How do I effectively compare funding options for flips?

Question

I am deciding between using a HELOC or private/hard money to fund my first flip. The HELOC has more than enough room, but I would like to really examine the alternatives closely. Excellent credit. Is there an organization that has done the hard work of comparing flip-lending products side by side? There are so many options and so much fine print that isn't immediately disclosed. If there is some helpful guidance available, that would be great. From what I have gathered, Easy Street Capital seems very competitive. But I would appreciate someone with a bit more experience than me weighing in.

Clay Edmonds · Answer

I think you're approaching this correctly, particularly on your first flip.

I wouldn't start by asking:

“Who has the lowest rate?”

I'd start by building a simple spreadsheet and making every lender answer exactly the same questions.

Because two flip loans advertised at 9% can have dramatically different actual costs.

I'd compare:

Interest rate

Origination points

Underwriting/document/admin fees

Loan-to-cost (LTC) — how much of your total acquisition and renovation cost they'll finance

Maximum ARV — how much they'll lend relative to the after-repair value

How much of the purchase price they'll fund

How much of the rehab they'll fund

When interest begins accruing on the rehab funds

Draw procedure and draw fees

How quickly draws are reimbursed

Appraisal/valuation costs

Minimum interest requirement

Prepayment penalty or exit fee

Extension fees if the project takes longer than expected

Total cash required from you at closing

And then I'd add one final line:

TOTAL COST IF I SELL IN 6 MONTHS

That's the number I'd use to compare lenders.

Your HELOC deserves exactly the same analysis.

The HELOC may have a higher or lower stated rate, but it has one potentially enormous advantage:

You generally only pay interest on the money you've actually drawn.

So if you already have enough HELOC capacity to purchase the property and fund renovations as they're needed, you potentially have very flexible capital without origination points and construction-draw procedures every time you need money.

But there's another side to that.

What property secures your HELOC?

If it's your primary residence, you're putting your home behind your first flip.

That doesn't automatically make it a bad strategy, but I would absolutely factor that risk into the decision.

There's also a third possibility I'd consider:

Use both.

For example, use a good fix-and-flip lender for the acquisition and renovation financing while keeping the HELOC available for your required equity, unexpected renovation costs, carrying expenses and reserves.

That may cost somewhat more than funding everything through the HELOC, but it preserves liquidity and limits how much of your HELOC you're exposing to one project.

Easy Street Capital is certainly one lender I'd include in your comparison. Their published fix-and-flip program currently shows fairly aggressive leverage, including financing toward both acquisition and renovation.

But I wouldn't stop with one lender.

I'd get three or four actual term sheets based on the exact same hypothetical deal and put them side-by-side.

And since this is your first flip, I'd pay particular attention to something investors sometimes underestimate:

The draw process.

If you've got contractors expecting $20,000 on Friday and your lender doesn't release the rehab draw until the following Wednesday, suddenly the lender with the lowest rate isn't necessarily your cheapest lender.

Speed, reliability and liquidity have financial value on a renovation project.

So I'd compare financing based on:

Total dollars out of pocket + total financing cost + liquidity remaining + execution risk.

Not just interest rate.

And I wouldn't automatically assume hard money is better simply because it's designed for flips—or that the HELOC is better simply because you already have it.

Run the same deal through both structures.

The best financing is the one that leaves the most profit in the deal without putting you in a liquidity position where one unexpected $15,000 repair causes a crisis.

Erik Estrada · Answer

Hard Money will always be the most expensive option to finance a FLIP. If you have access to a HELOC that can support the purchase and rehab you will save a lot on the closing costs and monthly interest since you will only pay on what you use.

Easy Street is OK but there are many hard money lenders that are more competitive. If you are purely looking at the total financing cost, the HELOC will win most of the time.

Claudia Rodriguez · Answer

There isn't really a single independent clearinghouse that does apples-to-apples comparisons across flip lenders — the products vary too much on structure for a simple rate table to mean much. A few things that actually decide whether a flip pencils, more than the headline rate:

Total cost of capital over your real hold, not the rate. A loan at more points but a shorter minimum-interest window can beat a "cheaper" rate that locks you into 6 months of interest whether you're done or not.

Leverage structure — how much of the purchase and rehab they fund, and how fast rehab draws get reimbursed. Slow draw turnaround quietly eats your carry.

Speed and certainty to close — a slightly pricier lender who actually closes in 10 days beats a cheap quote that slips and blows your purchase contract.

The exit — if there's any chance you hold it as a rental instead of selling, line up your DSCR takeout before you buy. Qualifying that refi off the finished property's rent is straightforward, but you don't want to be figuring it out at month five.

On HELOC vs. hard money specifically: the HELOC is cheaper but it's recourse against your home — if the flip goes sideways, your primary residence is on the line. Hard money is pricier but secured by the subject property instead. Plenty of investors blend both — HELOC for the gap, hard money for the bulk of purchase and rehab.

Whatever you land on, get 2-3 quotes and build a simple all-in cost sheet — points + interest over your expected hold + draw/exit fees — side by side. That comparison tells you more than any single "who's competitive" answer will.

Steve Waller · Answer

There is no independent clearinghouse, and there is a reason for that. These products are not comparable on a single axis, so anyone publishing a table would have to pick one and it would be wrong for half the people reading it.

What does work is building the sheet yourself, one column per lender, and forcing every quote onto the same lines. These are the ones that have actually cost people money, roughly in that order.

