Hard Money-Before or After making offers

7 Replies

My wife and I are starting to look for our first flip and are looking into HML. Is it best to have hard money lined up prior to making an offer. I have always heard that if the deal is good enough, then there will be no issues in finding the money.

When I am looking to buy I always have financing lined up in some way. In most cases, you'll have to provide proof of funds or a pre approval to accompany most offers anyways. 

I have been using private money but just maxed it out on my last deal I closed.  Just got a great deal and need it funded.  What i learned so far is that if you are going to use hard money you should get approved and learn their terms before hand because good deals usually don't have long contract time (this one is 3 weeks).   On the flip side,  if it is a great deal you should be able to wholesale if you can't get it funded so either way you make money.  Long story short, get pre approved if you can but if you find a great deal before you do lock it up.

@Shannon Niemiec

You are correct that if the deal is a true deal, finding financing will not be an issue. However, like others have stated, it's never a bad idea to get pre-approved. This helps expedite the funding process when you get a deal under contract and often times the time you get to close is limited to a couple of weeks, so getting that part out of the way is helpful.

Also, talking to lenders before hand is helpful to get an idea of the type of people your funding partners are. A hard money lender should be a valuable asset to your team, and you should feel comfortable that the people on the other end of the phone are integrious and reliable. 

Good luck!

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Another option to have the funds quickly is to keep a working line of capital or business line of credit up to $150 -$350K.  You can pay those down and re-use them each time you flip.  If you are just starting, you can qualify with a good FICO.  If you have been doing this a while, your FICO won't be as important as your proof of gross revenues.  There are several options and they all vary as to their requirements. 

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