
Another requirement of any lender with sound underwriting standards is adequate reserves. Reserves are money left in the borrower’s disposal after they’ve made the required contribution towards the transaction. We often run into potential borrowers who are ready to go “all in” and invest their last dime in their fix-and-flip transaction. They effectively become a ticking time bomb ready to default on their obligations to their lender, their state, or their other creditors. Even worse, they are putting themselves in an unfortunate position where, instead of making money, they can lose it.
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