Step-by-Step Guide to Borrowing for Your Next Flip

Borrowing money can be a great way to enter the house flipping market. For real estate investors who don’t have the cash on hand to finance a flip independently, private rehab loans can be used to acquire and improve distressed properties.

Even experienced flippers rely on financing to tackle larger projects while keeping their capital flexible. A trusted rehab lender is an essential part of a successful real estate investment strategy.

If you’re considering using borrowed funds to start or scale your flipping business, we’re here to help. From house hunting and planning renovations to hiring contractors, managing every aspect of a flip can be overwhelming.

To make the process as seamless as possible, we’ve outlined each step of the borrowing process below. Most house flippers aren’t loan or mortgage experts, and that’s okay—we’ll guide you through every step to make sure you get the funding you need.

A) How to Apply for a Rehab Loan:

1-The first step in securing a rehab loan is reaching out to us via our online pre-qualification form or giving us a call. This initial contact allows us to assess whether you qualify for a loan with Medina Mortgage Team.

2-Once we discuss your project and financial situation, we’ll provide you with an editable PDF application.

3-The application includes various forms, disclosures, tax return releases, and a checklist. You’ll need to complete and sign all parts of the application and provide copies of the documents listed on the checklist.

4-We can’t process your application until we receive all required materials, so please double-check that everything is submitted.

5-A small, one-time application fee will be charged to cover the cost of accessing your credit report while we review your application.

6-Your credit report and all application materials will be sent to our underwriter for approval.

7-You’ll typically receive a conditional approval or denial letter within one business day of submitting a complete application.

B) How to Get Pre-Approved and Request Proof of Funds Letters:

1-If you’re still searching for a property, we can pre-approve you to help narrow your options within a specific price range.

2-We’ll provide you with the maximum amount you qualify to borrow.

3-As you find properties you want to make offers on, let us know the offer amount, and we’ll generate custom proof of funds letters for you. These can typically be provided within a few hours during business days.

4-If you’re already under contract on a property, we’ll move directly into the inspection and appraisal phase if you’re approved.

1-Once you’re fully approved, you’ll need to submit the agreement of sale and the estimate of repairs as soon as possible.

2-Future draws will only be disbursed as each line item in the estimate is fully completed, so the estimate of repairs should match the project timeline.

3-After receiving the agreement of sale and estimate of repairs, we’ll order an appraisal and inspection of the property.

4-The appraiser and inspector will contact you to schedule appointments at the property.

5-You are responsible for covering the costs of their services, which typically run around $500 for an appraisal and $250-$350 for inspections.

6-These professionals will confirm their appointment times and acceptable payment methods.

7-The appraiser will determine the “as-is” value and the “after-rehab value” based on your repair estimate.

8-The inspector will verify that all repair items are well-documented for draw releases.

9-You and your realtor are responsible for ordering the title and obtaining a homeowner’s insurance policy. Once secured, provide us with the contact information for both.

1-Once a line item on your repair list is 100% complete, schedule an inspection for verification. Expect to pay the inspector between $75-$200 per visit.

2-The inspector will submit a report verifying the work completion, after which Medina Mortgage Team will issue a check for that amount. If you need funds sooner, we can process a wire transfer for a small fee.

3-A standard 10% contingency is added to the total repair costs to cover unforeseen expenses. If you need to cover additional costs beyond this, you will need to do so out of pocket until the final draw.

4-This 10% contingency is not available during the project but will be reimbursed at the final draw when all work is completed.

1-Once your rehab is complete and you’ve accepted an offer on the property, notify us of your settlement date as soon as possible.

2-A written request for a payoff statement, including a “paid-through” date and signed authorization, must be submitted by your title company or attorney at least 10 days before closing.

3-We will send the payoff statement directly to the title company. To avoid accruing additional interest, ensure that the funds are wired to us on the day of closing.

4-You are entitled to two payoff requests during the life of the loan. Additional requests may incur a $25 fee per request.

Pro Tip for Rehab Investors

Don’t stress—every new investor experiences some nerves when borrowing funds for the first time. Balancing rehab logistics while managing financial details can feel overwhelming, but staying organized and using available resources will make the process much smoother.

We’re here to help you every step of the way. After a few successful flips, you’ll be a pro!