Mortgages & Creative Financing

3 Things I Learned From My First Hard Money Deal

Expertise: Landlording & Rental Properties, Real Estate Investing Basics
19 Articles Written
Close up portrait of exhausted frustrated stressed handsome sad unhappy upset entrepreneur trying to take off uncomfortable blue tie formal wear isolated on gray background copy-space

Hard money is for suckers!”

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That is actually the first thing that popped up for me when I Googled, “What is hard money?” Do you think, just maybe, language like this is why there is so much confusion around the subject?

Or is it because of what I saw halfway down the same page, which read said: “Hard money is called hard money because it is harder to pay back than soft money.”

The author went on to say it is harder to pay back because of the high interest rate compared to soft money—which is true, I suppose. I just do not think it makes the subject any less confusing. Either way, I would like to go through my last hard money deal in detail and share my whole experience.

Real-Life Example of a Hard Money Deal

Pre-Purchase Details:

  • Location: New Britain, Conn.
  • How I Found It: MLS (just before the market turned hot—would not get this deal on the MLS now in this area)
  • Class: C class
  • Property Type: 3 family
  • Year Built: 1924
  • Square Feet: 4,035
  • Bedrooms/Bathrooms: 6/3
  • Garage: 2 car
  • Asking Price: $186,000 (original)
    $139,400 (after numerous price drops)
  • Type of Sale: Foreclosure
  • Condition: 3 (1 being the worst/10 being the best)
  • As-Is Appraisal: $125,000

Post-Purchase Details:

  • Purchase Price: $123,000
  • Budget for Repairs: $55,300 (can provide budget spreadsheet upon request)
  • Major Repair Items: All new siding, all new windows (50), new kitchens (3), all new paint, new boilers (2)
  • Appraised ARV: $255,000

(Please note: This was before repairs but was valued by an appraiser based on the scope of repairs provided on the budget spreadsheet.)


Hard Money Details:

  • Term Length: 12 months
  • Loan Details: 85% of purchase/100% of rehab
  • Interest Rate: 9.99%
  • Points: 2.75%

Costs Not Covered by Hard Money Loan:

  • Down Payment: $18,450 (15%)
  • Earnest Deposit: $1,000
  • Total to Close: $29,046.07 (includes fees, down payment, earnest deposit, pre-paids, etc)
  • Appraisal: $600
  • Insurance: $1,516.84

The money for these additional expenses came from my savings, which I earned through my 9 to 5 job.

What I Learned From My First Hard Money Deal

This is one of those projects where, if I knew what I was getting into, I would have been much more cautious or pessimistic. I could not be happier that I did it and gained the experience, but it was one heck of a ride.

Related: The Ultimate Guide to Hard Money Loans

I purchased this property on May 17, 2018. I had 12 months to rehab, rent, and refinance. I refinanced out of the hard money loan on May 14, 2019. Does it get any closer?

Let’s talk about what happened between those dates.

I went into that deal wide-eyed and bushy-tailed, as they say. I came out looking like I had been hit by a truck. However, even though I was in some pain, I was a lot wiser and more confident about the process.

3 Mistakes When Using Hard Money

Mistake #1: Actually thinking hard money covers ALL repairs.

Reality: Hard money covers what you agree on for repairs at closing.

Why It Mattered: The loan covered the $55,300 that I originally anticipated. Everything else came out of my pocket. This really hurt.

I quickly learned that nobody on the planet has ever nailed their budget down to the dollar. If you have, it is probably blind luck. There are going to be unforeseen issues. I do not care if you have an inspector come out or not. X-ray vision is not available to the public, so anything behind the walls is completely unknown.

Here are a few items that came out of my own pocket:

  • $6,000: This was to repair the majority of the plumbing in the house. This needed to be done mostly because someone went in at night and ripped out and/or damaged nearly all of the copper pipes.
  • $9,000: Expanding the driveway. This should have been budgeted. I was ripped off by two contractors who did terrible work for about $3,000. I finally found an incredible driveway guy and he transformed the space for about $6,000.
  • $7,500: Replacing the roof—pure stupidity that this was not on the original budget.
  • $4,500: Replacing siding and roof on the garage. This is something I decided to do because the garage looked so awful next to a newly remodeled main house.

detached garage with new-looking slate blue siding white door and black roof

These items really put a dent in my wallet. What's worse is, for much of this remodel, the house is not rented so it is generating $0 income. Furthermore, I am paying anywhere from $1,100 to $1,300 per month in interest to carry the property under the hard money loan. The interest gets higher each month as you draw out more for the rehab.

