Think basic, structural, substantial water damage, or electrical concerns, not obsolete appliances or flooring. Unless you’re a seasoned flipper with a lot of experience pricing significant upgrades, a house that’s falling apart (literally!) isn’t an appealing alternative. Want to learn more? visit us.

Even if you believe the property has potential, if local real estate rules require you to reveal prior issues that you have addressed, the property may sell for significantly less than you anticipated. This will have an impact on your ability to repay the lender. Finding a quality fixer-upper is exciting, but picking a fixable flip property increases the likelihood of the loan being approved.

Your renovation and repair costs should be modest and not balloon your property’s total cost. If it’s obvious that your fix and flip will necessitate a substantial loan compared to the property’s value, the lender may be hesitant to lend.

Examine what repairs are necessary and which renovations will add the most value to your house. Be objective, and take your project list to the lender for more clarity. Choosing a house that only requires cosmetic repairs as your flip is more likely to get you a loan and a profit) than one that requires a complete addition or new foundation, for example. It all boils down to the sale price in the end. You’re more likely to acquire a favourable verdict from a lender if the anticipated resale value of your home readily covers the loan amount you request.

Demonstrate to the lender that you will repay their loan. Consider this scenario: You need a $130,000 loan to support a fix-and-flip that you expect to sell for $200,000. It’s possible that the deal numbers will be as follows: In this example, you’re borrowing $120,000, or 60% of the property’s prospective resale value. Because you put down a 25% down payment on the first loan and have a 40% ownership stake in the final sales price, the lender is unlikely to refuse you a loan.