How many hard money loans can I take out at once?
Atlanta, GA · Member since 2021 · 163 posts · 57 votes
How many hard money loans can I take out at once?
Most Popular Reply
Property Manager · San Bernardino, CA · Member since 2014 · 473 posts · 238 votes
3yI can tell you from experience that you can only taking flipping so far before it becomes extremely difficult to scale. I've flipped 100 homes a year before in California. Juggling that much hard money and homes becomes inefficient and you are better off taking your profits from flipping and moving into multifamily, commercial or large single-family home developments. Imagine having 100 houses spread out all over an area. Imagine the construction team and project management team you would need to manage that. If it takes you 8 months on a house instead of your planned 4 months, the interest on the hard money took all of the profit from that project. All I'm saying is flipping can easily cascade and you are better off creating a strategy that takes advantage of economies of scale.
26 Replies
- Property Manager · San Bernardino, CA · Member since 2014 · 473 posts · 238 votes3y
Hard money loans are considered private loans so each hard money lender will have different requirements.
You could find several HM Lenders if one were to stop lending to you past a certain point, but I can't really see a scenario in which you would want to have more than 2-4 HM loans going on at once. If you are flipping you should be in and out and you are definitely overleveraging with HM if you have 10 at once.
- 3yErik EstradaBusiness MemberLender · Member since 2022 · 6k+ posts · 1k+ votes
Quote from @Steven Barr:
Hi BP!
I have only used hard money 1 time, and don’t remember the specifics of what their requirements were of my personal finances, if any.
I’m curious, how many hard money loans could I take out at a time? For instance… could I fund 10 flips at once if I had the deals lined up?
Thanks!
If you have the downpayment and closing costs, sure you can. These loans don't follow regulations like a conventional, FHA, and Non QM loan would. It is basically a group of investors loaning you short term money as long as the deal makes sense.
LuxePrivate Investments LLC 572 Reviews - Atlanta, GA · Member since 2021 · 163 posts · 57 votes3y
Quote from @David Friedman:
Hard money loans are considered private loans so each hard money lender will have different requirements.
You could find several HM Lenders if one were to stop lending to you past a certain point, but I can't really see a scenario in which you would want to have more than 2-4 HM loans going on at once. If you are flipping you should be in and out and you are definitely overleveraging with HM if you have 10 at once.
@David Friedman what exactly do you mean by in and out? It takes me anywhere from 2.5-4 months to acquire, renovate, find a buyer, and have them close on the property.
If I were to only have 4 hard money loans at once, then I could only flip 12 homes per year (assuming 4 months turns). When you mention over-leveraging, are you suggesting I should be using private money instead of hard money? Or are you suggesting that someone shouldn't flip more than 12 homes a year?
Thanks!
- Property Manager · San Bernardino, CA · Member since 2014 · 473 posts · 238 votes3y
I can tell you from experience that you can only taking flipping so far before it becomes extremely difficult to scale. I've flipped 100 homes a year before in California. Juggling that much hard money and homes becomes inefficient and you are better off taking your profits from flipping and moving into multifamily, commercial or large single-family home developments. Imagine having 100 houses spread out all over an area. Imagine the construction team and project management team you would need to manage that. If it takes you 8 months on a house instead of your planned 4 months, the interest on the hard money took all of the profit from that project. All I'm saying is flipping can easily cascade and you are better off creating a strategy that takes advantage of economies of scale.
- Atlanta, GA · Member since 2021 · 163 posts · 57 votes3y
Quote from @David Friedman:
I can tell you from experience that you can only taking flipping so far before it becomes extremely difficult to scale. I've flipped 100 homes a year before in California. Juggling that much hard money and homes becomes inefficient and you are better off taking your profits from flipping and moving into multifamily, commercial or large single-family home developments. Imagine having 100 houses spread out all over an area. Imagine the construction team and project management team you would need to manage that. If it takes you 8 months on a house instead of your planned 4 months, the interest on the hard money took all of the profit from that project. All I'm saying is flipping can easily cascade and you are better off creating a strategy that takes advantage of economies of scale.
@David Friedman A couple questions here…
Were you using hard money for all 100 homes that year?
Is 50 homes a year more manageable? Or is that still too chaotic? - Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes3y
Quote from @Steven Barr:
Hi BP!
I have only used hard money 1 time, and don’t remember the specifics of what their requirements were of my personal finances, if any.
I’m curious, how many hard money loans could I take out at a time? For instance… could I fund 10 flips at once if I had the deals lined up?
