Hey,
Most active flippers are stuck on a treadmill and don’t realize it.
They find a deal. They run the numbers. The deal makes sense. Then they scramble. Either they’re waiting on a previous project to close so they can free up cash, or they’re calling a private money guy who wants a chunk of the profit just to move fast.
Both options hurt you. One costs time. The other costs money.
Here’s the thing though. Most of the flippers I talk to aren’t struggling because they’re bad at finding deals or managing rehabs. Their operations are solid. The problem is their capital is always tied up inside active projects. They’re waiting on a rehab to finish. Waiting on a sale to close. Waiting to have money again.
So they flip, net $40,000 or $50,000, and immediately dump it back into the next down payment. Right back at zero. Always one deal away from liquid. Working hard but not actually building anything that compounds.
That’s the treadmill. And almost every active flipper is on it.
There’s a program available right now that changes this picture pretty significantly, at least for experienced investors. It lets qualified flippers get 100% of the purchase price and 100% of the renovation funded. No down payment. You’re just covering closing costs.
I know how that sounds. Keep reading, because I’m going to show you a real deal with real numbers.
Derek had been flipping houses for several years. Good track record. Clean. He found good deals, managed his contractors, sold for a profit. The issue was the same one most active flippers run into. His capital was always locked inside deals in progress. So when a great opportunity came up, he had to choose between waiting or giving up profit to a private money lender.
That was his ceiling.
When I walked him through this program, the numbers changed everything.
Derek’s Deal: The Actual Breakdown
Single family property in Georgia.
Purchase price: $600,000
Renovation budget: $300,000
Total project cost: $900,000
Total loan amount: $900,000
Down payment: $0
After Repair Value (ARV): $1,600,000
At $900,000 on a $1,600,000 ARV, Derek was sitting at a 56% loan-to-ARV. That’s an important number. The program wants to be under 75% ARV. At 56%, this deal had a healthy spread, so it worked cleanly.
So what did Derek actually bring to closing?
$14,795.
That covered the $13,500 origination fee and a $1,295 processing fee. No down payment. No interest reserve.
Now, there are two other numbers worth knowing. You need post-close liquidity of around $56,970, and the estimated total required for the deal was $71,765. So you’re not walking in with nothing. But you’re not burning $150,000 to $200,000 just to get into one project either. That money stays in your account, available.
You also need some starting capital to get crews moving on the front end. Once you hit your draw milestones, the construction funds come in stages as work gets done.
What Happened After the Rehab
Derek finished the project. ARV came in at $1,600,000.
Instead of selling and dealing with capital gains, he did a DSCR cash-out refinance at 75% of the after-repair value.
No tax returns. No W-2s. No personal income verification. The loan qualified based on what the property could rent for.
75% of $1,600,000 is $1,200,000.
That cash-out paid off the original $900,000 flip loan. After the payoff, Derek walked away with $300,000 in his pocket. The property is now a rental sitting on a long-term DSCR loan, generating cash flow every month.
He took that $300,000 and split it across closing costs on multiple new deals. He’s now running several more fix and flips using the same structure.
So let’s trace what actually happened here.
He came in with $14,795. Finished the rehab. Refinanced, paid off the loan, pulled $300,000 out. He now has multiple projects running and a rental producing monthly income.
Less than $15,000 to do all of that.
What If the Equity Isn’t Enough for a Full Cash-Out?
Not every deal ends with enough equity to do a full cash-out refinance. If you’re in that situation, there’s also the option of a DSCR HELOC. A revolving line of credit tied to the property based on rental income. You pull from it, use it, pay it back, pull again. No requalifying each time. Works inside an LLC. No seasoning requirement.
It’s a flexible backup and worth knowing about.
What the Program Actually Requires
On the credit side, you’re generally looking at a middle score around 650 to 660, with some flexibility depending on the full picture. So if your credit has taken a hit or two, don’t assume you’re out before you ask.
You also need six months of reserves. And here’s the part that’s easy to miss: because you’re not putting 10 or 20% down, that money stays in your account. The cash you would have burned on a down payment is now sitting there as liquidity. Hitting the reserve requirement is a lot more realistic with this structure than it sounds.
The main catch is the track record requirement. The threshold for 100% financing is 30 completed flips in your lifetime.
If you’re not there yet, that’s fine. If you have a partner or developer in your network who is, you can joint venture with them on the deal and still get the benefits. JVs aren’t new. That’s a legitimate path until your own track record is there.
The Bigger Picture
The reason most investors never break out of the treadmill is pretty simple. They spend so much on the front end that there’s nothing left to recycle.
With a structure like this, you keep your capital. The lender funds the deal. The refinance recycles the equity. You move to the next one without starting from scratch.
That’s the difference between flipping to survive and building something that actually compounds.
If you want to find out exactly where you land and what your options look like on your next deal, book a strategy call. It’s free. We’ll go through your numbers, your experience, your credit picture, and put together a real plan.
Ben Stef Mortgage Advisor NMLS# 2018674
Comments
Nothing yet. Say the first thing.
Sign in to join the conversation.