Tag Archive for: #Hard Money Mike

Stop Confusing These Loans! Fix and Flip vs Hard Money Explained

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Stop confusing these loans! Fix and flip vs hard money explained! Are you a real estate investor wondering which loan to use? Maybe you’ve heard of fix and flip loans and hard money loans, but you’re not quite sure which one is right for your next deal.

Let’s break it down. These two loans may seem similar, but they are not the same. Understanding the difference can save you time, stress, and thousands of dollars.

What Is a Fix and Flip Loan?

A fix and flip loan comes from big lending companies—usually backed by Wall Street money. These lenders include names like Kiavi, RCN, and Lima One.

They work well if:

  • You have good credit (typically 680+)

  • You have money for down payments and reserves

  • You’re buying a standard single-family home

  • Your deal fits in their box

Here’s What “Their Box” Means:

Fix and flip lenders want:

  • Properties in clean neighborhoods

  • Homes that sell between $250K and $350K

  • Borrowers with 3–5 flips already under their belt

  • A simple exit strategy like resale or refinance

Example:

You find a house worth $100,000 that will be worth $200,000 after repairs.
The lender might offer:

  • 90% of the purchase = $90,000

  • 100% of rehab = $40,000

But—you’ll need to bring the 10% down, plus have extra money set aside for reserves, closing costs, and interest payments.

What Is a Hard Money Loan?

Hard money loans are different. They come from real people or small private lenders. These lenders focus more on the deal than on your credit or experience.

They work great if:

  • Your credit score is lower

  • Your deal is outside the box

  • You don’t have a lot of cash to put in

  • You need flexibility

Hard money lenders look at:

  • Loan-to-value

  • Market strength

  • Exit strategy

  • Your ability to finish the project

Example:

You find a house worth $200,000 after repairs.
You can buy it for $80,000 and fix it up for $20,000.

That’s only 50% of the ARV (After Repair Value).

With a deal this strong, a hard money lender might fund:

  • 100% of the purchase

  • 100% of the rehab

  • Even your closing costs

You walk in with $0 out of pocket because the deal makes sense.

Fix and Flip Lenders vs Hard Money Lenders

Let’s compare side by side:

Feature Fix and Flip Loans Hard Money Loans
Credit Score Needed 680+ Not score-driven
Property Type Standard, 1–4 unit Unique, land, large, or small deals
Experience Required 3–5 previous flips Helpful, but not required
Cash Needed Upfront Down payment + reserves May offer 100% if the deal is strong
Speed and Paperwork Slower, more docs Faster, less paperwork
Who It’s Best For Cookie-cutter flips Unique or off-market opportunities

So, Which Loan Should You Use?

It depends.

➡️ Use a fix and flip loan if your deal is clean, simple, and in a popular area. You’ll likely get a lower rate and lower points—but you must fit their box.

➡️ Use a hard money loan if your deal is messy, different, or small-town. You’ll pay a little more, but the lender will work with you. They care more about the property and less about perfect credit or experience.

Bonus: The Best Loan for BRRRR Investors

If you’re using the BRRRR strategy (Buy, Rehab, Rent, Refinance, Repeat), hard money can be a great fit. Why?

Because hard money lenders can fund 100% of the deal if the numbers work and you’re already pre-approved for your refinance loan.

Final Thoughts

Both types of loans can be powerful tools. The key is knowing:

  1. What your deal looks like

  2. How much cash you have

  3. What kind of lender will work with you

👉 Fix and flip loans give you great terms if you fit the mold.
👉 Hard money loans give you flexibility when life—and deals—don’t fit the mold.

Need Help Finding the Right Fit?

At Hard Money Mike, we work with both kinds of lenders. And we have free tools like:

  • ✅ Cash Flow Worksheet

  • ✅ Quick Deal Analyzer

These tools help you know if a deal is worth doing before you borrow a single dollar.

👉 Download them now and take the guesswork out of your next investment.

Stop confusing these loans! Fix and flip vs hard money explained! Watch our most recent video to find out more!

Will Your Real Estate Investment Actually Make Money?

