Tag Archive for: closing costs

Fix & Flip Like a Pro: Hard Money Strategies for Maximum Profits

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Today we are going to discuss how to fix & flip like a pro: hard money strategies for maximum profits. Flipping homes is one of the fastest ways to build wealth in real estate. But without the right funding, your project can stall before it even begins. That’s where hard money loans come in. They offer fast, flexible financing that can cover up to 100% of your deal (in the right conditions).

In this guide, we’ll break down the key numbers, loan terms, as well as roadblocks that can make or break your success. Plus, you’ll get access to a free Excel spreadsheet to help you run your numbers before making a move.

Step 1: Know Your Key Numbers

Lenders evaluate fix and flip deals using three key numbers:

1. Purchase Price

  • This is what you’re paying for the property.
  • Example: $200,000

2. Rehab Budget (Scope of Work)

  • This includes repairs, upgrades, and improvements.
  • Example: $50,000

3. After Repair Value (ARV)

  • This is the projected value after renovations.
  • Example: $350,000

💡 Pro Tip: Your lender will use the ARV to determine how much they can lend. Most lenders offer loans up to 75% of the ARV.

Step 2: Understanding Your Loan Amount

Lenders will calculate your loan based on the ARV, purchase price, and rehab costs.

  1. Maximum Loan Amount (75% of ARV)

    • $350,000 × 75% = $262,500
    • This is the highest loan amount a lender might offer.

  2. How Much You Actually Get

    • Lenders will not give more than the total of your purchase price + rehab.
    • In this example:
      • Purchase + Rehab = $250,000
      • Since $250,000 is less than the $262,500 max loan, you could qualify for full coverage.

✅ Result: If your numbers align, you may be able to secure 100% financing. If not, you’ll need additional funds.

Step 3: What Costs Do You Need to Cover?

Even with hard money financing, you’ll have out-of-pocket costs. Here’s what you should prepare for:

1. Down Payment

  • Lenders typically fund 80–90% of the purchase price.
  • You may need to bring 10–20% of the purchase price in cash.
  • Example: $200,000 purchase price × 20% down = $40,000 out-of-pocket.

2. Rehab Cost Contribution

  • Many lenders fund 80–100% of rehab costs, but you must pay upfront and get reimbursed.
  • Example: $50,000 rehab × 90% lender coverage = $5,000 out-of-pocket.

3. Closing Costs & Loan Fees

  • Loan origination, title fees, and processing costs typically range from 2-4% of the loan.
  • Example: $205,000 loan × 3% closing costs = $6,150.

4. Carry Costs (Holding Expenses)

  • Monthly interest-only payments on the loan.
  • Taxes, insurance, utilities while holding the property.
  • Example: $205,000 loan at 10% interest = $1,700/month.

💡 Pro Tip: Many first-time investors underestimate how much cash they need upfront. Make sure to plan for these costs before diving into a deal.

Step 4: The Biggest Roadblocks & How to Overcome Them

Even great deals can fail if you don’t have the right funding strategy. Here’s what commonly trips up new investors:

❌ Not Having Enough Upfront Capital

✅ Solution: Build your Money Bucket with personal savings, business credit lines, or HELOCs.

❌ Not Understanding Escrow Releases

✅ Solution: Hard money lenders hold rehab funds in escrow and release them in stages. Make sure you can cover materials and labor upfront before reimbursement.

❌ Underestimating Holding Costs

✅ Solution: Budget for at least 4–6 months of carrying costs (interest, taxes, insurance).

💡 Avoid These Issues by Running Your Numbers First!

Step 5: Get Your Deal Funded the Right Way

Hard money loans are powerful tools when used correctly. The key is knowing your numbers, planning ahead, and ensuring you have enough funding to complete the project.

✅ Grab Your FREE Fix & Flip Calculator that is featured in this video that discusses fix & flip like a pro: hard money strategies for maximum profits. 

This tool will help you:
First, Calculate your loan amount
Second, See your cash needed upfront
Finally, Estimate your monthly payments

Got questions about fix and flip loans? Contact us today! Let’s make sure your next flip is your most profitable one yet! 🚀

Need More Funding?

Visit HardMoneyMike.com for more expert advice on real estate loans, BRRRR strategies, as well as funding solutions.

What closing costs should you expect when buying a property?

