New Member - Looking for learning material on hard money lending

Member since 2025 · 1 post · 2 votes

Hello - I'm looking to learn more on hard money lending and where to find potential opportunities to do so. Any resources, links, learning material, advice would be appreciated.

Thank you

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Marlon FongPro Member
BiggerPockets Support · Bridge City, TX · Member since 2016 · 1k+ posts · 367 votes
1y
Welcome aboard @Jeremy Ray Glad to have you here.
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Mike Klarman
Specialist · NJ · Member since 2022 · 1k+ posts · 650 votes
1y
Hard Money can be boiled down to Project Cost/ARV. The lower that %, the better the deal. Everyone has their own threshold as to what their cut-off number is. Used to be 75%, but really you want closer to 70%, the people who source with cash and know where to find discounts probably 60%ish.
The loan itself will be based on your borrowing profile which consists of your credit/background, experience, capital at your disposal, and then the asset. What did the appraisal have to say about the condition, what's the ARV.
You'll have a loan cap of 65% - 75% of the ARV. Probably 65% - 70% to start. So if the ARV is 300k, you can borrow a max of 195k. If your rehab is 80k let's say, that leaves 115k toward the purchase price. That 115k can represent no more than 90%, so if 90% of the purchase price is 110k, then you'll get 110k. If that 115k is 70% of the purchase price then that's what your leverage will be.
Bad financing terms can't kill a good fix n flip. If you pay 3 points and 13% but the project cost is 67% of the ARV, you will do just fine given the rehab period goes as planned. The Rehab process is where this model fails 90% of the time, the other 10% it fails because the asset was not worth what the investor thought it would be and they sell at a loss. But most times, it all falls apart during the rehab process and 9x outta 10 some GC will ghost you and maybe even file a mechanics lien on you if you fail to pay for their shoddy work.
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