Mistake #2: Thinking I would just have access to the rehab budget as I needed it.

Reality: The money for repairs would be given out on a draw.

Why It Mattered: I had to front large amounts of money for materials with no reimbursement until that specific job was completed and inspected.

This was another one of those items that I should have known. They do not just give you the rehab money. They did not just write me a check for the $55,300 in repairs.

This is how a typical line item on my budget went:

  1. I would put the materials for the job on my credit card or pay it from my bank account.
  2. Contractor would work on the job and complete it as soon as possible.
  3. He would be itching to get paid for his labor costs.
  4. He would be really itching to get paid.
  5. I would be sweating about carrying this unreimbursed balance.
  6. I would contact the inspector a day or two ahead of completion to allow for their two- to three-day lead time.
  7. They would inspect the property, take pictures, and sign off that it was done.
    1. The inspector sometimes would only mark it as partially done.
    2. This means I would only be reimbursed to whatever percentage they noted as complete.
  8. Inspector would submit his report the lender.
  9. Lender would notify me that a wire would be sent out in two to three days for the specific items noted as complete/partially complete by inspector.
  10. Funds would be received, and I would pay the balance owed to contractor and reimburse myself.
  11. Breathe.

This one was especially important. I remember walking around this rundown property for the first time AFTER I already purchased it. My contractor was like, “Wow, this needs a ton of work!”

I laughed it off, because why not? My hard money loan was just going to pay for everything, so I did not really care.

That laughter soon turned to tears. Well, not really, but close enough. Lesson learned.

Also of much importance, make sure you have cash reserves or a credit line or credit cards lined up and ready to cover these out-of-pocket costs.

Mistake #3: Thinking I had more time than I really did.

Reality: Twelve months fly by.

Why It Mattered: Going past the 12-month term means the lender increases the interest rate and you risk losing the property.

As mentioned, this property was purchased in Connecticut. It snows there from November to March—and sometimes even later. When we purchased the property in May, we planned to have this thing rocking and rolling before the first snowfall.

We would work on the interior first, so that we could get it rented sooner, and then move to the outside. By the time we got to the outside, it was snowing. This blew up our timeline.

dark-haired bearded man getting hit in the face with a large snowball outside during winter

We ended up being able to rent it starting Dec. 1, 2018, and it was fully occupied by Jan. 31, 2019. By the time the snow melted and the freezing temperatures went away, we were only a few months from our deadline. Furthermore, I knew it would take a bit of time to find a bank I wanted to work with and one that wanted to work with me.

During the course of this final stretch, it was not smooth sailing. I was running into all sorts of issues. The driveway had turned into a massive mud pit. I had a contractor’s van buried up to its bumper in the mud. I had tenants stuck in their new cars so badly that I had a tow truck say, “Sorry, can’t help you. I do not want to risk getting stuck, too.” When they finally got out, there were electrical issues with the car after being in mud for so long.

In the house, I was also having issues. This property had not been occupied in two years—no water running through the boiler system or anything. But it had signs saying it was “winterized.” It either was not winterized, or it was not done correctly. Most of the pipes burst. We thought we fixed everything; however, every now and then we would spring a leak and disaster would ensue.

Also, let us not forget that this is the first time the sewage lines had been working in a while, too. I rent everything by the room, as you may know, so I had nine tenants living in the property rather than just three tenants renting each unit. This extra load on the system backed up everything into the basement. Furthermore, the cast iron main stack was reaching its own limit and starting to leak.

Related: 5 Pitfalls of Renting by the Room (& How to Solve Them)

Eventually we fixed everything. I was dangerously close to the end of the term, but the refinance was moving along at a good pace with the small local bank I got hooked up with.

The Refinance and Other Important Numbers

I want to transition to some numbers for you:

  • Purchase: $123,000
  • Down Payment: $18,450
  • Principal Amount: $104,550
  • Rehab: $55,300
  • Total Loan: $159,850
  • Final ARV Appraisal: $255,000 (first appraisal came in at $250,000. I provided support and asked it be moved to $255,000. This does not always work.)
  • Cash-Out Refinance (75% of ARV): $191,250
  • Gross Cash-Out Amount: $31,400 ($191,250-$159,850)
  • Net Cash-Out Amount: approx. $19,000 (after closing costs)
  • New Loan: 5/1 ARM at 5.7% amortized over 20 years (wish I had gotten a 30-year, but it did not seem possible at the time, as nobody wanted to finance rent by the room and I was running against the end of the term—this has since changed)

There it is. I walked out with a check for almost $19,000!