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Today we are going to answer the question “what closing costs should you expect when buying a property?” Buying a property is exciting, but there’s one piece that often catches buyers off guard: closing costs. These are the fees and expenses you’ll pay to finalize your home purchase. Knowing how to calculate these costs upfront can save you from surprises and help you budget better.

Closing costs typically range from 2% to 5% of the purchase price. For example, if you’re buying a $200,000 home, you can expect to pay between $4,000 and $10,000 in closing fees. But what exactly makes up these costs?

Here are some common items included:

  • Lender fees: These cover things like loan origination and underwriting.
  • Title services: Fees for title searches and insurance to make sure the property is free of legal issues.
  • Appraisal: The cost of determining the property’s value.
  • Taxes and prepaid costs: Property taxes and homeowners insurance may need to be paid upfront.

It’s important to ask your lender for a Loan Estimate, which breaks down these expenses before closing. This document gives you a clear picture of what you’re paying for and ensures there are no hidden fees.

By understanding closing costs, you can prepare for your purchase with confidence. Ready to dive deeper? The full guide explains how to estimate your costs and even save money on them.

Contact Us Today! 

Is the potential property right for you? Contact us today to find out more about what closing costs should you expect when buying a property.

Free Tools For You! 

We also have free tools available! Download the Quick Deal Analyzer to see if your potential property will be a good investment.

Learn more!

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Does Your Real Estate Loan Cover All of Your Costs?

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Does Your Real Estate Loan Cover All of Your Costs?

Hey everyone, it’s Mike with Hard Money Mike! When you’re planning to invest in real estate, one of the most important questions to ask is: does your real estate loan cover all of your costs? Today, we’ll dive into what goes into your loan, how to verify it, and how you can make sure you’re covered.

What Goes Into Your Loan Amount?

When you’re dealing with real estate loans, it’s easy to know your loan amount. But the real question is, what can fit under that loan amount? Let’s break down what could be included to ensure you’re not caught off guard by unexpected costs.

The Basics: ARV and LTV

Two key numbers determine the maximum loan available for your property:

  1. After Repair Value (ARV): This is the value of your property after all repairs and improvements. It’s the price you expect to sell it for or its value when you refinance.
  2. Loan-to-Value Ratio (LTV): This is the percentage of the ARV that a lender is willing to lend you. Most lenders offer between 70% to 75% of the ARV.

Example:

Let’s say you have a property with an ARV of $200,000. If your lender offers an LTV of 75%, they’ll lend you $150,000 (which is 75% of $200,000). Now, the question is, will that amount cover everything you need?

Breaking Down the Costs

To figure out if your loan will cover all your costs, you need to look at the expenses involved in your project. Typically, these costs include:

  • Purchase Price
  • Rehab Costs
  • Closing Costs

Let’s see how these add up in a real-world scenario.

Real-World Example: Are You Covered?

Imagine your total costs look like this:

  • Purchase Price: $100,000
  • Rehab Costs: $40,000
  • Closing Costs: $5,000
  • Total Costs: $145,000

With a maximum loan amount of $150,000 based on your ARV and LTV, you’re in good shape! Your total costs of $145,000 fit comfortably under the loan amount, so you won’t need to come up with extra money out of pocket.

But what happens if your costs increase?

What If Costs Go Up?

Let’s say your purchase price jumps to $120,000 while keeping the rehab costs at $40,000 and closing costs at $5,000. Your new total cost is $165,000. Since your loan maxes out at $150,000, you’d have to cover the extra $15,000 on your own.

Make Sure You’re Prepared

Understanding what fits under your loan amount can make a huge difference in your project’s success. If your costs exceed what your loan covers, you’ll need to have additional funds ready.

Tools to Help You

At Hard Money Mike, we offer free tools like the Loan Cost Optimizer to help you run these numbers. Use it to make sure your loan covers everything, so you’re not surprised by out-of-pocket expenses.

Have Questions?

We know this topic can be tricky, so if you have any questions, drop them in the comments below. We’re here to help you run through the numbers and make sure your next project is a success!

Stay Connected!

For more tips and tools to make your real estate investments easier and more profitable, check out our website at: HardMoneyMike.com. Don’t forget to like, comment, and share this article with other investors! 

Watch our most recent video to find out more!