Should You Use Hard Money for Your Next Fix & Flip?

Real estate moves quickly, especially when it’s the right property, at the right location, at the right price. If you’re a fix and flip property investor, you need to be ready to hop aboard at any time or you might just miss the train.

One of the main reasons fix and flip investors choose hard money lending is for the speed. Hard money loans are designed as short-term loans that give you cash fast so you can take advantage of good investment opportunities.

Waiting for a traditional loan can be a lot like waiting for a busy train. You stand in line to buy a ticket, wait for an hour or two in a crowd of people, then end up still missing it after those same people rush to make it on board.

You’re closed out before you even had a chance. You never reach your destination.

Realize Your Return Faster with a Hard Money Loan

Hard money loans are more convenient for property investors because they have less red tape than traditional loans.

For example, at Catalyst, we have no minimum FICO score for loan eligibility. Also, our loans are open to properties in disrepair (often the best investments), which other lenders may deny.

As hard money lenders, we are more interested in the value of your property and your property investment. Therefore, we don’t need to go through your loan application and financial history with a fine-toothed comb.

This is what makes hard money loans perfect for the investor focused on collateral. A hard money loan also allows you to keep your cash at hand so you can leverage it for additional real estate opportunities.

With a pre-approved hard money loan, you are prepared when a real estate opportunity stops you in your tracks. Oftentimes, you can receive the money within days.

Hard Money vs. Conventional Lending

Along with speed and convenience, what are other reasons property investors choose hard money over conventional lending?

  1. Flexibility. Hard money loans are often more flexible than traditional loans. Lenders evaluate each situation individually based on the investment opportunity. Depending on the situation, they may be able to make adjustments to fit what works for you. This is unlikely to happen with a traditional loan and complex underwriting process.
  2. Fast Profit. They are designed for a short timeframe and quick profit turn. Even with a higher interest rate than a traditional loan, a hard money loan can still equal a higher profit. This is due to the shorter term -- and it opens the door for other investment opportunities. Many fix and flip investors have multiple projects going on simultaneously.
  3. Opportunity. Most properties in poor condition will not qualify for conventional financing, and oftentimes, the best opportunities come from the ugliest houses. Also, wholesalers will only sell to those with either a cash offer or an approved hard money loan.

Check out this house flipping success story to see how one real estate investor used a hard money loan to flip a house in just five weeks for a $30,000+ net profit.

Fix and Flip Financing with a Hard Money Lender

How do you get started with a hard money lender? Start by asking key questions. It’s imperative that you choose the right creditor, one that is committed to you and your investing future, not just their own profits.

8 Questions to Ask Your Hard Money Lender

  1. Do you require a minimum credit score?
  2. Do I have to have previous experience in house flipping?
  3. Do you look at contractor bids to ensure everything is in line, including cost accuracy and completeness?
  4. Do you help generate a detailed ARV estimate?
  5. Do you oversee the repair progression?
  6. Do you fund my repair costs, points and interest?
  7. Do you provide a detailed, itemized list of ALL closing costs?
  8. Do you provide tools/resources/training to help me succeed?

Hit the Fast Track to Opportunity

Don’t wait in line while the train passes you by. Hard money is a lending option designed for property investors who are ready to move, have a plan of action and want to see their investment paying off fast.

Catalyst Funding is a hard money lender who can help build your real estate investment opportunities. With a background in fix and flip projects and other property investments, we can provide resources and guidance to help you through the entire process. Contact Catalyst Funding today. 832.648.3626make a living flipping houses