Hard Money/House Flip Questions

8 Replies

Hi folks - 

I'm a small time RE investor in Northern Virginia and own 4 rented units that cashflow. I've had these units for approximately 2 years. I didn't know a whole lot before I hopped into the RE market but fortunately I have learned fast with no huge mistakes (phew!). I bought them at good price points and did some rehab in order to get top rent dollar and good tenants.  

I've always been interested in doing flips and am part of a FB group that posts off market deals. Since I'm new to this part of the RE market, I have some questions I hope you all could help with (I apologize if they are eye-rolling basic!):

1.    Do you traditionally need hard money to take advantage of off market deals?

2.    How do you go about finding hard money?

3.    Generally speaking, are these FB groups for off market deals reliable/trustworthy places to find opportunities?

The RE properties I own now were financed with my own money for down payments and loans from traditional lenders. 

Thank you in advance for your help!


Hi @Chris Stevens

I am relatively new to the investing world but have been going to many different local meets up over the past year or so meeting and talking with people doing this here locally.  Congrats on your rental units btw!

With regards to your questions

1)  I think most people use hard money, private money or cash to purchase flips, namely because the condition of the home won't allow them to qualify for 'traditional' financing.  If a house is in great shape depending on how you're buying it (your name or a business name) I don't think you'd have issues getting traditional financing for it be it a residential or a commercial loan depending on your end goals.   The condition of the house and what you intend to do with it I think will dictate more your financing options, where you find the deal shouldn't matter.

2)  I've found hard money lenders mostly via the networking events, that is how I found a partner with whom I'm doing my first flip with and he has introduced me to some lenders, real estate agents, etc....

3) Can't speak to this as I am not on one, I'd be interested in joining one though to see what they have, my deal actually came thru a traditional listing but there are many wholesalers who'll come up with off-market deals also.

Hope this helps!

@Chris Stevens I love the NOVA market and very, very bullish in Richmond. I don't see that much competition out there and they offer great returns for flips or rentals. As for your questions 

1. Do you traditionally need hard money to take advantage of off market deals? No, you can use cash or any other type of lender. The big thing is usually timing. Most off market stuff is traded via wholesalers who have a limited time to own the contract. HML can move quicker and do not have as many underwriting requirements which is why you see investors using them.

2. How do you go about finding hard money? Use your network! Attend a local REIA or meetup including those posted here on BP. Also use BP, google, connected investors, etc. All great sources. Lastly, look at the titles and blogs that people write here usually a huge indicator. PM me if you need any advice 

3. Generally speaking, are these FB groups for off market deals reliable/trustworthy places to find opportunities? I personally do not like the FB groups. I tend to not believe what is out there especially when it comes to lenders. I have seen some crazy things like 100% financing on purchase and rehab at a 3.99%....too good to be true. The collect an upfront fee and never intend to fund the loan. I am sure the same happens where people what you to buy a contract they dont have the right to sell or reassign. 

@Tommy McWhorter Some people use them as interchangeable and others have a clear cut definition. Private Money is a person or group of people who offer to loan you the money based on their own terms. A private loan might come from a friend, a business, a family member.

Hard Money - is a business that operates to lend money but is considered a non-bank since they can set their own guidelines and do not operate under the same regulations as a mortgage company or bank (wells fargo or B of A) would. 

Both have their benefits and can be easier and easier to deal with as you develop a relationship. They will have some criteria or expectations of you and your business plan so as a newbie you should focus on getting your ducks in a row and make sure you can share your vision vs just saying you want to invest in real estate. 

Thank you for the quick reply! I am extremely close to having everything in place. However, I am trying to learn how to obtain the finances available to secure a possible deal in the next 90 days. Any education that you can share as it relates to the process of securing a private lender, will be greatly appreciated. Thank you so much for responding Mr. Molina.

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