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If you want to succeed in real estate, you have to ask this question early:
Will your real estate investment actually make money?

Too many new investors skip the numbers. They get excited. They imagine the profits. But then… the deal doesn’t turn out like they hoped.

Let’s change that.

Real Estate Is a Numbers Game — Not an Emotional One

Think of real estate like baking. It’s a recipe. You follow it, step-by-step. If you get the right ingredients in the right amounts, you end up with something great.

The key is knowing your numbers before you buy.

Because if you wait until after… it’s often too late.

Example: A Real Flip Deal Breakdown

Let’s say you’re buying a property for $150,000.
You plan to put $75,000 into renovations.
And you expect to sell it for $300,000.

That sounds like a $75,000 profit, right?

Not so fast.

There’s a lot more to it. Here’s what most people miss:

The Hidden Costs You Have to Know

Even when the top-line numbers look good, deals fall apart when you forget the real costs.

Here’s a quick list of what you should always include:

1. Realtor Fees

Usually around 5% when you sell. On a $300,000 sale, that’s $15,000.

2. Loan Origination and Carry Costs

Lenders charge fees to set up the loan. Then you pay interest while you hold the property. For this example, let’s say that’s $18,000 total over 6 months.

3. Title Costs

You pay this when you buy and again when you sell. Around $1,500 total is a safe estimate.

4. Insurance

You need coverage during the rehab. That’s about $1,800 for builder’s risk insurance.

So What’s the Real Profit?

Let’s do the math again.

  • Purchase Price: $150,000

  • Rehab Budget: $75,000

  • Total In: $225,000

Now subtract the real costs:

  • Realtor Fee: $15,000

  • Loan + Carry Costs: $18,000

  • Title Fees: $1,500

  • Insurance: $1,800

That’s $36,300 in extra costs.

So your actual total is now around $261,300.
And if you sell for $300,000, your real profit is about $38,700.

Still a great deal — just not the $75K you hoped for.

Why This Matters Before You Buy

This is why you need to ask:
Will your real estate investment actually make money?

Too many people focus on just two numbers: what they buy for and what they hope to sell for. But that’s only part of the story.

You must factor in all the other costs. Only then can you know if the deal is worth your time, energy, and money.

A Quick Tool to Help You

We built a simple tool called the Quick Deal Analyzer. You can download it for free at HardMoneyMike.com.

It walks you through:

  • Purchase price

  • Rehab costs

  • Loan terms

  • Realtor fees

  • All the sneaky costs most people forget

This tool helps answer that key question:
Will your real estate investment actually make money?

Final Thoughts: Follow the Recipe

The best investors don’t just hope for profits. They plan for them.

They run the numbers before they ever sign a contract. And they aim for deals with at least 10% to 15% profit, even after all the costs.

So if you’re asking yourself, “Will your real estate investment actually make money?” — now you have the tools to find out.

Keep it simple. Stick to the recipe. And go build the future you want.

Watch our most recent video to find out more!

The 100% Financing Strategy Every Real Estate Investor Should Know

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Let’s walk through The 100% Financing Strategy Every Real Estate Investor Should Know — a method that combines your lender with other smart tools to fully fund your deals.

What Is “100% Financing,” Really?

You’ve probably heard lenders say, “We’ll cover up to 75% of the ARV.”

That sounds great… but it’s not true 100% financing.

Why? Because it usually only covers:

  • The purchase price

  • Some or all of the rehab

But what about everything else?

Let’s Look at a Real Example

Say you find a property that will be worth $200,000 after repairs.
You’re buying it for $110,000 and putting $40,000 into repairs.

That adds up to $150,000 — and yes, a lender might cover that.

But here’s what they don’t cover:

  • Closing costs (title, insurance, origination)

  • Escrow advances for rehab

  • Upfront contractor payments

  • Materials (windows, doors, appliances)

  • Holding costs (mortgage, taxes, HOA)

  • Surprise repairs or last-minute changes

  • Staging, cleaning, or listing prep

See the problem?

Even with a great loan, you still need extra funds on hand — and that’s where the credit stack comes in.