Well, hold up. That doesn’t include overages on the rehab budget and the interest payments that I was making all along. All told, the $19,000 did not cover all of that—but it was somewhat close. Either way, I did not leave a ton of money in the deal, which is good news.

Rental Details

  • Rent: $595 per bedroom (9 beds/includes utilities)
  • Garage: $75 (rented to contractor at a discount)
  • Mortgage: $1,850 (PIT–doesn’t include insurance)
  • Gross Monthly: $5,430

Renting by the room is my go-to strategy. It is all I do. The property cash flows well. As you may know, I am also self-managing. Never a dull moment!

I really hope this helps some of the people who have questions about hard money. My lender was awesome. He took the time to explain things to me. Anything I did not realize, in my opinion, was on me.

All told, I am big proponent of hard money. I want to get the deal done and am willing to pay the high interest and applicable fees to do that. For me, spending inordinate amounts of time with a traditional lender that wants an arm, a leg, and your first-born child just isn’t worth it.


Is there anything else you’d like to know about hard money that I haven’t covered here?

Ask me in the comment section below.

Ryan Deasy, of Deasy Property Group and RentReddy, is a long-distance landlord currently residing in Houston, Texas. Originally from Connecticut, Ryan has employed various strategies and studied unique niches in order to grow and manage his portfolio. In 2012, Ryan purchased his first duplex. Little did he know, he had stumbled into house hacking and, from there, never looked back. In 2016, he moved to Houston and left all of his rentals behind with no property manager. Through many trials and tribulations, he discovered the best way to manage his portfolio was, simply, by himself at a distance. After employing rock solid systems and an all-encompassing team, he has been able to scale his portfolio without missing a beat. Not only is his entire portfolio managed from out-of-state but it is also comprised entirely of rent-by-the-room arrangements. With the appropriate systems and teams in place, Ryan has taken a group of small multifamily rental properties and made them into an exceedingly profitable income source.
    Brandon Davis
    Replied about 1 year ago
    I'm studying for my real estate license. It is worth it to get it?
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    hey Brandon, thanks for commenting. this is just my opinion. i had my license for a while and never really had the goal of being a real agent and buying and selling for other people. point is, i could save money on my own deals, but the monthly and annual fees were quite heavy. if you are not going to buy and sell for others, i am not sure i would bother. it is not a cheap license to hold.
    Dylan Phillips Real Estate Agent from Phoenix, Arizona
    Replied about 1 year ago
    Domenick T. Investor from Springfield , New Jersey
    Replied about 1 year ago
    Excellent story! Thanks for sharing the details behind a real world case study. I was on the other end of a hard money loan for the first time not too long ago. I learned a few things too but now I think I missed a few as well after reading your article. Did the HML have a first position mortgage? I'm wondering why they did a draw on the $55k. I never did it on mine because the investor was very experienced and I didn't want to be that involved. It worked out ok but maybe I should think twice about releasing 100% of the funds next time.
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    Domenick, thanks for commenting. yes they had a first position mortgage. the draws are for protection in part. they do not just want to hand over a large amount of money. they want to pay you based on the work you have completed that was originally agreed upon. there are various reasons. i would definitely not do what you did, but thats just my opinion.
    Lashawn McCauley Rental Property Investor from Brooklyn, NY
    Replied about 1 year ago
    I'm on the verge of using a hard money lender. I'm very grateful you wrote this article because it has given me good insight. Were you able to profit some cash when you refi the property.
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    Lashawn, thanks for reading. glad it provided value. i was able to pull out about 19k, but honestly with the overages on the budget and interest paid during the term, i do not think i truly came out "ahead" as you described. however, lets say i have 10k or 20k stuck in the property. heck, i would pay 20k for a fully remodeled and cash flowing 3 family any day! therefore, in my opinion, it was certainly a win.
    Shun Jackson
    Replied about 1 year ago
    Thanks for the specifics regarding your deal. I love when people give you a breakdown so you can understand better.A sense of humor was needed throughout this process. I’m glad it worked out for you.
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    Shun, thank you! yes, i always aim to provide as much usable content as possible. i am glad you found it helpful!
    Banna Kidane
    Replied about 1 year ago
    This is so helpful! I've been doing a lot of reading on hard money lenders and your story and experience has really opened my eyes to the ups and downs of this method! Thanks for the breakdown of this.