Thanks!
As many as you can afford.
- Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes3y
You can fund as many as you'd like, hard money needs to see a good track record and cash reserves in your account.
- Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes3y
With hard money lenders, it depends on them. There aren't nearly as many rules. But hard money lenders are really expensive so I would be very wary of carrying more than one or two at a time. It's just too risky to have that much high cost debt at one time.
- Atlanta, GA · Member since 2021 · 163 posts · 57 votes3y
Quote from @Andrew Syrios:
With hard money lenders, it depends on them. There aren't nearly as many rules. But hard money lenders are really expensive so I would be very wary of carrying more than one or two at a time. It's just too risky to have that much high cost debt at one time.
@Andrew Syrios I’m finding that hard money is about 12% interest. This is what I would give private investors with todays rates. So the only difference I see is that I have to pay an additional origination fee of 1-2 points on hard money. I feel that if 1-2 points is going to break my deal, then it was a bad deal in the first place.
Do you have any input on a different strategy? Or any input on how I should be looking at this differently?
- Property Manager · San Bernardino, CA · Member since 2014 · 473 posts · 238 votes3y
50 would be more manageable, but that’s not the right question to ask. Think about how you will scale. What would be more scaleable would be managing as many flips as you feel comfortable managing within the skill of your team and wholesaling the rest of the deals. We would use HM for most of them, but it become too chaotic. Contractors fall off, you miss something because you were too busy working on another project. Because every fixer is different and unique it’s just not scaleable. That being said, do as many as you can, but just start to think about how to scale.
- Atlanta, GA · Member since 2021 · 163 posts · 57 votes3y
Quote from @David Friedman:
50 would be more manageable, but that’s not the right question to ask. Think about how you will scale. What would be more scaleable would be managing as many flips as you feel comfortable managing within the skill of your team and wholesaling the rest of the deals. We would use HM for most of them, but it become too chaotic. Contractors fall off, you miss something because you were too busy working on another project. Because every fixer is different and unique it’s just not scaleable. That being said, do as many as you can, but just start to think about how to scale.
@David Friedman Thanks for the insight! I don’t plan on doing this forever. Just the next few years to take all the profits and dump them into cashflowing single family rentals
Then I would likely move into raising money for Multifamily
- Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes3y
Quote from @Steven Barr:
Quote from @Andrew Syrios:
With hard money lenders, it depends on them. There aren't nearly as many rules. But hard money lenders are really expensive so I would be very wary of carrying more than one or two at a time. It's just too risky to have that much high cost debt at one time.
@Andrew Syrios I’m finding that hard money is about 12% interest. This is what I would give private investors with todays rates. So the only difference I see is that I have to pay an additional origination fee of 1-2 points on hard money. I feel that if 1-2 points is going to break my deal, then it was a bad deal in the first place.
Do you have any input on a different strategy? Or any input on how I should be looking at this differently?
That's very cheap hard money, so that makes it a lot better. We usually pay our private lenders 8-10% (mostly 10 these days) so perhaps you could try to offer a little less and see if that works. Other than that I would just be cautious about how much high interest debt you have at any given time. (And basically anything but a bank loan is high interest debt.)
- Member since 2024 · 2 posts · 0 votes2y
Quote from @David Friedman:
50 would be more manageable, but that’s not the right question to ask. Think about how you will scale. What would be more scaleable would be managing as many flips as you feel comfortable managing within the skill of your team and wholesaling the rest of the deals. We would use HM for most of them, but it become too chaotic. Contractors fall off, you miss something because you were too busy working on another project. Because every fixer is different and unique it’s just not scaleable. That being said, do as many as you can, but just start to think about how to scale.
Hi David, my name is Tyson and I have a question that I feel like you would be very well suited for. For context I am 18 years old and live in SC. I am trying to get into the real estate industry as one of my main income sources, however I don't want to take a slow and steady approach as a goal to finally retire comfortable at 50. I do understand the extra risks involved, but I was curious if you know if it scalable to a degree of 10 to 100 homes using BRRRR a year? I was curious because I won't be able to have down payments and planned on using what I can affect, the purchase price, to spend most of my time into finding houses using wholesaling strategies to try to get the total loan amount at or below 70% of the ARV so that I could maybe avoid the down payment. But I was also worried if hard money lenders would even lend me money if I just got approved a few weeks or a days before then for another loan, in other words it looks like I'm digging myself into a hole even though all of the numbers line up? I kind of have an unrealistic goal of earing 8 figures gross a year by the time I am 30 and am willing to go all out. I am also going to branch into everything surrounding real estate such as home cleaning, contracting and moving into franchising. But I just wanted to know if it possible to own 800+ properties or close to it by 30? thank you for your time.