The Secret to True 100% Financing? Your Credit Stack

The 100% Financing Strategy Every Real Estate Investor Should Know isn’t just about a lender.

It’s about stacking other money tools as well as your loan, like:

  • A HELOC (home equity line of credit)

  • A business line of credit

  • Business credit cards

  • OPM (Other People’s Money)

  • A private partner

This stack fills the gaps so you can:

  • Move fast

  • Keep your projects on schedule

  • Avoid costly delays

  • Take on more deals without stress

Best of all? These tools often don’t cost you anything unless you use them.

Why Speed = Profit

Every day a deal drags, your profits shrink.
That’s why successful investors always keep funds ready.

Let’s say a contractor needs $5,000 upfront to start.
If you wait 10 days to figure it out, your project stalls.
Now it’s not a 3-month flip — it’s a 6-month flip.

That delay costs you:

  • More interest

  • More taxes

  • More stress

  • And maybe even the next great deal

But if you have your credit stack set up? You fund it, keep the job moving, and finish strong.

How to Set Up Your Own Stack

Everyone’s stack looks a little different. Here’s how to start building yours:

First, Start with your main lender

  • Hard money can fund up to 75% of the ARV

Second, Add a HELOC or line of credit

  • Use this for materials, escrows, or delays

Third, Get a business credit card

  • Great for contractors or emergency purchases

Forth, Tap into OPM or partnerships

  • Know anyone with $20K–$50K sitting idle? Give them a better return than the bank.

Finally, Keep it all ready — not running

  • These should be available, not maxed out

What Happens After the Flip?

Here’s the smart part:
When you sell the property, you pay off everything — including your credit stack.

You’re not adding more debt.
You’re just using tools temporarily to get your project across the finish line.

Let’s Recap

The 100% Financing Strategy Every Real Estate Investor Should Know comes down to this:

✅ Use a lender for the purchase and rehab
✅ Stack other tools to cover the rest
✅ Set everything up before you start
✅ Move fast, reduce stress, and stay profitable

If your money is ready, your deals will go smoother — and your profits will grow.

Ready to Build Your Stack?

We’ve helped thousands of investors set this up.
Download our free guide, grab your spot in our upcoming workshop, or reach out with questions.

Visit Hard Money Mike
Or email us at info@hardmoneymike.com

Let’s get your money lined up — so you can focus on finding great deals and making real progress.

Watch our most recent video to find out more!

Top 5 Questions to Ask Hard Money Lenders

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Today we are going to discuss the top 5 questions to ask hard money lenders before you get a loan. Not all hard money lenders are the same. That’s why asking the right questions before you sign is key. Whether you’re doing a flip, a BRRRR, or a bridge loan, these five questions can save you time, stress, and a whole lot of money.

1. What Are Your Total Costs?

Don’t just look at the interest rate. Lenders can make their deals sound great by hiding extra fees.

👉 Some charge low interest, like 10%, but add in:

  • 2 points (That’s 2% of the loan upfront!)

  • $1,000 in processing fees

Let’s break that down:

  • Loan Amount: $200,000

  • 2 Points: $4,000

  • Six Months of Interest at 10%: $10,000

  • Processing Fee: $1,000

  • Total: $15,000

Now compare it to another lender:

  • Interest Rate: 12%

  • No Points

  • But $4,000 in other fees

  • Six Months of Interest at 12%: $12,000

  • Total: $16,000

👉 Even with no points, the second lender costs more.

💡 Use a tool like the Loan Cost Optimizer at hardmoneymike.com to compare lenders side-by-side.

2. How Do You Decide Loan Amounts?

Lenders calculate what they’ll lend based on different values. Some use just the purchase price, others use ARV (After Repair Value).

Let’s look at two examples:

  • Purchase Price: $150,000

  • Rehab Costs: $50,000

  • ARV: $300,000

One lender might only give you 75% of the purchase price, or about $112,500.

