Best Way to Get Approved for Hard Money

[Tony Robinson]

Hi Everyone!  I want to use hard money for the first time to fund my next deal. I would love insight on how to increase my chances of making this work. Current Situation: 

• My first flip is under contract for $45k purchase price, $35K renovation, $145k ARV (Supposed to close on Halloween!)
• I found another property that's listed for $34k with a (conservative) ARV of $100,000 that I want to fix and flip
  • (The property has been sitting for a while, so I'll definitely start with an offer below the asking price) 
• I have not yet identified rehab costs
  • (However, this property is in similar condition and size to my first flip. So somewhere in the ballpark of $30k seems reasonable)
• I don't have the funds necessary to purchase and rehab this second property, so I want to use Hard Money to fund this loan 

I've never used Hard Money before, but below is the 20,000 foot view of the steps I feel I need to take:

• Have my contractor walk the property to offer an estimate of the rehab costs 
• Place an offer through my agent
• Once the property is under contract, leverage my due diligence period to acquire the hard money

Question:

• Would you change anything about the above steps? 
• Is it correct for me to get the property under contract before I have the Hard Money financing approved? 
• What steps should I take to increase the likelihood of the Hard Money lender approving this deal? 

Note: 

• My first flip, and the second one I'm looking to use hard money for are both in Louisiana, and I live in California. Not sure if that changes your answer, but thought I should share!

Thanks! 

[Chris Coutu]

It's been my experience that you should try to arrange your financing before making the offer. There are many hard money lenders that are less formal than the more established companies and can provide you at least a tentative yes with some basic information. If you have the property address, purchase price, rehab budget, and ARV, a smart lender can make a pretty quick decision.