- Property Manager · San Bernardino, CA · Member since 2014 · 473 posts · 238 votes2y
Quote from @Tyson Smith:
Quote from @David Friedman:
50 would be more manageable, but that’s not the right question to ask. Think about how you will scale. What would be more scaleable would be managing as many flips as you feel comfortable managing within the skill of your team and wholesaling the rest of the deals. We would use HM for most of them, but it become too chaotic. Contractors fall off, you miss something because you were too busy working on another project. Because every fixer is different and unique it’s just not scaleable. That being said, do as many as you can, but just start to think about how to scale.
Hi David, my name is Tyson and I have a question that I feel like you would be very well suited for. For context I am 18 years old and live in SC. I am trying to get into the real estate industry as one of my main income sources, however I don't want to take a slow and steady approach as a goal to finally retire comfortable at 50. I do understand the extra risks involved, but I was curious if you know if it scalable to a degree of 10 to 100 homes using BRRRR a year? I was curious because I won't be able to have down payments and planned on using what I can affect, the purchase price, to spend most of my time into finding houses using wholesaling strategies to try to get the total loan amount at or below 70% of the ARV so that I could maybe avoid the down payment. But I was also worried if hard money lenders would even lend me money if I just got approved a few weeks or a days before then for another loan, in other words it looks like I'm digging myself into a hole even though all of the numbers line up? I kind of have an unrealistic goal of earing 8 figures gross a year by the time I am 30 and am willing to go all out. I am also going to branch into everything surrounding real estate such as home cleaning, contracting and moving into franchising. But I just wanted to know if it possible to own 800+ properties or close to it by 30? thank you for your time.
I’m 30 years old turning 31 this year. I’d like to think that I’ve done very well but nowhere near 8 figures on an annual basis. My net worth, yes, but annual would be quite insane. Sounds like you aren’t starting out without much, so you need to provide value for other people to get them to trust you and build relationships. The road to being a millionaire takes a team and a lot of hard work and a lot of risk. Maybe a more realistic goal is to start by earning your first $100,000 or $1m and then reevaluate. The best advice I can give you is to network with the right people. Educate yourself and become very good at providing value to your network. Don’t worry about your second deal when you haven’t even done your first yet.
- Member since 2024 · 2 posts · 0 votes2yThank you for the advise, but is it possible to grow without a starting money? My goal for this year is to gain 6 rental properties. If I use the resources on hand, with virtually no starting money? That would leave overlap on some properties, assuming I fix a property in 4 months and find a tenant. Just trying to get quit my job this year and get comfortable with the steps on my own to start
Quote from @David Friedman:
Quote from @Tyson Smith:
Quote from @David Friedman:
50 would be more manageable, but that’s not the right question to ask. Think about how you will scale. What would be more scaleable would be managing as many flips as you feel comfortable managing within the skill of your team and wholesaling the rest of the deals. We would use HM for most of them, but it become too chaotic. Contractors fall off, you miss something because you were too busy working on another project. Because every fixer is different and unique it’s just not scaleable. That being said, do as many as you can, but just start to think about how to scale.
Hi David, my name is Tyson and I have a question that I feel like you would be very well suited for. For context I am 18 years old and live in SC. I am trying to get into the real estate industry as one of my main income sources, however I don't want to take a slow and steady approach as a goal to finally retire comfortable at 50. I do understand the extra risks involved, but I was curious if you know if it scalable to a degree of 10 to 100 homes using BRRRR a year? I was curious because I won't be able to have down payments and planned on using what I can affect, the purchase price, to spend most of my time into finding houses using wholesaling strategies to try to get the total loan amount at or below 70% of the ARV so that I could maybe avoid the down payment. But I was also worried if hard money lenders would even lend me money if I just got approved a few weeks or a days before then for another loan, in other words it looks like I'm digging myself into a hole even though all of the numbers line up? I kind of have an unrealistic goal of earing 8 figures gross a year by the time I am 30 and am willing to go all out. I am also going to branch into everything surrounding real estate such as home cleaning, contracting and moving into franchising. But I just wanted to know if it possible to own 800+ properties or close to it by 30? thank you for your time.