Another lender might lend based on ARV, offering:

  • 90% of the purchase = $135,000

  • 100% of the rehab = $50,000

  • Total Loan: $185,000

👉 That’s a huge difference. Ask if they use purchase price or ARV to calculate your loan.

3. How Do You Decide Property Value?

This one’s big. Some lenders use real appraisers. Others use in-house tools or AI. The problem? They can value your property way lower than what it’s actually worth.

Example:

  • One lender values the ARV at $300,000

  • Another comes in at just $250,000

If they lend up to 75%, here’s what you’d get:

  • $300,000 ARV: Loan up to $225,000

  • $250,000 ARV: Loan up to $187,500

👉 That’s almost a $40,000 difference in your funding!

Always ask:

  • Who determines value?

  • Can I provide my own comps?

  • Can I dispute a low value?

4. Are There Prepayment Penalties?

Some lenders sneak in rules like:

  • Minimum interest guarantees

  • 3, 6, or 9-month required interest payments

Even if you pay the loan off early, you’re stuck paying interest for those months.

👉 Ask about any minimum interest periods. Make sure the loan fits your timeline.

5. How Do Draws Work?

If you’re doing a flip or a BRRRR, you’ll likely have rehab money held in escrow.

For example:

  • Rehab budget: $50,000

  • That money is held until work is done

  • You’ll get it back in draws (aka stages)

Ask:

  • How fast can I get my draw?

  • Are there fees every time I request one?

  • Do I need an inspection or lien waivers?

👉 If your contractor can’t get paid, they might walk off the job. That’s the last thing you want.

Final Thoughts

These five questions can help you find the best lender for your project:

  1. What are the total costs?

  2. How is the loan amount calculated?

  3. How do you come up with property value?

  4. Are there prepayment penalties?

  5. How do your draws and escrow work?

✨ Want help comparing lenders? Try the Loan Cost Optimizer at HardMoneyMike.com.

Watch our most recent video to find out more about: Top 5 Questions to Ask Hard Money Lenders BEFORE You Get a Loan

What’s Better for You: Hard Money or a Partnership?

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Today we are going to discuss what’s better for you: hard money or a partnership. Every investor runs into this question sooner or later:
Should I use hard money or bring in a partner?

Let’s break it down so you can choose what fits your deal best.

First, What’s Hard Money?

Hard money is a loan based on the property — not your personal income.
You borrow from a lender and pay interest, but you keep full control of the project.

Pros of Hard Money:

  • Fast funding. Many loans close in just a few days, which can give you an edge.

  • No partner needed. That means you get to keep 100% of the profits.

  • Flexible terms. It works well for flips or short-term projects.

Cons of Hard Money:

  • Higher rates. You’ll pay more than you would with a traditional loan.

  • Short terms. So, you’ll need to finish fast or refinance quickly.

  • More risk. If the deal goes sideways, you’re the one responsible.

Example:
Let’s say you find a flip that needs $200,000.
A hard money lender gives you $160,000 (80% of purchase), and you put in $40,000.
You make monthly interest payments. Then, when you sell the property, you keep all the profit.
In this case, hard money gave you speed, control, and full profit — but it also came with risk.

On the Other Hand, What About a Partnership?

A partnership means you team up with someone else.
Usually, they bring the money, while you bring the hustle.

Pros of a Partnership:

  • No loan required. You don’t need to qualify or make payments.

  • Shared risk. If things go wrong, you won’t shoulder it all alone.

  • Build strong connections. A great partner today could help with 10 deals tomorrow.

Cons of a Partnership:

  • Split profits. Often, you’ll walk away with only 50% — or sometimes even less.

  • Less control. You’ll need to agree on decisions, which can slow things down.

  • More communication. You’ll need to share updates and work closely together.

Example:
Let’s say that same $200,000 flip comes up.
Your partner funds the whole thing, including repairs. You do the work.
Then, you split the profits 50/50.
This works great if you don’t have the funds, but you’re willing to trade profit for opportunity.

So, Which Is Better?

Well, that depends on what you need the most.

