So you just got that contract you‚Äôve been waiting for and now you need a loan to help you buy, fix, and flip. You‚Äôve gone to various money lenders and were turned down by all of them. You want to learn why before going to another lender. If this has already happened to you, consider how you are selling yourself. Just like when buying the actual real estate, it‚Äôs all about how you sell it.
Keep in mind, the lender is now your customer. While you do need that loan, you have some ground work to lay. Take control of it from the very beginning and you will be much better off in the end.
Begin by organizing your materials. Put together a binder complete with tabs outlining each section. The sections should be as seen below.
Begin with an ‚ÄúAbout Me‚Äù section. Here you will include your FNMA 1003 loan application, a copy of your credit report, a copy of your driver‚Äôs license, and a resume briefly outlining your past experience. If you have never had experience flipping houses, at the very least be sure to include a list of books and seminars you‚Äôve attended. List references if you have them as well.
Next you‚Äôll need the purchase contract. You‚Äôll need to include a copy of the purchase contract complete with addendums.
Now you need to include the appraisal. This would be ideal if you have it. If not, you‚Äôll at least want to supply a real estate broker BPO (broker‚Äôs price opinion).
You will also need an insurance binder. This is a copy of your insurance company‚Äôs commitment to insure. It will help the lender understand just how serious you are about the loan.
You will also want to include a copy of the title commitment. Again, this will illustrate how serious you are about making the sale.
You will also need photos. Choose pictures of the property as it appears both inside and outside. This will show it in its best possible light.
Be sure to also include a copy of the inspection report. The professional inspection is a very important part of any sale and showing the report will help you obtain your loan.
Include a repair estimate. This should come from a licensed general contractor. A copy of the license should also go here.
Break down the numbers. Make a spreadsheet of all the numbers involved and add it to your binder. This will include: purchase costs, closing costs, repairs, holding costs, realtor fees, and any other costs you will incur.
The last item should be your timeline. This should diagram your entire construction project.
Now that you have a product to sell, it‚Äôs time to go out and approach your hard money lender to acquire different results. You may just wind up getting that loan after all.