Flipping from the lenders view

I look at potential flips everyday. We loan 70% of ARV. I see lots of eager and competent investors but sometimes the enthusiasm clouds thier ability to judge a deal.

Dont push values, dont chase deals (banks are chasing investors now, let the deal come to you and your offer).

We dont want to own the the property we loan on nor do we want to put an investor in a position to fail.

ex: sell a house for 100k, what do you net.

6% commission
3% seller contribution or more if FHA
1% title policy

So a minimum of 10-12% closing costs on most deals. You net 89k, if we had loaned up 75%, after your holding costs (interest, utilities, insurance, budget overuns..)

you may well be near a net of 80k, so if everything goes pretty well you made 10k , then taxes, so you walk away with 5-7k. Not a good return and not a good risk by most standards.

Also, if you decide to refinance, that appraisal had better be tight. Its very difficult to finance beyond 75 - 80% for investor property. With no title seasoning you can expect an appraisal review.

The conclusion: dont push value, stay in the 70% rule or less and have realistic expectations about your holding time.

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