Fix and flip loans in Atlanta

How the loan amount is worked out

The loan is built from two numbers. The first is a share of what you pay for the property. The second is your renovation budget, which is held back and paid out in draws as each stage of work is finished. The two together are limited to 70 to 75% of the after-repair value (ARV): the price the property should bring once the work is complete.

Example

How experience and credit change the terms

• First deal? You can still qualify. A new investor with a 720+ score is eligible for the full 90% and 100%.
• Five or more flips in the past two years? You can close with no inspection and no appraisal, up to 75% of ARV.
• Score under 720? Programs run down to 600, with less leverage.

Experience is counted as properties you bought and sold in the past 24 months that were acquired within the past 36 months.

Built around a resale

• Interest-only payments while you renovate
• 6 to 24 month terms
• No prepayment penalty: pay off the day you sell
• No income or job verification

When a project stalls: mid-rehab loans

If a renovation is under way and the money has run out, a mid-rehab loan lends on the property as it stands today and adds the funds to finish.

What an Atlanta flip involves

• Crawl spaces and termites. Many older Atlanta houses sit on crawl spaces over red clay, so moisture, sagging floor framing, wood rot and termites are common findings. Get a full inspection and a termite letter before you set the rehab budget.
• Roofs and insurance. Hail, wind and falling trees drive insurance costs across metro Atlanta, and older roofs and wiring can limit coverage. Homes along creeks such as Peachtree, Proctor and Nancy creeks can sit in FEMA flood zones. Get insurance quotes before you make an offer.
• Property tax while you hold. Georgia taxes real estate on 40% of its fair market value, and combined millage rates in Fulton and DeKalb counties often work out to about 1.3% to 1.8% of market value. Investment property gets no homestead exemption and no cap on yearly increases. The county reassesses each year, and a recent sale price usually becomes the new value. Plan on taxes at full market value, not the seller’s bill.
• Closing taxes. Georgia’s transfer tax is $1 per $1,000 of price, customarily paid by the seller. A long-term mortgage note adds intangible recording tax of $1.50 per $500 of the loan, up to $25,000, while short-term notes such as most flip loans are generally exempt. Georgia closings are conducted by a closing attorney, who also handles the title work.
• Trees. Atlanta’s tree protection ordinance requires a permit to remove most trees on private property, with replanting or fees to the city’s tree fund for trees you take down. On a new build or a large addition, price the tree plan into the budget and the schedule.
• Permits and historic districts. Each city and county runs its own permit office. Atlanta has historic and landmark districts including Inman Park, Grant Park, Cabbagetown, West End and Adair Park. Exterior work, additions and demolitions in those districts need approval from the Atlanta Urban Design Commission as well as a building permit.
• Where the deals are. Kirkwood, East Lake, Edgewood and East Atlanta on the east side; West End, Adair Park, Capitol View and Pittsburgh near the BeltLine’s Westside and Southside trails; English Avenue, Grove Park and Riverside to the west; and older neighborhoods in East Point, College Park, Decatur and Stone Mountain.

Documents we ask for

• Loan application
• Signed purchase contract, or the settlement statement from your purchase if you are refinancing
• A rehab budget broken into line items with a clear scope of work
• Contact details for your insurance agent and title company
• For an LLC: articles of organization, EIN letter and operating agreement
• For experienced investors: your projects from the last 3 years with settlement statements

The full list is in our hard money loan document checklist.