Choose Hard Money If:

  • You want full control of your deal

  • You have the down payment and monthly payments covered

  • You believe in the deal and want to keep all the profit

Choose a Partnership If:

  • You don’t have enough cash or credit

  • You’re new and want to lower your risk

  • You’re okay sharing profits in exchange for experience

A Quick Comparison

To help you decide faster, here’s a side-by-side look:

Feature Hard Money Partnership
Profit Share 100% yours Shared
Control All yours Shared decisions
Risk All yours Shared
Cost Monthly payments No loan payments
Speed Very fast funding Depends on partner
Experience Needed Some required Can be new

Final Thoughts

At the end of the day, there’s no wrong choice — only the right fit for your deal.
Some investors use hard money to scale fast. Others build long-term success with great partners.
In fact, many smart investors use both, depending on the deal.

So before you jump in, think about your goals:
Do you want control, or would you rather share the load?
Do you have money for payments, or would a partner give you the boost you need?

Whatever you choose, take action.
Deals don’t wait, and neither should you.

Need help deciding?
We can walk you through it, run the numbers, and help you pick the smartest path forward.
Reach out today — your next deal could be one good decision away.

Contact Us Today! 

Is hard money or a partnership better for you? Contact us today to find out more!

Free Tools For You! 

We also have free tools available! Download the Loan Optimizer to compare financing options side by side!  

Learn more!

Visit our YouTube channel to learn more about real estate investing and how you can get on the fast track to success

5 Tips to Get Approved by Hard Money Lenders Fast!

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Today we are going to discuss the 5 tips to get approved by hard money lenders fast! Hard money loans are a great option for real estate investors who need fast funding for unique deals. Unlike traditional bank loans, hard money lenders focus on the property and exit strategy rather than personal income or credit scores. Let’s take a closer look!

1. Have a Clear Exit Strategy

Hard money lenders want to know how you plan to pay back the loan. Whether it’s flipping the property, refinancing into a long-term loan, or selling part of the land, your exit strategy must make sense.

Example: If you’re flipping a house, explain how long renovations will take and what comparable homes in the area are selling for. Show that you have a solid plan to sell quickly and at a profit.

2. Keep the Loan Term Short

Hard money loans are meant to be short-term solutions, usually between 9 to 12 months. The faster you can complete your project and pay off the loan, the better your chances of approval.

Example: If you’re subdividing land, outline a timeline for approvals, sales, and closing. A clear plan reassures lenders that they’ll get their money back quickly.

3. Show Responsible Credit Habits

Hard money lenders don’t care about your credit score, but they do look at your credit history. If you have a pattern of late payments, bankruptcies, or foreclosures, it may raise concerns.

Tip: If your score is low due to high credit usage but you always pay on time, highlight that to the lender. They’re more interested in your payment habits than the number itself.

4. Keep Your Loan-to-Value (LTV) Low

Most hard money lenders prefer an LTV under 75%. For fix-and-flip deals, they typically lend up to 75% of the After-Repair Value (ARV). The lower the risk to the lender, the faster they’ll approve your loan.

Example: If you’re purchasing a $200,000 property expected to be worth $300,000 after repairs, a hard money lender may lend you up to $225,000 (75% of ARV).

5. Move Quickly and Be Prepared

Hard money lenders work fast, but they expect you to move just as quickly. Have all required documents ready, including property details, a project timeline, and any additional funding sources.

Tip: Work with a lender who understands your local market. A lender familiar with your area can approve deals faster because they know the risks and opportunities.

Final Thoughts

Hard money loans can be a game-changer for real estate investors who need fast, flexible funding. By following these “5 Tips to Get Approved by Hard Money Lenders Fast”, you’ll increase your chances of securing the funds you need without delays.

If you’re ready to compare rates, try our Loan Cost Optimizer to find the best hard money loan for your next project! Contact us today!

Watch our most recent video to find out more!

Why Renovation Speed is the Key to Your Success

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Today we are going to discuss why renovation speed is the key to your success. Renovating a property can make or break your success as an investor. The key? Speed. The longer a project takes, the more it costs. However, when you move quickly and efficiently, you keep more money in your pocket and get to the next deal faster. Let’s break down why speed matters and how it can boost your profits.