Minimum interest. Ask it plainly: how many months of interest do I owe if I pay this off in 90 days? Plenty of quotes carry three, four, even six months guaranteed. On a $250,000 loan at 11%, three months of minimum interest you did not use is roughly $6,900. That is more than a full point of rate and it appears nowhere in the rate quote.

Draw mechanics. Two separate questions here. Does the first draw fund at closing, or am I fronting phase one out of pocket and waiting to be reimbursed? And what is the turnaround once I submit? Reimbursement-only means your liquidity, not the loan amount, decides how much rehab you can run at one time. If a lender says five days, ask what actually happened on their last five files.

What the leverage is measured against. Nearly every fix-and-flip lender caps you twice, once as a percentage of purchase and rehab and once as a percentage of ARV, and the lower of the two governs. A 90% of purchase and 100% of rehab quote against a 70% ARV cap is a different offer than the same percentages against a 75% cap. Run your own numbers through both and see which one binds first, because that is the one that decides your cash to close.

Extension pricing. Get it in writing before you sign, not in month five when you need it. This is where a friendly quote turns unfriendly, and on a first flip the odds you need one are not small.

Experience requirements. Some programs price off completed deal count and some off FICO. On a first flip with excellent credit, that difference is the entire quote, so ask each one which lever they are actually pulling.

On HELOC versus hard money, the cost comparison is real but it is not the only one. The HELOC is recourse to the house you live in. Hard money is secured by the project. On deal one, when your rehab estimate is the least reliable it will ever be, that distinction is worth paying something for. A lot of people run the first one or two on hard money specifically to keep the mistake contained, then move to cheaper capital once their numbers have a track record behind them.

Last one, and it is the cheapest to fix now. Decide your exit before you close. If there is any chance this becomes a rental instead of a sale, price the DSCR takeout today rather than in month five. Discovering that the finished rent does not support the refinance is a very different problem depending on when you discover it.

One habit from a long stretch underwriting commercial credit that transfers well here: build the sheet before you take the first call. If you know which six lines you are filling in, the sales conversation stops steering you and you notice much faster which lender is answering the question and which one is changing the subject.

Nicholas Floyd · Answer

With excellent credit, I’d compare more than just the advertised rate. For a flip, I’d look at total cost of capital, points/origination fees, rehab draw requirements, appraisal/inspection fees, extension fees, prepayment penalties, closing speed, required cash into the deal, and whether the lender has any experience requirements.

I’d also compare a third option alongside the HELOC and hard money: business funding. Depending on your credit profile and LLC structure, 0% intro APR business credit cards, business lines of credit, or conventional business loans can sometimes be used for rehab, materials, carrying costs, or reserves while preserving your HELOC and reducing how much expensive private money you need.

I work in the business funding space, so when I look at a flip I usually focus on the entire capital stack rather than automatically putting everything with one lender. With excellent credit especially, you may have more options than you realize.

Uzoma Onyeije · Answer

Realized I never actually tagged anyone in my reply above, so making sure this reaches you directly rather than assuming you'll scroll back.

@Claudia Rodriguez — Beyond the framework itself, the risk-versus-cost separation you flagged is what kept my spreadsheet honest. Easy to let recourse risk quietly disappear into a dollar figure if you're not deliberate about keeping it its own line.

@Erik Estrada — Since your reply I've started asking every lender the "what do I actually pay if I only use half the line" question directly, rather than letting the quote answer it for me.

@Nicholas Floyd— Still working through whether the business-funding route makes sense for this specific deal, but it's changed the order I'm making calls in. Lenders first, then seeing what gap that third bucket could realistically close.

@Steve Waller — The part of your reply I haven't fully implemented yet is the draw-mechanics interrogation—asking what actually happened on a lender's last five files rather than what they claim on the call. Working that into the next round of quotes now.

@Clay Edmonds— The ARV-versus-LTC cap question turned out to matter more than I expected once I ran real numbers through both. Appreciate you flagging that it's not just theoretical.

Thanks!

Uzoma Onyeije · Answer

This feedback is great. I asked a fairly unnuanced question—basically, "Who's cheapest?" What I got back was a full teardown of why that's the wrong question. Steve's line about the $6,900 in guaranteed minimum interest that never shows up in a rate quote stuck with me hardest; that's real money hiding in fine print I wouldn't have known to ask about. Claudia's four factors—cost of capital over the actual hold, draw speed, closing certainty, and the exit—gave me a framework I didn't have going in. And Clay's advice to build the spreadsheet before the first call, so the lender answers your questions instead of steering the conversation, changed how I'm running this whole process.

So I built the spreadsheet. Two tabs: one to log each lender's actual answers side by side, one that turns those answers into a single dollar figure—the total cost of capital for my specific deal, not the marketing rate. It catches the stuff that's easy to miss on a phone call: which cap actually binds (LTC vs. ARV, whichever's lower wins), what your real loan amount ends up being once that cap hits, and whether the minimum-interest months exceed your hold period. There's a separate risk score too, because the cheapest lender isn't automatically the right one—Erik and Nicholas's point about recourse risk on the HELOC made sure that stayed a separate line, not folded into the cost number where it'd get lost.

Happy to share the file with anyone working through the same decision. And genuinely—thank you. This thread did more for my first flip than three days of Googling did.

How do I effectively compare funding options for flips?

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