I’m 30 years old turning 31 this year. I’d like to think that I’ve done very well but nowhere near 8 figures on an annual basis. My net worth, yes, but annual would be quite insane. Sounds like you are starting out without much, so you need to provide value for other people to get them to trust you and build relationships. The road to being a millionaire takes a team and a lot of hard work and a lot of risk. Maybe a more realistic goal is to start by earning your first $100,000 or $1m and then reevaluate. The best advice I can give you is to network with the right people. Educate yourself and become very good at providing value to your network.
- Property Manager · San Bernardino, CA · Member since 2014 · 473 posts · 238 votes2y
Quote from @Tyson Smith:
Thank you for the advise, but is it possible to grow without a starting money? My goal for this year is to gain 6 rental properties. If I use the resources on hand, with virtually no starting money? That would leave overlap on some properties, assuming I fix a property in 4 months and find a tenant. Just trying to get quit my job this year and get comfortable with the steps on my own to startQuote from @David Friedman:
Quote from @Tyson Smith:
Quote from @David Friedman:
50 would be more manageable, but that’s not the right question to ask. Think about how you will scale. What would be more scaleable would be managing as many flips as you feel comfortable managing within the skill of your team and wholesaling the rest of the deals. We would use HM for most of them, but it become too chaotic. Contractors fall off, you miss something because you were too busy working on another project. Because every fixer is different and unique it’s just not scaleable. That being said, do as many as you can, but just start to think about how to scale.
Hi David, my name is Tyson and I have a question that I feel like you would be very well suited for. For context I am 18 years old and live in SC. I am trying to get into the real estate industry as one of my main income sources, however I don't want to take a slow and steady approach as a goal to finally retire comfortable at 50. I do understand the extra risks involved, but I was curious if you know if it scalable to a degree of 10 to 100 homes using BRRRR a year? I was curious because I won't be able to have down payments and planned on using what I can affect, the purchase price, to spend most of my time into finding houses using wholesaling strategies to try to get the total loan amount at or below 70% of the ARV so that I could maybe avoid the down payment. But I was also worried if hard money lenders would even lend me money if I just got approved a few weeks or a days before then for another loan, in other words it looks like I'm digging myself into a hole even though all of the numbers line up? I kind of have an unrealistic goal of earing 8 figures gross a year by the time I am 30 and am willing to go all out. I am also going to branch into everything surrounding real estate such as home cleaning, contracting and moving into franchising. But I just wanted to know if it possible to own 800+ properties or close to it by 30? thank you for your time.
I’m 30 years old turning 31 this year. I’d like to think that I’ve done very well but nowhere near 8 figures on an annual basis. My net worth, yes, but annual would be quite insane. Sounds like you are starting out without much, so you need to provide value for other people to get them to trust you and build relationships. The road to being a millionaire takes a team and a lot of hard work and a lot of risk. Maybe a more realistic goal is to start by earning your first $100,000 or $1m and then reevaluate. The best advice I can give you is to network with the right people. Educate yourself and become very good at providing value to your network.
It’s going to take money one way or another to do what you want to do. So you either have to have it, or have an investor who has it. If you work with an investor they will want a piece of the pie. That’s how most real estate investors get started. $0 down deals exist, but then what about the money to fix it up? Also they are rare and far few inbetween. Nothing in real estate is actually ever $0.
- Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes2y
Quote from @Steven Barr:
Hi BP!
I have only used hard money 1 time, and don’t remember the specifics of what their requirements were of my personal finances, if any.
I’m curious, how many hard money loans could I take out at a time? For instance… could I fund 10 flips at once if I had the deals lined up?
Thanks!
As many as your financial situation can handle ,
- Lender · Phoenix Arizona · Member since 2018 · 89 posts · 51 votes2y
Quote from @Steven Barr:
Hi BP!
I have only used hard money 1 time, and don’t remember the specifics of what their requirements were of my personal finances, if any.
I’m curious, how many hard money loans could I take out at a time? For instance… could I fund 10 flips at once if I had the deals lined up?
Thanks!
We can do as many as makes financial sense. We do like to see that progress is happening on all of them and not that they are sitting.
- Specialist · NJ · Member since 2022 · 1k+ posts · 653 votes2y
10 at once with one lender? You'd really have to know each other well. Most have a debt cap of like 1 or 2 million. But you can have a relationship with three lenders and have three deals with each. You can get to 10 that way.
