Investment Lending Essentials with Liz Lawrence
In this episode of the ArcFluence Podcast, Nick and Paul sit down with Liz Lawrence, founder of LFG Lending and an avid real estate investor, to explore the dynamic intersection of financing and design. Discover how hard money loans, DSCR products, and the BRRRR method empower investors to tackle fix-and-flips, build profitable rental portfolios, and boost property value—all while making smart design decisions that catch buyers’ and renters’ eyes. Whether you’re a first-time flipper or a seasoned pro, Liz’s insights on team-building, managing rehab budgets, and timing the market can help you maximize returns and navigate the ever-evolving world of real estate investing.
Note: The content provided in this podcast is for informational and educational purposes only. It is not intended as investment or financial advice. Please consult a professional financial advisor before making any financial decisions based on the information provided.
Investing Meets Design: A New Perspective on Real Estate Lending
Real estate investment isn’t just about financing, nor is it solely about design and construction. In a growing market like Columbus—where demand, creativity, and profitability intersect—understanding both the numbers and the aesthetics is crucial. That’s where Liz Lawrence, founder of LFG Lending, stands out. With nearly a decade of mortgage experience, Liz has developed an approach focused on giving investors the tools they need to thrive—especially when it comes to flipping, refinancing, and long-term portfolio building.
During our conversation, Liz helped frame how specialized loan products—like hard money lending or “no-income-validation” loans—support real estate investors who are focused on fix-and-flips, BRRRR projects, or new construction. She also underscored how thoughtful design decisions can enhance returns when done strategically. If you’re new to real estate or looking to optimize your existing operations, understanding the interplay between financing strategies and smart renovations can help you maximize both profitability and property appeal.
The Big Picture: Why Real Estate Lending Matters to Design
Any investor, whether a rookie or a seasoned pro, has to consider two vital components: money and design. Design choices can significantly influence a property’s ultimate market value, while the structure and terms of a loan affect your timeline, budget, and overall flexibility. From selecting high-traffic finishes to deciding whether to gut-renovate, aligning your renovation scope with a viable financial plan is key to avoiding expensive pitfalls.
Liz emphasized that in investor-focused lending, the deal itself is often more important than a borrower’s personal financial statements. This creates opportunities for those who might not fit traditional lending requirements. However, these flexible loans usually have higher interest rates, which puts extra pressure on finishing renovations quickly, staying on budget, and steering clear of overbuilding or design missteps.
Hard Money 101: The Fix-and-Flip Approach
“Hard money” may sound intimidating, but it’s a mainstay of the fix-and-flip world. Rather than scrutinizing personal income or W-2 statements, a hard money lender looks at three essentials:
- Purchase Price: How much to buy the property?
- Rehab Budget: How much to renovate?
- After Repair Value (ARV): What could it sell for post-renovation?
If those numbers pencil out—usually at no more than 75–80% of the final ARV—the financing can move forward very quickly, sometimes in under two weeks. The trade-off is higher interest rates and fees, and the reality that every extra day of renovation increases your holding costs. For design-driven investors, these loans enable total makeovers, but keeping the project on schedule and on point is crucial to avoid eroding your profits.
The BRRRR Method: Building Long-Term Wealth
Not every investor wants to flip a home in a few months. The BRRRR Method—Buy, Rehab, Rent, Refinance, Repeat—offers a framework for creating wealth through rentals without sinking too much cash into each property. Here’s how it works:
- Buy a distressed or under-market property, often with hard money.
- Rehab it to local standards, boosting the property’s value.
- Rent the upgraded unit to quality tenants for steady income.
- Refinance into a 30-year loan—ideally pulling out most of your initial funds.
- Repeat the process using that same capital pool.
If you’re aiming to hold the property long-term, tailoring renovations to renter demands is vital. A short-term rental in a trendy area might need more striking finishes, whereas a B-class long-term rental might benefit from durable, low-maintenance materials. Liz points out that “perfect” BRRRR deals—where you recoup 100% of your investment—are relatively rare. More likely, you’ll leave 5–15% in the property, but that still beats the typical 20% down on turnkey rentals.
DSCR Loans: Flexible, Long-Term Financing
Once your project is stabilized with tenants, you may want to exit your hard money loan. Conventional mortgages can be strict—requiring personal income verification, high credit scores, and a tight debt-to-income ratio. Many investors prefer a DSCR (Debt Service Coverage Ratio) loan because it’s underwritten based on the property’s rental income rather than the borrower’s salary or tax returns.
For design-minded investors, the potential to add high-value features—like a smarter floor plan, more convenient laundry placement, or an upgraded kitchen—can justify higher rents and strengthen the DSCR. While these loans may have higher interest rates than traditional home loans, they let you scale up quickly if your rental income covers the mortgage and other property expenses.
