Second Look Fix-and-Flip Leverage Rescue

Problem — original financing fell through

A experienced fix-and-flip sponsor had a southeastern 3/2 under contract at $240,000 purchase with a $65,000 rehab budget and $410,000 ARV support from documented comps. The first hard money lender issued a term sheet near 90% loan-to-cost, then — seven days before closing — cut leverage to 80% LTC, requiring roughly $30,500 additional cash the sponsor could not deploy without killing reserves for carry and draws.

The seller had a backup offer. The contract was one extension away from cancellation.

Property snapshot

Item	Amount
Purchase	$240,000
Rehab budget	$65,000
Total project cost	$305,000
ARV	$410,000
Original lender (withdrawn)	~90% LTC → cut to 80% LTC

Challenge

The sponsor needed ≥90% LTC for the deal to work on the spread after interest-only carry and sale costs — not because the asset was weak, but because the first lender’s final committee moved the goalposts. Starting a brand-new application from zero would miss the extension window.

Second Look solution

The sponsor submitted the Second Look form with:

• Executed purchase contract
• Full scope, budget, and comp packet already built for lender #1
• Uploaded original term sheet showing 90% LTC approval and the 80% LTC withdrawal email

The Second Look Desk ran asset-based review on collateral and exit — not the reason lender #1 retreated — and restructured fix-and-flip hard money near 90% LTC with milestone draws on the existing scope. Credit was reviewed; approval was driven by ARV, LTC, and resale liquidity.

Result — closed

Milestone	Timing
Second Look submitted	Day 0
Term sheet issued	Day 2
Underwriting cleared	Day 6
Wire / close	Day 9

The sponsor closed, completed rehab on schedule, and marketed for exit at $410,000 ARV. The Save the Deal outcome: contract preserved, seller relationship intact, spread intact.

Save the Deal takeaway

When leverage changes late — not economics — upload the original terms and hit jakenfinancegroup.com/rescue before you release the contract. Rescue files move fastest when the diligence package already exists from lender #1.

Sponsor profile

The borrower was an experienced fix-and-flip sponsor — not a first-deal file — with prior closed projects in the same market. Credit was reviewed under asset-based underwriting; approval rode on ARV, LTC, documented scope, and resale exit. The sponsor had entity docs, bank statements, and comp support already built for lender #1 — the package Second Look needed was largely complete on day zero.

What lender #1 offered — and withdrew

Lender #1 issued a term sheet near 90% loan-to-cost on the $305,000 total project ($240,000 purchase + $65,000 rehab). Seven days before contract close, final underwriting cut leverage to 80% LTC, requiring roughly $30,500 additional cash the sponsor could not deploy without draining reserves needed for interest carry and draw milestones.

The withdrawal arrived by email — not silence — which gave the sponsor documentation for Second Look: original 90% term sheet plus 80% retrade message. That paper trail shortened rescue review because the desk saw exactly what broke.

Economics that made rescue viable

Line item	Amount
ARV (comp support)	$410,000
Total project cost	$305,000
Gross spread before costs	~$105,000
Cash gap at 80% LTC	~$30,500
Cash gap at 90% LTC	$0 (fully leveraged)

The deal was not a bad buy. It was a leverage retrade — the spread supported rescue pricing at ~90% LTC even after interest-only carry and sale costs. Starting a brand-new application from zero would have missed the seller’s extension window.

Second Look process — day by day

Day 0 — Submission. Sponsor uploaded executed contract, full scope and budget, comp packet, entity docs, bank statements, and the original term sheet showing 90% → 80% LTC change on the Second Look form.

Day 1–2 — Asset-based review. Second Look Desk underwrote collateral and exit — ARV, LTC, draw schedule, resale liquidity — not why lender #1 retreated. Credit reviewed; collateral drove approval.

Day 2 — Term sheet. Restructured fix-and-flip hard money near 90% LTC with milestone draws tied to approved scope and interest-only carry aligned to existing exit timeline.

Day 3–6 — Underwriting clearance. Title, insurance, and entity verification — accelerated because lender #1 had already collected most diligence.

Day 9 — Wire / close. Closed inside seller extension window. Seller relationship preserved; backup offer never activated.

Draw schedule and exit

Rescue financing tied draws to the existing approved scope — foundation, systems, cosmetic — with inspections at milestones. The sponsor completed rehab on schedule and marketed toward the $410,000 ARV exit. No plan change was required; only replacement capital at the leverage the deal always needed.

Lessons for sponsors and agents

Upload the original term sheet. Rescue starts where lender #1 stopped. The 90% → 80% email was the most valuable document in the file.

Do not release the contract on day one. The sponsor negotiated one extension while Second Look ran — framed as lender switch, not deal death.

Complete files close in 7–10 business days. This file closed in nine. Missing scope or entity docs would have blown the extension.

Leverage retrade ≠ bad asset. When economics work at rescue leverage, hard money lender backed out scenarios are saveable.

If your deal looks like this

Hard money loan denied, leverage cut late, or lender backed out before closing on a fix-and-flip with documented ARV and scope? Submit before you walk:

Submit to the Second Look Desk · Quick link: jakenfinancegroup.com/rescue · Urgent: (833) 264-7776

Related: fix-and-flip financing fell through · hard money loan denied · investment property loan denied · lender backed out before closing · real estate financing fell through · Second Look hub