Hard money lender when investing in a house flip?

[Stefanny Gonzalez]

Hello all!

How do you guys feel about working with a hard money lender?

I am planning my first house flip and coming into it with a partner. The plan is to purchase a fixer here on SoCal, rehab it and sell it off within 3 to 6 months. We may consider holding for rental income for 24 months but are leaning more towards buy and flip vs buy and hold.

Any advice on the above would be great! Thanks in advance.

[Anthony H.]

@Stefanny Gonzalez I have done 3 flips so far and used HML on 2 of them. As others mentioned it is the most common way of funding a flip project. Generally it is a 12 months interest only loan at rates in the range of 8 to 12% depending on experience with no prepayment penalties. Before COVID you could get 100% of your rehab cost and 80% of your purchase included. During COVID some of these HML put a pause on these loans and are now gradually re-offering them at less interesting terms.

Aside from financing a successful flip comes down to having a good team (from contractors/sub contractors to material suppliers) and coordination/construction knowledge. Are you and your partner handy? Can help save on some of the labor costs. Or if you use a GC make sure you follow up on your project regularly. Good Luck