A First-Time Flipper Got Funded by Text in About Three Weeks (A Real Houston Deal)

Based on a real deal we funded in the past week, figures rounded. I left out his name, the address and the dates.

A lot of people assume getting a fix and flip loan means a long application, a stack of forms and a bunch of phone calls. This deal didn't look anything like that. A first-time investor saw one of our Facebook ads, texted me late on a weeknight, and about three weeks later he was funded with no surprises at closing (we could have closed sooner). We talked on the phone maybe three times. Here's how it went, start to finish.

The First Text Had Everything I Needed

Here's his first text, with the address taken out and the numbers rounded:

That's the perfect first message. Property, price, rehab, ARV, entity, title company, deadline, credit, experience and cash. I didn't have to ask him a single question before I could price it.

Two Term Sheets That Same Night

About 40 minutes later he had two term sheets from me, each one showing the rate, every lender fee, my broker fee and the closing costs:

• 5% down. A loan of about $274,000 at about 11.5% for 12 months, 2 points of origination plus my 1% broker fee, and about $19,000 total cash to close.
• 100% financing. Less cash up front (about $12,500 to close), but 3 points, and the loan sat right at the lender's max. This program only works in major Texas metros when the price plus rehab fits under 70% of the ARV.

Texts lightly trimmed, figures rounded.

For a first-timer I told him I'd go with 5% down. The fees are lower, it's a 12 month loan from the start instead of 6 months, and the 5% down lender lends up to 75% of the ARV instead of the 70% cap on the 0% down programs. I also flagged something most people don't hear until it's too late. The rehab money is paid out in draws after the work is done, so the lender wanted to see roughly $45,000 to $50,000 total in his accounts, not just the $18,000 he planned to bring to closing. He said he had it, and that settled the biggest question early.

He Never Filled Out an Application

A couple of days later he texted that he wanted to move forward with the 5% down option. I asked for four things: two months of bank statements, his LLC documents (formation and EIN), the contract and his rehab budget. He sent them that afternoon.

Then I sent one text with nine quick questions, things like whether he owns or rents where he lives, any other projects going, any large deposits, any judgments, who his insurance would be with, and how the inspector would get in. He answered all nine in a single reply. From there I put the application together myself, so he never filled out a form. He signed a few documents, and that was it.

I Told Him Exactly How Closing Would Go

Every lender's closing process is a little different, so I lay it out before it happens instead of letting it surprise anybody. On this one that meant:

• The lender would add a 10% contingency to his rehab budget, which I rebuilt in their format.
• The rate could move a little once the lender finished underwriting. I told him that on a call up front.
• Once underwriting approved it, I'd send their conditional terms next to my original term sheet so he could see exactly what changed before he signed.
• No prepayment penalty, a flat 12-month term, and no extension fees at 6 or 9 months.
• Each draw would cost about $175 plus a small wire fee.
• The appraisal and the inspection would be ordered once he signed, and someone needed to let the inspector in. His neighbor opened the door.

None of that is exciting, but it's the stuff that turns into a last-minute phone call when nobody explains it.

The Appraisal and the Final Numbers

The appraisal came back above his ARV estimate. The lender built a 10% contingency into his rehab budget, which his original numbers already had room for, and the rate came in right where I told him to expect. The final loan was about $281,000. Roughly $204,000 of it funded at closing, and about $77,000 was held back for the rehab, contingency included, to be paid out in draws as the work gets done. He signed off on the final terms and the closing documents went out.

Funded With No Surprises

The sellers signed in the afternoon and the lender wired the money the next morning. From his first text to funding was about three weeks, and nothing at closing was new to him. Every fee was on the term sheet from the first night, and anything that moved, he heard from me before he signed.

What Made This One So Smooth

• A complete first message. Every number I needed was in it, so the term sheets were real, not guesses.
• The cash question came up early. Talking about draws and reserves on night one meant nothing blew up later.
• Documents came in fast. The lender can only move as fast as your paperwork.
• No surprises. He knew every fee, including mine, that the rate could move a little, and how each step of closing would go before it happened.

If You're Doing Your First Flip

Text me the same things he did: the property, price, rehab budget, ARV, your LLC, your title company, your closing date, your credit score, how many flips you've done and how much cash you have. You'll get real numbers back, usually the same day.

If your deal is in Houston, the Houston hard money page has the programs and rates there. The 5% down cash to close breakdown walks through every line of a deal like this one, and the Texas fix and flip loan page has current pricing for every program. Just keep in mind that 5% down is for major Texas metros right now. In most other states a first flip starts around 10% down.

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