Ready to streamline your next fix & flip project? We've outlined three straightforward steps that can significantly speed up your funding process. Take a few minutes to review this list – it'll save you time and frustration down the road!

Let's dive in:

1. Get Your Entity Documents in Order

Why it matters: Having your legal entity documents squared away is crucial for a smooth and swift lending experience. Disorganization here can cause significant delays.

What lenders need from you:

• Your entity must be current and in good standing.
• Required documents:
  
  • Operating Agreement
  • Formation documents / Articles of Organization
  • Tax ID / EIN
• A clear entity structure that details ownership breakdown.

2. Show a Clear Trail for Your Liquidity

What lenders consider liquidity:

• Cash in your checking or savings accounts (personal or business).
• Money market accounts and other liquid assets.
• Retirement accounts, stocks, and HELOCs are generally credited at 50% of their value.

What lenders need from you:

• Two months of bank statements demonstrating proof of sufficient liquidity.
• A clear paper trail showing the origin of your down payment funds.
• Your liquidity must come from a  signer who holds at least 25% ownership in the entity.

3. Create a Detailed Scope of Work (SOW) to Maximize Appraised ARV

Why your SOW is vital: Your Scope of Work is more than just a renovation plan; it directly impacts your loan amount and the appraiser's valuation of your property.

• The SOW impacts your loan amount because fix & flip loans are based on your project costs.
• It directly influences the After-Repair Value (ARV).
• Appraisers use your SOW to determine the future value of the property.
• A detailed SOW helps create a clear schedule for draw requests and ensures you can only draw funds for approved, outlined work.

What lenders need from you:

• A budget that aligns perfectly with your purchase price and target ARV.
• A highly detailed SOW for the lender's review.
• An SOW that "sells" the appraiser on the proposed improvements and justifies your ARV.
• A plan for communicating with the appraiser about the appraisal's purpose, your planned improvements, and a list of strong comparable properties for their consideration.
• A clear strategy for drawing from your rehab budget based on your SOW.

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