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    Banna, you're welcome! my goal is to share my real experience so that someone can take what i learned and go into their next deal ready to go and knowing what to expect!
    Josh Coup
    Replied about 1 year ago
    Thanks for the insight Ryan. For someone low on capital, like myself, would you recommend I avoid Hard Money for a first deal because of the risks? Or is it doable as long as I have a solid plan and some extra money (line of credit, cash, credit card etc.) Also, you stated in the text that you could provide the rehab budget. Would you mind sharing that spreadsheet? I'm curious what a lender would want to see and the aesthetics? Thanks!
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    Josh, thanks for the questions. i would suggest this in your case. even though the fees are high and rate is higher, it may still be cheaper than putting 25% down or more. furthermore, most HMLs are willing to push the deal through and have far less red tape. without back up though (LOC, credit card, etc) i do think you are taking a big risk. things will go wrong and you need to be ready. yes, i can provide the budget sheet. no problem. please message me and ill be happy to send. thanks.
    Andrew Vincent from CT/MA
    Replied about 1 year ago
    Who did you use for your hard money lender? Been looking aroud and some seem fair and some seem extremely expensive in regards to points and rates.
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    Andrew, i actually used a lender local to CT. message me privately and ill be happy to provide their info.
    Todd Hoggatt Investor from Florida Panhandle
    Replied about 1 year ago
    Thanks for the post, all very good information and I have experienced a lot of what you mentioned regarding a hard money loan. My question is related to renting room by room. Do you have a difficult time with all the people living there getting along and sharing accommodations? Seems like it would be a nightmare, I'm curious to know how you make it work.
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    Todd, thanks for comment. i do not have much drama these days. i do certainly have some. it mostly surrounds one person not being as clean as another, or someone stole someones Popsicle out of the fridge (yes i am serious). you will want to lay down ground rules on day 1. you will want to nip the issue in the bud right away. you will want to suggest that roommates work out the issues amongst themselves first. you will want to pair people living together that have similar attributes. a studious young female will not go well with a mid life crisis 45 year old male that likes to close down the bar every night of the week. message me for more info. i am happy to explain further.
    Terry Lowe
    Replied about 1 year ago
    Ryan, I laughed at all the problems you had. Not that I was laughing at you..... some of your issues were just like what we went through! Someone cut all the copper pipe, and also a gas pipe! My husband walked in just soon enough to see the guy jumping out a bedroom window. Luckily my husband could smell the gas and we got the fire department to turn it off. Then before we could repair the water pipes we had to tear up the floors and put concrete footings to bring things up to code, and it goes on n on!! The driveway was paved with spare pieces of carpet. We also ended up with too much mud! Luckily we weren’t using a hard money loan. It cost a lot of cash, and it will take quiet a while to make up the money we spent. The rent went from $250/mo to $1650. We intend to hold this for a long time. The land is zoned so we can put 5 more units on it. It will be worth the pain!!
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    Terry.......carpet??!! that is a first. wow. i would have loved to see that one. glad you could relate to me and im not the only one going through these things. it is all part of the game right? in the end, it usually ends up being in your favor but there is pain and blood, sweat and tears in the interim. glad it worked out for you. another 5 units would be incredible!
    Barbara Mack Investor from West Hartford CT
    Replied about 1 year ago
    Hi Terry, In what parts are you? $250-$1650 rental increase due to rehab sounds nice!
    Justin Simank
    Replied about 1 year ago
    My new go to will be renting out each bedroom, I'm thinking. What are the leases like, are they much different then a regular lease? I have several properties and I am definitely thinking about doing all my properties as bedroom leases. Stay blessed.
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    Justin, thank you. happy to help you make this goal a reality. message me if you would like and we can talk! it is a great way to dramatically increase cash flow.
    Tjede Mcvey from Landenberg, Pennsylvania
    Replied about 1 year ago
    This was very helpful. Thank you! The breakdown of the steps taken along with numbers made this an extremely useful post. I’ve been toying with idea of using hard money but was hesitant because I was afraid of missing a crucial factor in my analysis. Will refer to this again!
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    Tjede, glad you found this useful! i would not be weary of hard money. it is really just another tool to use to grow your portfolio. there is nothing more to it than what i described. i would just strongly recommend that you have reserves/credit to tap into when things go wrong because things will go wrong.
