How to Present Your Fix and Flip Deal to Investors and Lenders

When working with clients on fix-and-flip projects, third-party originators, such as brokers, private lenders, and referral partners, need to present deals effectively to attract the right financing for their clients. Knowing how to present a fix-and-flip deal to investors and lenders is key to securing the funding your clients need. Here’s how you can guide your clients in presenting their projects and help them build a solid case for financing.

Signs a Property is Worth Flipping: What to Look for When Helping Clients

As a broker or private lender, understanding the right indicators of a good fix-and-flip property will allow you to identify solid opportunities for your clients. Here are some critical signs that tell you a property is worth investing in:

• The house is priced below market value
• Property records are clear and suitable
• Property follows the 70% rule (purchase price plus repairs should not exceed 70% of the ARV)
• Repairs are minor and manageable

Having a solid grasp of these metrics helps you identify deals with lower risk for your clients, making it easier to secure financing from lenders.

How Brokers and Lenders Can Support Fix and Flip Deals

As a broker or private lender, it’s crucial to understand how to position a fix-and-flip deal to a funding source. Lenders, like RCN Capital, look for key factors when considering loan applications, such as the investor’s strategy, potential ARV, and the risks involved with the property. By helping your clients focus on these key areas, you can significantly improve their chances of securing the necessary funding.

Know the Strategy Inside and Out

Lenders need to understand the investor's strategy to assess the risks and potential returns on the project. Help your clients prepare by ensuring they know their exit strategy, projected timelines, and how they plan to manage risks. This will help make your clients more prepared and increase the likelihood of securing financing.

Research Your Lender

As a partner helping your client secure funding, it's essential to understand the lending criteria of different lenders. Some lenders may place more importance on credit scores, while others prioritize the property’s potential. Understanding the lender’s qualifications, interest rates, and terms allows you to better present a deal that meets the lender’s criteria, increasing the chance of approval.

Preparing the Right Data: A Broker’s Checklist

The more data you provide to lenders, the more confident they’ll be in financing the project. Here's a checklist of key data points to help your clients prepare their fix-and-flip deals for lenders:

• Macro and microeconomic market conditions – Lenders appreciate when you demonstrate knowledge of local and national real estate markets. This helps them assess the feasibility of the project.
• Comparable sales (comps) – Showing comps from the neighborhood helps lenders assess the property’s ARV and how it compares to similar properties in the area.
• Repair estimates and budgets – Lenders will want to know how much money is needed to complete the renovations. Having a clear breakdown of costs and timelines is essential.

Understanding ARV: The Key to Unlocking Funding

For brokers and lenders, the After Repair Value (ARV) is one of the most important figures in a fix-and-flip deal. It’s the amount the property is expected to be worth once all renovations are completed. Lenders will assess the ARV to determine how much capital is needed to complete the project and how the property can act as collateral for the loan.

Presenting a well-researched and realistic ARV estimate gives lenders confidence in the project and helps your clients secure funding more easily.

Comparing Nearby Properties: Building the Case for Lenders

One of the best ways to enhance the credibility of your client’s fix-and-flip deal is by comparing similar properties in the area. This helps demonstrate the potential profitability of the deal, showing that the project is in line with other successful flips. Lenders will appreciate the effort and are more likely to provide financing if they see that the property is aligned with market trends.

Partnering with RCN Capital for Your Fix and Flip Deals

As a trusted third-party originator, your role in presenting fix-and-flip deals to lenders is critical to helping your clients secure the necessary financing. By preparing your clients with the right data, understanding their strategy, and researching lenders’ criteria, you can set them up for success. At RCN Capital, we offer short-term and long-term financing options for real estate investors, including flexible options for fix-and-flip projects. If you are looking to finance a real estate project, RCN Capital has competitive loan options available. Connect with us today to discuss how we can support your clients' next real estate investment.