If you're considering jumping into the Tennessee real estate market, you’ve probably noticed two things: the BBQ is incredible, and the "For Sale" signs don’t stay up for long. Welcome to the world of high-velocity real estate investing. Whether you’re eyeing a craftsman bungalow in East Nashville or a multi-unit project in Memphis, the game isn't just about finding the deal: it's about how you fund it.
Most investors think they need a massive mountain of cash to get started. They assume the bank wants 20% or 30% down, plus the cost of renovations out of pocket. But what if I told you that the "experts" are holding onto a secret that allows them to keep their cash in their pockets while scaling their portfolios at lightning speed?
We're talking about 90% LTC (Loan-to-Cost) financing. In this guide, we'll equip you with the knowledge to leverage this powerful tool specifically for the Tennessee market, helping you achieve your financial goals without draining your bank account.
What is 90% LTC (And Why Should You Care)?
Before we dive into the Tennessee-specific strategies, let's break down the jargon. In the world of fix and flip loan basics, LTC stands for Loan-to-Cost.
Unlike traditional banks that look at LTV (Loan-to-Value), which is based on what the house is worth now, hard money and bridge lenders look at the total cost of the project. A 90% LTC loan means the lender provides 90% of the purchase price plus usually 100% of the renovation budget.
The "Secret" Math:
If you find a distressed property in Knoxville for $200,000 that needs $50,000 in work:
- Total Project Cost: $250,000
- 90% LTC Loan: $225,000 (90% of the $250k total cost)
- Your Skin in the Game: $25,000
Instead of needing $60,000 or $70,000 (standard bank down payment + rehab costs), you only need $25,000. That’s the difference between doing one deal a year and doing three.
Actionable Takeaway:
Always ask your lender if their 90% LTC includes 100% of the renovation costs. If it doesn't, you aren't truly maximizing your leverage.
Why Tennessee is the Ultimate Fix and Flip Playground
Tennessee isn't just a great place to live; it's a gold mine for investors. Statistics show that fix and flip investors in Tennessee average a gross profit of about $65,000 per flip. When you combine those margins with high-leverage financing, your Return on Equity (ROE) goes through the roof.
Why is the Volunteer State so hot right now?
- In-Migration: People are flocking to TN for the lack of state income tax and the high quality of life.
- Diverse Markets: You have high-end flips in Franklin and high-yield workforce housing in Chattanooga.
- Speed of Business: Tennessee is generally "investor-friendly" when it comes to regulations and closing timelines.
At Emerald Capital Funding, while we have a nationwide reach, we’ve seen a massive surge in fix and flip financing Tennessee requests because the math simply works.
The Secrets Experts Don't Want You to Know
You might wonder why more people aren't shouting about 90% LTC from the rooftops. Here’s the reality: many "traditional" lenders can't offer it. They don't have the stomach for the risk. But for an expert lender who understands the TN market, that 90% leverage is a tool for growth, not a red flag.
1. It’s Not About Your Income; It’s About the Deal
Traditional banks want to see two years of tax returns, your dog's medical records, and your third-grade report card. High-leverage fix and flip lenders care about the property. Does the math make sense? Is the After Repair Value (ARV) realistic? If the deal is solid, the funding follows. You can learn more about why your tax returns don't matter as much as the property in our deep dive on DSCR and bridge lending.
2. Speed is a Competitive Advantage
In markets like Nashville, if you can’t close in 10 days, you’ve already lost the deal to a cash buyer. 90% LTC financing through a private lender allows you to act like a cash buyer. We’ve seen deals in places like Pigeon Forge close in as little as 11 days.
3. You Can Scale with "OPM" (Other People's Money)
The real secret to wealth in real estate is velocity. If you use 90% LTC, you keep more cash in reserve. That reserve cash can be used for your next earnest money deposit, unexpected "surprises" during demolition, or even a second simultaneous flip.
How to Master the LTC Math
Understanding how a lender views your deal is the key to getting an approval. They aren't just looking at the purchase price; they are looking at the "Exit."
Lenders typically cap their total loan at around 70-75% of the ARV (After Repair Value). So, if you want that sweet 90% LTC, your deal needs to have enough meat on the bone.
For a detailed breakdown of how this math works, check out our guide on fix and flip secrets and the LTC math experts use.
Actionable Takeaway:
Before applying for a loan, run your own ARV numbers using conservative comps. If your total loan amount (90% of cost) is less than 75% of your projected sale price, you’re in the "Green Zone" for funding.
Common Pitfalls to Avoid in Tennessee
Even with the best financing, you can run into trouble if you aren't careful. The Tennessee market moves fast, but don't let that make you sloppy.
- Over-Improving for the Neighborhood: Don't put Nashville-Gulch-level finishes on a house in a starter-home neighborhood in Clarksville.
- Ignoring the Holding Costs: While 90% LTC is great, remember that you are paying interest on that leverage. Every month the house sits unsold, your profit evaporates.
- Underestimating Rehab Costs: This is the #1 killer of deals. Always include a 10-15% contingency fund in your budget. Check out these common fix and flip mistakes to stay ahead of the curve.
Scaling Beyond the Flip: The BRRRR Transition
If you're looking for long-term wealth, the flip is just the beginning. Many Tennessee investors are moving toward the BRRRR method (Buy, Rehab, Rent, Refinance, Repeat).
You use a 90% LTC fix and flip loan to acquire and renovate the property. Once the work is done and a tenant is moved in, you refinance that short-term debt into a long-term DSCR loan. Because you've added so much value, you can often pull your original 10% investment back out, essentially owning the property for $0 down.
Actionable Takeaway:
Always have your "Exit Strategy" (the refinance) planned before you even close on the purchase. Knowing your 90-day BRRRR timeline can save you thousands in interest.
Q&A: Everything You Wanted to Know About TN Fix and Flip Financing
Q: Do I need a high credit score to get 90% LTC?
A: While credit is considered, it’s not the end-all-be-all. Most lenders look for a score of 660 or higher to hit the max leverage, but the property’s value and your experience level carry significant weight.
Q: Can I get 90% LTC as a first-time flipper in Tennessee?
A: It’s possible! Some lenders might scale you back to 80% or 85% for your very first deal to mitigate risk, but with a solid contractor and a great deal, 90% is within reach.
Q: Does Emerald Capital Funding fund projects outside of major cities like Nashville?
A: Absolutely. We cover the entire state of Tennessee: from rural mountain cabins to suburban family homes: and we offer nationwide reach for investors looking to diversify outside of TN.
Q: How long does the approval process take?
A: We pride ourselves on speed. While banks take 45-60 days, we generally look to get you to the closing table in 10-14 days.
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Your Path to Financial Security Starts Here
Success in the Tennessee real estate market is within your reach. You don't need to be a millionaire to start flipping houses; you just need the right leverage and a team that understands your goals.
By utilizing 90% LTC financing, you can protect your liquidity, scale your business faster, and take advantage of the incredible growth happening across the Volunteer State. Don't let a lack of capital hold you back from the deal of a lifetime.
Ready to see what your next Tennessee deal looks like with 90% LTC?
At Emerald Capital Funding, we’re more than just a lender; we’re your partner in scaling. Whether you're in Memphis, Knoxville, or anywhere in between, we've got you covered.
Contact Emerald Capital Funding today to get a quote on your next fix and flip!