    Michael P. Lindekugel Real Estate Broker from Seattle, WA
    Replied about 1 year ago
    i was curious if shopped hard money lenders. the loan terms are all over the map. more experienced investors will get better hard money rates. paying points or other costs associated with obtaining the loan are pre paid interest. when shopping loans you can take the mix of different interest rate and point/fee combinations and calculate the effective interest rate which is the true cost obtaining financing. the effective interest rate allows you to compare apples to apples. in the mortgage interest the very similar calculation is called the Annual Percentage Rate or APR.
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    Michael, thanks for reading and commenting. i do none of this. i find someone that i like and that i think has good and fair rates and i pretty much stick to them. i do believe in loyalty. i do not care about saving 37$ per month in interest if i have to bounce all over finding different lenders. i also do not have the time or patience for that, to be honest.
    JP Murphy Rental Property Investor from Copper Center, Alaska/Indiana
    Replied about 1 year ago
    Thanks for the info, very helpful. I am thinking of using a hard money lender as well. What property management software do you use to manage the rent by the rooms? Keep writing, love your articles!
    Sherry Norman Wholesaler from Kenvil, New Jersey
    Replied about 1 year ago
    Ryan, your numbers look really good! Thanks so much for sharing all the details. Can you tell me why you said it was 6 bdrms in the beginning of your post, but then you said you were collecting rent on 9 bdrms? Did you maybe divide a big bdrm in each unit into two bdrms? Also on your renting by the bedroom method, how do you handle damage to common areas if say, nobody admits to having done it, and nobody claims to have seen it happen?
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    Sherry, thanks for commenting! yes i added a bedroom on each floor. this property had a dining room/extended living room and we closed off part of it, put in a door and added a closet. Believe it or not, i have never had damage to any common areas until a few months ago where there was an accident in the kitchen. that is it, in all my years. i paid for it. it was a mistake. the tenants need the money more than i do. if the damage was somehow purposeful that is a different story. i would divide the costs up by each person if nobody owned up (again, that has never happened.) for the most part, i will repair damages.
    Gabriella Miller Real Estate Agent
    Replied about 1 year ago
    Thanks for this sharing this deep dive, Ryan. In one of your responses to a comment above you said, "heck, i would pay 20k for a fully remodeled and cash flowing 3 family any day!" Is this comment specific to the deal in the article or more general? I'm a newbie thinking that turnkey may be the best way to begin my investing journey.
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    Gabriella, thanks for commenting. yes that is this deal. what i was saying was, if you take a look at what i actually have out of pocket (my own money) into this deal, it is probably around 20k (or less). therefor, even though it was a struggle to get there, took a year to do and was aided by my refinance, that is a pretty realistic view. let me know if this does not make sense. Thanks!
    Carol Hall Investor from Jacksonville, FL
    Replied about 1 year ago
    This is the best explanation of hard money lending I've ever seen!!! My husband and I are currently in our first hard money deal. The biggest thing we were not of aware of: the interest cost increases the more money you draw for the rehab! I never saw this anywhere, until I signed the loan document. The honorable mention: the rehab budget. We're already $14K over the rehab budget (which was $21K). We're still excited! The loan closed on Dec 4, the rehab work is expected to complete no later than 6 Jan, and we will hopefully have both units rented no later than 31 Jan. People have already expressed interest while the property is being worked on. Thank you for this article!! A great one for all who are using hard money for the first time. I hope this article comes up in the Google searches like the rest of the BP articles, when newbies Google "How does hard money work".
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    Carol, thanks for reading! Yes, i agree the increasing interest costs is a killer. you going over budget is, unfortunately, pretty standard. it is really hard to know what the future will hold in your renovations or, simply, what is behind the walls. sounds like you still have a lot of potential in this deal though.
    Charito Mattson from Lakewood, WA
    Replied about 1 year ago
    Thanks for the info. My partner and I are looking to use hard money for our next (2nd) purchase and your story already gave me a lot of understanding about it. Thank you.
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    Charito, thanks for the kind words! glad this helped. i am still here to answer more of your questions. please let me know if i can help at all.
    Andrew Valdez from Norfolk, Virginia
    Replied about 1 year ago
    Since your bread and butter strategy is per room rentals. What are some common and unique problems that come with that strategy. Such as strangers sharing a common area? And parking?