Design Decisions That Pay Off
Whether you plan to flip or hold, design matters. A few thoughtful choices can significantly boost your appraised value or market rent. Consider:
- Layout Optimization: Adding a half bath or repositioning a laundry area can make a home stand out.
- High-Traffic Zones: Kitchens and bathrooms typically give you the best return on renovation dollars.
- Choice of Materials: Durable, attractive finishes (e.g., quartz counters, quality vinyl flooring) can appeal to both buyers and renters.
- Neighborhood Comparisons: If similar homes have finished basements, skipping that step could lead to a lower sale or rental price.
Striking the right balance is key—overbuilding for a modest neighborhood wastes money, while underbuilding in a pricier area could leave your listing ignored. Consulting a realtor or appraiser early on helps ensure your renovation plans match local expectations.
Managing the Draw Process
For many rehab loans, the funding for renovations sits in escrow, and you’re reimbursed through a “draw” once specific work is completed. This system keeps contractors accountable—no finished work, no draw—but it also requires planning:
- Scheduling Inspections: Wait until each phase is truly done before calling an inspector to avoid added fees or delays.
- Maintaining Liquidity: A small credit line or cash reserve can keep you current with contractor bills until the draw arrives.
- Documentation: Clear scope-of-work sheets and before-and-after photos help secure the appropriate reimbursement.
Liz stresses the importance of proactive communication with both your lender and your contractors to keep the project on track.
Building the Right Team
From securing the right loan to finalizing design plans, teamwork is everything. A knowledgeable contractor can accurately forecast costs and timeframes. An experienced designer or architect ensures the final product is both functional and visually appealing, potentially increasing your resale or rental potential. And an investor-savvy lender understands the nuances of renovation draws and profit margins.
If you’re new to this, consider hiring or partnering with someone local who can verify that work is done correctly, especially if you live far from the project site. Nothing drains profits faster than discovering poor workmanship or unexpected “surprises” midway through a renovation.
Handling Unknowns and Potential Pitfalls
Even the best-planned project hits roadblocks: outdated wiring, hidden water damage, or municipal permit changes. That’s why it’s wise to budget a 10% contingency—or more for older properties. Furthermore, design changes mid-project can lead to permit revisions, extra demolition, and new materials. Whenever possible, nail down your plan upfront to avoid cascading delays and mounting costs.
Time Is Money: Minimizing Holding Costs
In short-term or higher-interest loan scenarios, each extra day counts. If you’re flipping, a drawn-out project can siphon away thousands in interest and fees. If you plan to keep the property, shifting promptly into a more stable financing option—like a DSCR loan—reduces monthly payments. Strategies to prevent time overruns include:
- Ordering Materials Early: Supply-chain issues can derail your timeline.
- Frequent Communication: Stay in touch with contractors and trades to avoid bottlenecks.
- Watching the Market: If nearby comps are selling fast, you want to list sooner rather than later.
The New Construction Frontier
Fix-and-flip deals aren’t the only avenue for investors. Some prefer ground-up development—designing a property from scratch for ultimate control over layout and finishes. However, new construction loans generally require documented experience or a partnership with an experienced builder. Permits, zoning, and unexpected material costs can also introduce new layers of complexity.
Still, in areas with low housing inventory, building new can pay off. If you’re confident in your ability to coordinate a larger team—architects, general contractors, designers—it can be a lucrative path to long-term cash flow or a profitable sale.
Key Strategies for Success
- Keep ARVs Realistic: Overly optimistic numbers can lead to disappointment. Use local comps to guide rehab plans and sale expectations.
- Avoid Overbuilding: Match your design ambitions to the neighborhood’s norms.
- Multiple Exits: If your flip doesn’t sell, can you rent it out profitably? If the rehab budget grows, do you have a contingency?
- Stay on Schedule: Every day in a short-term loan is an added cost.
- Use the Right Lender: Opt for someone well-versed in investment loans and experienced in navigating draw schedules.
Conclusion: Merging Lending and Design for Optimal Returns
Real estate can offer high rewards but also carries high risks. Rising material costs, shifting buyer preferences, and the continuous pressure of loan fees all demand a nuanced strategy. Liz Lawrence’s insights highlight how investor-focused lending—whether it’s a short-term rehab loan, a DSCR rental loan, or even new construction financing—lets you move beyond traditional bank barriers. Yet no loan product, however flexible, can fix a poorly scoped renovation or disorganized timeline.
Ultimately, success requires balancing the science of financing with the art of design. A property that’s both functional and stylish typically appraises higher, rents faster, or sells more quickly. Working with the right lender, an efficient contractor, and a design team that understands market expectations can significantly boost your returns and keep your stress levels in check.
Whether you’re tackling your first flip or scaling up to multifamily projects, remember that informed decisions—about finishes, loan structures, and market position—are what set apart profitable investments from cautionary tales.