchange for some collateral, usually the asset the loan is being taken out for.

You will pay back the agreed upon interest and principal when the note expires. In other words, they prefer to earn their agreed upon interest and have their principal returned when due, and not have to foreclose.

Understanding when you are working with this type of lender is important as it will impact how they price and underwrite your deal. So what is the lender going to look at when determining whether to give you a loan? Show too many negative indicators and you will likely not get funded, even if the deal is good. So how do you make sure you minimize negative indicators and maximize your chance of getting a loan? Here are positive indicators you can send to your lender:.

Find a way to show that you are a qualified operator of your business. Feel free to get creative with this — but always be honest! Just as you prefer to deal with professional contractors, real estate agents, title agents, etc. Certain lenders have identified markets that they prefer to lend in. Get to the truth about whether they support your type of deals. Here are things to ask you lender:. In asset backed loans, the deal is one of the most critical components of the underwriting decision.

If your strategy is to refinance and rent the home, have a clear plan on what that looks like going into the deal. This complicates foreclosure proceedings, especially for lenders who have no interest in owning the asset.

What backup options do you have if the home does not appraise for enough to pay back the lender? Will you have enough equity to sell or enough reserves to absorb the costs? Debt is a great way to scale your business. It is rather straight forward once you have a relationship with a lender that likes your type of deals.

The process will continue to get easier over time as you do more and more deals. Understanding how your lender thinks will increase your likelihood of getting funding. Get to know your underwriters and most will be happy to tell you what their ideal loan looks like! Here is a great article with more information on hard money for flipping.

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How to Become a Millionaire… Using Other People’s Money

Financing Properties , Fix-and-Flip , Real Estate Investor. Mark Ferguson No Comments. Prev Article Next Article.

How to Leverage a Business With Other People's Money

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