Specialist · I give advice - [email protected] - I focus on states where investing is profitable, reasonably safe & secure · Member since 2026 · 205 posts · 72 votes
What is your plan for financing your fix and flips or buying rentals? That seems to be what holds most people back.
I'm aware of three options - we use the third option There are variations to all of these but in 30 years of flipping what I generally see are:
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1. Using a bank -
a. Bank qualifying financing b. 20% down. c. 7% interest d. use MLS e. Normal bank loan f. Normal real estate agent fees g. Normal purchase routine h. So a $300,000 house i. Is $60,000 down j. $2,000 a month payments k. Then taxes, utilities l. You bring in the rehab money m. Tend to be slow to decide n. Must qualify
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2. Hard Money -
a. Generally will provide 70% financing on the lesser of value of finished product (ARV) or of purchase price whichever is less b. 30% down. c. 9% - 12% interest d. Can buy "off market" e. Credit not as important f. No real estate agent fees g. So a $300,000 house h. Is $90,000 down i. $1,700 to $2,200 a month payments j. Then taxes, utilities k. You bring in the rehab money l. Tend to be faster to decide m. Must have experience
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3. Taking Over someone's loan -
a. Generally will provides full financing on the loan b. 8.5% down. c. $25,000 down. d. 4% - 5% interest e. Can buy "off market" f. Credit not at all important g. No real estate agent fees h. So a $300,000 house i. Is $25,000 down j. $1,300 to $1,475 a month payments k. Then taxes, utilities l. You bring in the rehab money m. Tend to be faster to very quick n. Probably need to be trained on how to put it together
You are in control
You can use all three be care of which hardmoney lenders you deal with though
John, thank you for laying the three options out side by side — most people only ever compare two, and the financing question really is what stops a lot of would-be investors before they start. From the Realtor side, I'd add that the right option usually depends on the deal and the borrower together, not just the rate: a bank loan is often the cheapest money if you can qualify and the timeline allows, hard money can make sense when speed or a property's condition closes the bank's door, and taking over a loan can be powerful when the numbers work — but it's the option where the details matter most, so anyone considering it should understand exactly what they're assuming and get good advice before signing. Whatever route someone chooses, the discipline is the same as any deal: run the full costs — taxes, utilities, insurance, rehab — and make sure the property works even if the financing takes longer or costs more than planned.
Specialist · I give advice - [email protected] - I focus on states where investing is profitable, reasonably safe & secure · Member since 2026 · 205 posts · 72 votes
John, thank you for laying the three options out side by side — most people only ever compare two, and the financing question really is what stops a lot of would-be investors before they start. From the Realtor side, I'd add that the right option usually depends on the deal and the borrower together, not just the rate: a bank loan is often the cheapest money if you can qualify and the timeline allows, hard money can make sense when speed or a property's condition closes the bank's door, and taking over a loan can be powerful when the numbers work — but it's the option where the details matter most, so anyone considering it should understand exactly what they're assuming and get good advice before signing. Whatever route someone chooses, the discipline is the same as any deal: run the full costs — taxes, utilities, insurance, rehab — and make sure the property works even if the financing takes longer or costs more than planned.
Hi Ametria your thought "a bank loan is often the cheapest money" is not what I've actually found.
My experience is taking over the sellers loanis almost always a lot cheaper money. But thanks for your comment and have you tried taking over a loan or is that a new idea to you?
Worth adding to the take-over-the-loan option: almost every mortgage has a due-on-sale clause, and federal law (Garn-St Germain) lets the lender enforce it once the property transfers, so the loan can be called. And on an FHA loan closed after Dec 1989, investors can't formally assume it at all, the person taking it over has to qualify and live there. People still do sub-to, but make sure your exit is a refi you could actually get, not just hoping the servicer never notices.