Checklist & Tips for Every Fix and Flip Loan Originator

Lendstacks August 25, 2021 Blogs & Articles

Checklist & Tips for Every Fix and Flip Loan Origination

From a lender’s perspective, the underwriting process presents several unique challenges and considerations. There is a plethora of variables to account for and documents to review to make an informed decision when it comes to extending financing to potential clients. Fix-and-flip investment scenarios only enhance the complexity of vetting applicants. As this niche market continues to steadily increase in popularity, lenders face a considerable task in terms of responsibly conducting a thorough underwriting process to mitigate any risk of default whilst continuing to deliver optimal client-centered service in an expedient manner. It’s certainly a tall order, but you don’t have to go it alone. LendCRM is a cloud-based loan origination software with an exhaustive suite of CRM features, crafted by skilled professionals who have vast experience optimizing banking applications, loan origination software and customer relationship software to streamline every phase of the loan process—all while improving communication and reducing the collective expense of lending for all parties involved. Sound too good to be true? We wouldn’t blame you for thinking so—but we can back these claims up! To that end, the following is a brief overview of some of the documents and metrics you should prioritize in every fix and flip loan and how the specialized features offered by LendCRM can assist you in improving all-round efficiency to deliver a better end-product to your clients.


Before we get too far into the fix-and flip process, let me first ask you a simple question? You can’t originate and underwrite loans if you don’t have any clients, right? No need to worry, with LendCRM’s intuitive customer relations platform you can quickly and easily automate all of your sales process. Need to establish and maintain relationships with prospects? Done. Source brokers and investors? Check. Our lead management features enable you to seamlessly collaborate with your sales and marketing team to oversee received leads and gather the needed information and documentation to convert leads to verified customers.

Fix & Flip Underwriting Essentials

When it comes to the underwriting process for fix-and flip loans, there are three key areas to focus on:

  1. COLLATERAL: Can you determine a verifiable “As-Is” value of the property when it was purchased or when the loan request was submitted? What is the relative marketability strength in terms of the collateral’s geographic location, condition, and market volatility? Ideally, the loan-to-value ratio should be somewhat conservative (i.e., under 70%) when using conventional asset-based criteria that is premised on assessing the as-is value to make sure that an acceptable ‘equity cushion’ will exist when funding is disbursed.
  2. BORROWER/CLIENT: Lenders should seek several characteristics when evaluating the viability of a borrower or sponsor, to include experience, liquidity, balance sheet, network, resources, capacity, and credit history. Repeat borrowers can be a solid source of reliable business in the fix-and-flip space.
  3. INVESTMENT STRATEGY: Most borrowers utilize either privately funded loans or joint-venture equity to acquire or renovate a property. No matter the scenario, it is essential that the lender analyzes the viability and potential profit margin of the specific strategy that is proposed and consider the reliability of any potential exit strategy the client has to repay the loan balance.

The hard part about underwriting is that there is no magic formula. For instance, a strong credit score with a history of responsible payment activity can mitigate some shortcomings in other areas of a potential borrower’s loan application. The key is not to rely too heavily on one single aspect of the client’s profile, but instead evaluate the future interaction between the borrower and collateral variables when evaluating the viability of the loan or investment proposal. It can still be a daunting task even for the most experienced loan professionals. Let LendCRM simplify the process. Our Rate Engine feature can quickly generate the eligibility and best interest rate that can be offered to a specific borrower based on your firm’s specific pricing matrix for different loan offerings. Simply input the data into the Borrower Profile interface such as the subject property state, LTC, ARV, etc. that can impact the loan and we will do the hard work of computing all your conditions to provide the best rate your client can obtain. Afterwards, you can use our Rate Engine and Loan Calculators to reliably assess the risk of the borrower to approve or reject a loan file. When you partner with LendCRM, you have the distinct advantage of having efficient and ongoing access to the data points you need to make the right decisions—which at the end of the day is the deciding factor on the success of your lending business.

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