Posted by John Holmquist on February 17, 2001 at 21:15:35:
Hi Joe. An additional consideration with flips (assuming this is a retail, not rehab property) is the issue of deferred maintenance. Note buyers or conventional lenders don’t like to fund properties that have deferred maintenance. By this I mean actual structural problems like roofs, plumbing, HVAC, etc. This does NOT include things like out-of-date kitchens or baths which might be ugly by today’s standards but are fully functional. A reputable appraiser would be a good source of reliable information regarding what is and is not considered deferred maintenance.
Most of my note buyers will fund a flip if, as Greg stated earlier, it’s appraised by a national company.
If this is a rehab property you’re using an entirely different type of funding in most cases anyway. We’re closing 3 of these next week but they’re being funded by private, cash-toting investors who are repeat clients. We make sure our clients either have cash or we set them up with a private lender so they have access to funds.