How a Flip Loan Works With Larry
You find the house. Larry values it himself from comparable sales, with no appraisal and no appraisal fee, and decides the same day. You close, often within days. You do the work. You sell. The sale pays off the loan, and because there’s no prepayment penalty or minimum interest, you only pay interest for the months you held it.
As-Is Value, Not After-Repair Value
Many flip lenders size the loan on after-repair value, or ARV, which is the estimated value once the work is done. Larry doesn’t. He lends on the property’s value today, based on comparable sales.
That changes how much cash you need. Say you’re buying a house for $240,000 and Larry values it at $240,000. At 75%, he’d lend $180,000, and you’d bring the other $60,000. The repairs, closing costs, and a cushion for surprises come on top of that.
The upside is that you’re not borrowing against a number that only exists if the rehab goes perfectly. The downside is that you need more of your own money in the deal. Plan for both.
What The Loan Costs On a Flip
Take that $180,000 loan. Interest runs $1,948.50 a month. If you take the 6-month term and sell in month four, you’ll pay 2 points ($3,600) plus four months of interest ($7,794), for a total of $11,394.
Choose the 12-month term instead, and the same four months costs $13,194, because the longer term carries 3 points. That’s $1,800 for time you never used.
Picking The Right Term
Most flips should fit inside six months if the scope is clear and the contractor is reliable. If the house needs structural work, permits that take time, or the market in your area is slow to sell, the 12-month term gives you more room.
Larry’s loans are also renewable, so starting on the shorter term is an option when you’re close. Ask Larry what a renewal costs before you count on it, so you can compare it with the extra point.
If This is Your First Flip
Larry’s loan amounts are set partly by your history with him. First-time borrowers typically get 70% to 80% of his valuation, and repeat borrowers can borrow more.
What matters most on a first flip is that the numbers hold up without everything going right. Know your rehab budget before you close, add a cushion for the problems you’ll find once the walls are open, and have a realistic idea of what the house will sell for and how long that’ll take. If the deal still works with the loan cost added in, it’s a deal worth calling about.
Is There A Credit Check?
There’s no hard credit pull. A personal guarantee is required, and good credit can help you borrow a higher percentage of the property’s value. Larry looks first at the property, not your credit report.
Where Larry lends
Fix and Flip Loans in Texas FAQ
What is a fix and flip loan?
A fix and flip loan is a short-term loan to buy a property, renovate it, and sell it. At Larry the Lender, flip loans run 6 or 12 months at 12.99% interest-only, and the sale of the house pays off the loan.