Time is Money

Every extra day of renovation costs you. Loan interest, utility bills, as well as property taxes keep adding up. The longer your project drags on, the smaller your profits become.

Fast Renovations Mean Faster Profits

Let’s compare two investors:

  • Investor A flips a house in three months and moves on to the next deal.
  • Investor B takes six months, paying twice the holding costs.

Who do you think makes more money? The faster you finish, the faster you profit.

Rentals Need Speed Too

If a rental sits empty, it’s losing money. A one-month delay means missing an entire month of rent. Fast renovations get tenants in sooner, putting cash in your pocket.

Speed Without Sacrificing Quality

Fast doesn’t mean sloppy. It means having a solid plan, hiring the right team, and keeping things on schedule. Delays kill deals, but efficiency builds wealth.

Conclusion

If you want to maximize your real estate success, focus on speed. Whether flipping or renting, a fast, well-planned renovation means lower costs, quicker profits, and more deals in the future. Don’t let delays eat into your success—keep things moving and watch your investments grow!

Contact Us Today! 

Do you have more questions about what makes an investment property a good investment? Contact us today to find out more! 

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!

Visit our YouTube channel to learn more about real estate investing and how you can get on the fast track to success! 

What Makes an Investment Property a Good Investment?

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Today we are going to discuss what makes an investment property a good investment. Not all investment properties are good investments. Some make money, and others drain your wallet. The key is knowing what to look for before you buy.

1. Cash Flow

A good investment property pays you every month. If your rental income covers the mortgage, taxes, insurance, and maintenance—with money left over—you have positive cash flow.

Example: Sarah buys a rental for $150,000. Her mortgage, taxes, and insurance total $1,000 per month. Her rent is $1,400. After setting aside $200 for maintenance, she still clears $200 per month in profit. That’s a good deal!

2. Property Value Growth

Over time, a solid investment property increases in value. Buying in a growing area with strong demand means you can sell later for a profit.

Example: Jake buys a duplex in a neighborhood where new businesses are popping up. Five years later, property values have jumped 30%. Now, he has options—sell for a profit or refinance to buy more rentals.

3. The Right Financing

Your loan matters. A high-interest rate or bad terms can turn a great property into a bad investment. The right financing keeps your payments low and cash flow strong.

It isn’t just about location, it’s about numbers. If the deal makes money today and builds wealth for tomorrow, you’re on the right track.

Contact Us Today! 

Do you have more questions about what makes an investment property a good investment? Contact us today to find out more! 

Free Tools For You! 

We also have free tools available! Download the Quick Deal Analyzer to see if your on the right track! 

Learn more!

Visit our YouTube channel to learn more about real estate investing and how you can get on the fast track to success! 

Stacking Your Funding Options can Guarantee Profits

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Today we are going to discuss how stacking your funding options can guarantee profits! Smart investors don’t rely on just one type of funding. They stack their options to create the best deal possible. By combining different funding sources, you can lower costs, increase cash flow, and keep more profit in your pocket.

Let’s say you find a great fixer-upper for $100,000. A hard money loan covers 80%, but you still need $20,000 for the down payment. Instead of using your own cash, you could tap into a HELOC, a 0% interest credit card, or even a private lender. This way, you spread out your costs and keep more cash available for renovations.

Another example? A rental property with a DSCR loan. You might finance 75% of the purchase price with a DSCR loan and cover the rest with a seller carryback or a line of credit. This lets you close deals without draining your bank account.

Stacking funding isn’t about taking on more debt, it’s about using the right debt at the right time. The goal is to build wealth while keeping your cash flow strong.

In the full article, we’ll break down different ways to combine funding sources, so you can structure deals that work for you.

Contact Us Today! 

Find out more about how stacking your funding options can guarantee profits!  Contact us today to find out more about real estate investment loans!

Free Tools For You! 

We also have free tools available! Download the Loan Optimizer to compare financing options side by side!  

Learn more!

Visit our YouTube channel to learn more about real estate investing and how you can get on the fast track to success! 

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.