Buyer closes on investment flip with commercial line of credit

Mortgage lender: James Forte Property type: Single-family in Meriden

Purchase price: $105,000 Borrowing amount: $155,000 Loan type: 1-year adjustable Rate: 7.99 percent Background: The borrowers were a married couple — a personal trainer and a pharmaceutical sales person — who recently started a house flipping business.

They had purchased one house for cash with their reserves, and another they went they bought with “hard money.” They had their eyes on other houses, which were no brainer deals where they knew they could make a good amount of money.

They were not happy having to go the hard money route, which typically is 12-14 percent for an interest rate and three to five points in fees.

Conventional mortgages are not an option on foreclosures in poor condition that need rehab and also need to close in a matter of weeks.

The borrower’s attorney referred them to Forte as he knew that Forte had a very special product for borrowers looking to flip houses. The borrowers called Forte and he set them up with a commercial line of credit that was for the purpose of flipping houses.

The line of credit enabled the borrowers to get 90 percent loanto-value on the purchase price, then another 95 percent of all the renovation costs. With a copy of the purchase contract and title, they were able to submit the property for a quick approval and they were able to close in 12 days.

What was the most exciting for these borrowers was that the line of credit they were approved for was significantly more than they expected and as a result, they are able to now start looking for multiple properties to be able to do at the same time and make even more money.

The moral here is you don’t need cash and you don’t need to pay 12-15 percent and three to five points to flip houses, and you can act as if you are paying cash.

James Forte, Finance of America, Danbury,

203-942-6860, james.forte@financeofamerica.com