But I can't imagine trying to manage 10 flips at once. Couldn't possibly be the same contractor or agent involved either. So you're talking about using multiple lenders, multiple contractors, multiple agents and keeping it all straight.
- 12 Penns Trail Suite 138 Newtown, PA 18940 · Member since 2023 · 1k+ posts · 319 votes2y
Yes definitely if the lender is ok with that much exposure to borrower and experience. what do the scenarios look like ?
- Atlanta, GA · Member since 2021 · 163 posts · 57 votes2y
Quote from @David Friedman:
I can tell you from experience that you can only taking flipping so far before it becomes extremely difficult to scale. I've flipped 100 homes a year before in California. Juggling that much hard money and homes becomes inefficient and you are better off taking your profits from flipping and moving into multifamily, commercial or large single-family home developments. Imagine having 100 houses spread out all over an area. Imagine the construction team and project management team you would need to manage that. If it takes you 8 months on a house instead of your planned 4 months, the interest on the hard money took all of the profit from that project. All I'm saying is flipping can easily cascade and you are better off creating a strategy that takes advantage of economies of scale.
@David Friedman it’s funny how these threads age… I ended up scaling my flips to a point where it just makes more sense to get into a strategy that takes advantage of the economies of scale. Single family development is the route I am actively taking. Plus I’m tired of opening up walls and watching $5k disappear
Flipping was a great place to get started, but it’s not the long term answer
- Property Manager · San Bernardino, CA · Member since 2014 · 473 posts · 238 votes2y
Quote from @Steven Barr:
Quote from @David Friedman:
I can tell you from experience that you can only taking flipping so far before it becomes extremely difficult to scale. I've flipped 100 homes a year before in California. Juggling that much hard money and homes becomes inefficient and you are better off taking your profits from flipping and moving into multifamily, commercial or large single-family home developments. Imagine having 100 houses spread out all over an area. Imagine the construction team and project management team you would need to manage that. If it takes you 8 months on a house instead of your planned 4 months, the interest on the hard money took all of the profit from that project. All I'm saying is flipping can easily cascade and you are better off creating a strategy that takes advantage of economies of scale.
@David Friedman it’s funny how these threads age… I ended up scaling my flips to a point where it just makes more sense to get into a strategy that takes advantage of the economies of scale. Single family development is the route I am actively taking. Plus I’m tired of opening up walls and watching $5k disappear
Flipping was a great place to get started, but it’s not the long term answer
100% agree. Economies of scale is a powerful concept, but most of us start out flipping houses and don’t really understand that until we hit our first wall.
- Lender · Santa Monica, CA · Member since 2023 · 63 posts · 26 votes2y
Hi @Steven Barr
David Friedman provided valuable insight on this.
There really is no cap on how many you can take out at once. I will say if you are actively trying to take multiple loans out at once, the lender will limit their exposure to you to 1-2 deals at most until those loans have been paid back. Meaning you cannot takeout 10 loans with the same lender.
Having (10) loans with (10) different lenders is possible but is not sustainable in the long run.
It's best to utilize one lender and revisit them as you will get better terms/pricing on each new deal.
- Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes2y
Quote from @Steven Barr:
Hi BP!
I have only used hard money 1 time, and don’t remember the specifics of what their requirements were of my personal finances, if any.
I’m curious, how many hard money loans could I take out at a time? For instance… could I fund 10 flips at once if I had the deals lined up?
Thanks!
There's no official limit so you could conceivably get a bunch at the same time. That being said, it would not be wise too. I would do one at a time, if even that as hard money loans are very expensive and would be a last option for me.
- Atlanta, GA · Member since 2021 · 163 posts · 57 votes2y
Quote from @Celia Lumbroso:
Hi @Steven Barr
David Friedman provided valuable insight on this.
There really is no cap on how many you can take out at once. I will say if you are actively trying to take multiple loans out at once, the lender will limit their exposure to you to 1-2 deals at most until those loans have been paid back. Meaning you cannot takeout 10 loans with the same lender.
Having (10) loans with (10) different lenders is possible but is not sustainable in the long run.
It's best to utilize one lender and revisit them as you will get better terms/pricing on each new deal.
@Celia Lumbroso this post is old and got resurfaced, but I ended up getting with a lender that lets me take out 10 at once, or at least as many as I can handle. I scaled quickly though.
Curious what makes you say 10 loans with 10 different lenders isn’t sustainable long term? Other than it just being administratively inefficient
Join the conversationCreate a free account to reply, vote on answers and follow this thread.