Strategies for Using Gap Funding

We’ll dive into an exciting case study showcasing how we’re empowering a client to dramatically scale her fix and flip business. Our focus is on a strategic financing solution tailored to meet the unique challenges and ambitions of investors in the real estate flipping arena.

Our client’s primary goal is to expand her project portfolio without being hindered by extensive out-of-pocket expenses. To achieve this, we’ve crafted a two-loan package designed to maximize her investment leverage while minimizing initial cash requirements. Typically, investors seek a loan covering a high percentage of the purchase price plus 100% of renovation costs, often referred to as 90/100 financing (10% down payment and full coverage of construction expenses). Although our client initially aimed for this ideal, her qualifications led us to explore more innovative avenues.

We leveraged our strong relationship with her to offer an even more advantageous financing package. Instead of the standard 90/100, we’re providing her with more than 90% Loan-to-Cost (LTC), with the first loan covering up to 85% LTC. This exceptional offer breaks the conventional financing barriers, enabling her to pursue more deals simultaneously with significantly reduced personal capital investment.