Have you been a gap lender?

Question

Have you had success with Gap Funding before?  What made you decide to gap lend rather than use that capital as a down payment in your own flip or buy and hold?

I did this before and unfortunately, I was dragged along for almost a year, but then again this was partially due to the borrower and his lack of due diligence (I’ll take blame too for partnering with the individual) but I like to think that the mistakes I had seen wouldn’t take place if the project was under my watch or to the very least the situation would be handled differently.

The properties and deals that I generally see and come across in the South Jersey and Central Jersey areas would need a gap lender that would bring roughly 25 – 45K to the table depending on the area.  The payout is usually 15%-22% of the initial GAP investment (although seen others as well).  The projects are estimated for 5-6 months turnarounds with teams already in place.

Your experience?

David Roque · Answer

Antoine are you still gap funding? We all have our good and bad deals. Me included those bad ones sting for some time.

I do fix and flips in Ca and buy and hold in Central Ca.

Antoine Martel · Answer

Yashar.

I've done gap funding for a few years now. I have had many successful projects but also had one bad deal which ruined everything for us.

The problem with gap funding is that the HML is in 1st position and they are paid first. Interest is expensive with them.

You also do not have control over the deal as a gap funder.