Equity Investment: Flip

4 -6 Month Flip Investment: Traditional (for flippers) or Pre-Construction (for investors)

Traditional for Flippers

We offer rehabbers 100% financing for your deals. Given that Flips are a pure appreciation investment with significant risk related to After Repair Value (ARV) calculations and Rehab Costs estimates, we have very strict investment criteria. The maximum purchase price cannot be greater than the ARV less the Rehab costs, all multiplied by 70%. So for a property that has an ARV of $100,000 and Rehab Costs of $15,000, the maximum purchase price would be ($100,000 – $15,000) x 70% = $59,500.

We also have a strict methodology for determining the ARV based on our Automated Valuation methodology. We also require the flipper to pay for As-Is and After Repair appraisal reports before approving the 100% financing. The investor is also required to pay for a home inspection report that will detail the minimum rehab costs that need to be performed in order for the house to appraise at the After Repair Value.

At a minimum, we will manage the financing of the Rehab project and we will negotiate the terms of the Rehab contract on behalf of the 2nd mortgage lender. This will include what repairs will be completed, the extent to which they well be completed, and the timeframe within they will be completed. We include daily penalty costs in all our Rehab project contracts for delays beyond the agreed upon deadlines that are within the General Contractor’s control. We also hold back 10% from the final payment until the repairs are accepted by the 2nd mortgage lender and the flipper, and all sign offs are completed by government agencies.

We are also responsible for making sure the property sells for the amount projected in the Deal Sheet. We start marketing the property for sale upon the close of the purchase escrow using an experienced listing real estate agent. Our goal is to have the property under escrow while the Rehab repairs are being completed so that the sale escrow can close as soon as the repairs are completed.

The Investment:

  • Average Purchase Price: $40,000 – $300,000 (varies significantly by State and market)

 

  • Cash Required by Flipper: $5,000 – $20,000 (usually 10% of total costs)

 

  • Profit Split: Flipper receives 100% of all profit up to 25% of investment amount. All profit above that amount is split 50/50 between the investor and Help Keep My Money, LLC.

 

  • Projected Cash-on-Cash Return On Investment (ROI): 25% – 150%

 

  • Length of Investment: 3 – 6 months

 

  • 1st Mortgage Loan Details: 70% LTV of purchase price, 10% interest amortized 30-year fixed loan with 4 points upfront plus processing and origination costs.

 

  • Closing Costs: 1% management fee, title insurance, escrow fees and miscellaneous fees all vary by State and market. There are also prepaid costs for property taxes, property insurance and interest on the 1st mortgage.

 

  • 2nd Mortgage Loan Details: Amount is equal to 30% LTV of the purchase price, closing costs, 1st mortgage upfront costs, and rehab costs. 12% interest-only 30-year fixed loan with 4 points upfront for processing and origination costs. Includes a Rent and Lease Assignment Rider that allows Help Keep My Money, LLC (on behalf of the 2nd mortgage lender) to collect rents directly from a tenant to pay all costs associated with the property if the property is not sold.

 

  • Flipper’s upfront out of pocket costs: up to $1,000 for Appraisal ($500) and Property Inspection
    ($500) vary by State and market. These are paid outside of escrow and take place during the purchase agreement period where the purchase is subject to contingencies. The house appraising for the purchase price and passing the lenders’ property inspection requirement are two contingencies. The deal is automatically void and canceled if the flipper does not remove the contingencies within the time period specified in the purchase agreement. The Earnest Money Deposit (EMD) check is usually $500 – $5,000 and is held in escrow (and preferably not cashed) until all contingencies have been removed by the flipper.

 

  • Flipper’s costs paid through escrow: Investor is required to pay for the 2nd mortgage upfront points
    costs. EMD can be applied toward these costs. Flipper is also required to place reserves and
    holding costs (6 months’ worth of PITI payments) into a joint account with Help Keep My
    Money, LLC that requires both parties’ signatures to withdraw funds.

 


 

Pre-Construction Flip for Investors

We offer investors a unique opportunity to participate in the flipping of a newly constructed high-end home built by a national home builder. Given that Flips are a pure appreciation investment with significant risk related to After Repair Value (ARV) calculations and Rehab Costs estimates, we have eliminated both of these risks.

We are responsible for identifying a buyer for the price projected in the Deal Sheet. There are no selling costs as we select homes in tracts where the builder is still building homes, and therefore the homebuilder is advertising for us for free. We simply put a For Sale By Owner sign in the front yard with the current price that the home builder is selling houses for. It will take us less than 2 weeks to enter into escrow with a buyer and then close within another 45 days. If a buyer can’t qualify for a conventional loan, we are always able to offer them our 30-year Lease Purchase with as little as 5% down.
The Investment:

  • Average Purchase Price: $200,000 – $850,000 (varies greatly by City and State)

 

  • Cash Required by Investor: $10,000 + proof on ability to close (loan pre-qualification or proof of funds)

 

  • Profit Split: Investor receives 100% of all profit up to 25% of investment amount. All profit above that amount is split 50/50 between the investor and Help Keep My Money, LLC.

 

  • Projected Cash-on-Cash Return On Investment (ROI): 25% – 100%

 

  • Length of Investment: 4 – 6 months

 

  • 1st Mortgage Loan Details: 70%-95% LTV of purchase price, 4% – 9% amortized 30-year fixed loan with 0 – 4 points upfront plus processing and origination costs (this all depends on what you are able to qualify for).

 

  • Closing Costs: 1% management fee, title insurance, escrow fees and miscellaneous fees all vary by State and
    market. There are also prepaid costs for property taxes, property insurance and interest on the 1st mortgage.

 

  • 2nd Mortgage Loan Details: Amount is equal to 5% – 30% LTV of the purchase price, closing costs, and 1st mortgage upfront costs. 12% interest-only 30-year fixed loan with 4 points upfront for processing and  origination costs. Includes a Rent Assignment Rider that allows Help Keep My Money, LLC (on behalf of the
    2nd mortgage lender) to collect rents directly from a tenant to pay all costs associated with the property if the
    property is not sold.

 

  • Investor upfront out of pocket costs: The Earnest Money Deposit (EMD) check is usually $1,500 – $10,000.

 

  • Investor costs paid through escrow: Investor is required to pay for 2nd mortgage upfront points costs. EMD can be applied toward these costs. Investor is also required to place holding costs (2 months’ worth of PITI
    payments) into a joint account with Help Keep My Money, LLC that requires both parties’ signatures to
    withdraw funds.

 


 

Additional Investment Opportunities

Help Keep My Money LLC offers three additional real estate investment opportunities based on your risk tolerance and based on your timeframe for receiving your return:

 


 

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