Real estate investors can be some of an agent’s best clients. They buy more than once, they refer other investors, and many of them also sell, flipping homes or listing new construction when it’s finished.
But investors usually don’t use the same loans as homebuyers. Knowing how investor financing works helps you write stronger offers, set realistic timelines and keep deals from falling apart. This guide covers the basics.
Investor Loans Are Business-Purpose Loans
When a client buys a property to flip, rent or build for sale, the loan is generally a business-purpose loan, not a consumer mortgage. A few things are different:
- Borrowers usually close in an LLC or other entity, not in their personal names.
- Underwriting focuses on the deal: the property, the budget, the after-repair or completed value, and the investor’s experience.
- Timelines can be faster than conventional mortgages when the file is complete.
- Programs can cover renovation or construction costs, not just the purchase.
The Main Loan Types Your Clients Use
| Loan type | What it’s for | What drives the loan amount |
|---|---|---|
| Fix-and-flip | Buy, renovate and resell (or refinance) | Purchase price, rehab budget and after-repair value (ARV) |
| Ground-up construction | Buy a lot and build a new home | Land cost, construction budget and completed value |
| DSCR rental loan | Long-term financing for a rental | The property’s rent compared to its payment |
| Bridge | Short-term purchase or refinance | Current value and the business plan |
Learn more on our fix-and-flip, ground-up construction and DSCR rental loan pages.
Why 100% Financing Matters to Your Clients
On qualified fix-and-flip and construction deals, the programs Borrowers Capital offers access to can finance up to 100% of the purchase or land and up to 100% of the renovation or construction budget, subject to a cap based on the after-repair or completed value. That generally requires a 600 credit score and one completed project of the same type.
For your clients, that means more of their cash stays available for reserves and their next deal. For you, it can mean a client who is ready to buy again sooner.
Your clients will still need verified liquidity, typically 10% of the rehab or construction budget, plus six months of payments, plus closing costs and fees. The money isn’t necessarily spent, but lenders want to see it.
How to Help Investor Clients Write Stronger Offers
Get the deal reviewed early
Before your client writes an offer, have them run the numbers in the 100% Financing Calculator or submit the deal for a preliminary review. That helps answer the key question early: does the property support the loan the client needs?
Set realistic contingency periods
Investor loans usually need an appraisal that includes an ARV or completed value, plus a review of the rehab or construction budget. Leave enough time in the financing and appraisal contingencies for both. Ask the lender about current turn times instead of guessing.
Plan for access
Appraisers and sometimes contractors need to get inside the property before closing. Make sure the listing agent knows to expect a few visits.
Confirm the buyer entity
If your client will close in an LLC, it’s best to name the entity on the contract or confirm the contract can be assigned. Last-minute entity changes can delay title work.
Help support value
Appraisals drive investor loans. If you have sold or listed nearby renovated homes or new construction, share those comps. Good comps help support the ARV or completed value.
Common Reasons Investor Deals Get Delayed
- The ARV doesn’t support the loan. The client may need to bring more cash or renegotiate.
- The budget is thin or vague. Lenders want a line-item scope with real numbers.
- Liquidity isn’t documented. Recent bank statements need to show the required funds.
- Title or entity issues come up late.
- Property condition surprises, such as foundation, roof or unpermitted work.
Catching these early protects your timeline and your commission.
When Your Client Is the Seller
Many investors become your listing clients when the project is finished. Flippers want a fast, clean sale. Spec builders may want help with pricing and features before they build. If the home doesn’t sell as quickly as planned, refinancing into a long-term DSCR loan and holding it as a rental can be a backup plan. See our guide to BRRRR financing and DSCR refinances.
Work With Borrowers Capital
We work with investors and the agents who serve them. If you have a client who needs fix-and-flip, construction, bridge or rental financing, your client can submit a deal for a preliminary review. If you are an agent who works with investors often, learn more on our partners page.
Want a quick refresher on the basics to share with clients? Start with Can You Get 100% Financing for a Fix-and-Flip? and the Investment Property Loan Document Checklist.
Disclosure
Borrowers Capital LLC provides access to business-purpose real estate financing through correspondent and private lending channels. Program availability, leverage, pricing, fees, loan amounts and approval requirements vary by transaction and are subject to applicable lender guidelines, borrower and property eligibility, valuation, due diligence, underwriting and final approval. References to 100% financing describe the potential financing of eligible project costs and do not guarantee a zero-cash transaction or loan approval. Borrowers Capital LLC may receive compensation in connection with arranging a transaction. This article is general information and does not constitute a commitment to lend, an offer of credit, or financial, legal or tax advice.