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    Andrew, thanks for commenting. those are great questions. i have actually done a few articles on those questions. i just submitted another article yesterday addressing these points further. parking is always something to look out for. you need a big area. common area issues arise when it is not kept clean. i recommend you have a once or twice a month cleaning person come in. either way, check out my next article for more details.
    Jeffrey Grieshop New to Real Estate from Coldwater, OH
    Replied about 1 year ago
    case studies are awesome. 1 room rentals @ 9 in the unit, nice. well done, thanks for presenting the case study.
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    Jeffrey, thanks for commenting! glad you enjoyed. i agree, case studies are the most helpful for me. happy you got some value.
    Sherry Norman Wholesaler from Kenvil, New Jersey
    Replied about 1 year ago
    Ryan, as long as we're talking case studies, maybe you wouldn't mind my asking one more question. How much would you estimate each 3 bdrm unit would have rented for as a whole instead of by-the-room? I guess this would be another way of figuring out how much of a premium you get for the extra hassle of renting by- the- room, in other words. I will be looking forward to your next article you mentioned.
    Barbara Mack Investor from West Hartford CT
    Replied about 1 year ago
    Hi Ryan, Will shoot you a PM shortly as I do have specific questions regarding my backyard market... for now regarding the rehab loan from a HML, would it be better to initially ask for $20-$30k more than your estimated rehab cost?
    Brian Esser New to Real Estate from Royal Oak, MI
    Replied about 1 year ago
    Great article Ryan! I'm just getting into real estate and plan to use the BRRRR method to develop a portfolio. With that being said, I was hoping you could send me a copy of your budgeting spreadsheet for this project - I want to see everything accounted for and estimated costs for each item.
    James Williams New to Real Estate from Charlotte, NC
    Replied about 1 year ago
    Wow. That was a lot to take in and it gave me a lot to think about. Thank you for the invaluable insight.
    Odie Ayaga Specialist from Delran, NJ
    Replied about 1 year ago
    Great post Ryan! I've both used hard money (actually took longer than yours!) and worked as a loan officer for hard money. What you mentioned are some of the things I tried to let clients know ahead of time. Many have no idea what it actually means when they get a hard money loan. Many are only concerned with the rate and terms, but ironically, they don't even know what a good rate and terms are. Sometimes it's way better to deal with a company or officer who explains everything (as in many other industries) versus getting the lowest rate.
    Michael S. Rental Property Investor from Richfield Springs, NY
    Replied about 1 year ago
    Love it!!! You’re telling my story. We are currently in the middle of our first flip. There was/is so much that I do not know but I am learning. I’m definitely going to be over budget $15,000 to $20,000, luckily there is enough room that I won’t lose money, hopefully. Glad to hear I’m not the only one going through this.
    Daniel Lidwin
    Replied about 1 year ago
    Hey Ryan, thanks for all these details man! Question about hiring contractors... Do all hard money lenders want a say in who the contractor is? The reason I ask, is because the reason I'm thinking of doing a flip or a BRRR is because three of my close friends are handy and can do pretty much everything you'd ever need to do for a home repair. 2 of the 3 work for themselves, just getting started, but aren't licensed contractors. Will this leave hard money as completely out of the question, meaning I'll need to pursue a family member or friend for the loan?
    Thadeous Larkin from Colorado Springs, CO
    Replied about 1 year ago
    Dude, Ryan, I LOVE this post. It's so critical that folks post actual numbers and warn people about what went wrong with deals. Just writing to say "thanks!"
    Carl Creviston Contractor from Scottsdale, AZ
    Replied 12 months ago
    My question about getting a HML, how it is effected when I am the one doing most of the acual repairs? I do 90% of interior and exterior finishes including light plumbing and electrical. I have learned thru 23 years of construction work including building 5 houses from the ground up. I understand some things will be required for licenced contractor to do but I will do anything that isn't required. So what I am getting at is how do you think this would be handled? I dont plan on taking labor out of the rehab costs to keep profit coming at the end. So any idea how I would be reinbursed for materials? Would they even do this? I am in Scottsdale AZ Thanks! Carl
    Kaitlyn Masai from Phoenix, AZ
    Replied 9 months ago
    Thanks for writing this. I'm considering using a hard money lender and trying to learn all I can about it. The details from a real example are super helpful. Would you be willing to send me your budget spreadsheet? I'm also looking for examples of the cost of rehabbing as I would also like to use BRRR.
    Trevor Thompson
    Replied 6 months ago
    Did you use a single member LLC to get the loan from the hard money lender? If so, did they require it and how did that go over with the bank you got your ARM loan from?