How would YOU structure this deal? 👇

Question

Here’s a scenario I’d like to put in front of the real estate investing and lending community:

🏠 Purchase Price: $500,000🔨 Rehab Budget: $100,000📈 Projected ARV: $800,000💳 Investor FICO: 720

The investor wants to move quickly but also wants to preserve as much liquidity as possible for the next opportunity.

So the question is:

How would you structure this deal?

A) Maximize leverageB) Minimize cash-inC) Preserve liquidityD) Structure around a refinance/exit strategy

There isn't necessarily one answer. The right structure can depend on the investor's experience, liquidity, property, market, exit strategy, and overall portfolio objectives.

I'm curious how other investors, brokers, and lenders would approach it.

👇 Drop A, B, C, or D in the comments—and tell us WHY.

Let's talk numbers, strategy, and deal structure.

#RealEstateInvesting #HardMoney #RealEstateFinance #FixAndFlip #RealEstateInvestors #PrivateLending #CommercialRealEstate #RealEstateFunding #DSCR #RealEstateNetworking

Alex S. · Answer

At 720 FICO with a $500k purchase and $100k rehab, the structure that preserves the most cash is a hard money or DSCR-bridge loan at 85-90% of purchase plus 100% of rehab drawn in arrears, which puts roughly $50-75k down instead of the $150k an all-cash or conventional path needs. The catch is the draw schedule: you still front each rehab stage before reimbursement, so ask the lender their actual inspection-to-funding turnaround and keep about one draw cycle in reserve. At $800k ARV the total loan sits near 75% LTV, which is comfortable enough that you should be able to negotiate points down or get an interest-only term to protect monthly cash flow.

Hossein Sharifi · Answer

At 75% LTV on an $800K ARV, the refi gets you $600K, which is roughly your all-in before costs. I'd underwrite the refi at a 10% ARV haircut ($720K, so $540K out) and make sure you're fine leaving ~$60K plus closing and holding costs in the deal. Also check DSCR at today's refi rate before choosing max leverage on the front end.

Alex S. · Answer

Lower cash-in, but only if the freed cash is actually sized to the project: on a $100k scope I'd want roughly 6 months of carry plus about 20% of the budget untouched, call it $50-60k, before the extra leverage is worth anything. Below that line the cheaper capital wins, because one missed draw reimbursement or a surprise foundation bill costs more than the rate spread ever will. On the refi exit you raised, I'd underwrite the stabilized DSCR at 75% of ARV first and let that number cap the bridge, since a takeout that only pencils at 1.05 turns a liquidity win into a forced sale.

Alex S. · Answer

Lower cash-in, as long as the extra liquidity actually sits in reserve and isn't spent on the next deal. On this one the gap between 80% and 85% of cost is about $30k of cash, while 2 points of rate on a bridge that averages ~$500k outstanding for 9 months is closer to $7-8k, so you're buying $30k of flexibility for $8k. The answer flips when the timeline is uncertain: past 12 months the carry compounds and extension fees show up, and that's exactly when the cheaper capital pays for itself.

Alex S. · Answer

Lower cost of capital, but only if the refi exit is already underwritten - if the stabilized DSCR at today's rates doesn't clear 1.20 on the long-term loan, the cheap bridge turns into an expensive extension. The practical test I'd run upfront: price the refi at ARV x 75% and see whether the rent supports that payment at a 1.25 DSCR with a cushion; if it doesn't, take the lower cash-in and keep the dry powder for a longer hold. On a $800k ARV that's a $600k refi, so the stabilized rent has to carry roughly $4,500-5,000 a month before you let the leverage decision ride on the exit.

Divin Kanyama · Answer

@J Castro D — structure around the refinance and exit strategy, with liquidity preservation as a close second.
The projected numbers are attractive: $600,000 total acquisition and rehab cost against an $800,000 ARV leaves a meaningful spread. However, the best structure depends on how much of that value a lender will recognize, whether rehab funds are advanced or reimbursed through draws, and what the property can realistically support after stabilization.
I would work backward from the exit. If the plan is to refinance, estimate the future loan using a conservative appraised value and the lender’s maximum loan-to-value requirement—not just the projected ARV. Then confirm that the refinance proceeds can repay the acquisition loan, accrued interest, points, and other carrying costs without requiring an unexpected cash contribution.
Maximizing leverage can preserve capital, but the investor still needs enough liquidity for the down payment, closing costs, draw timing, interest, taxes, insurance, cost overruns, and a slower-than-expected sale or refinance. A 720 FICO helps, but experience, reserves, project scope, market conditions, and the exit will likely drive the final terms.
I would favor the highest leverage that still leaves a healthy contingency and does not depend on every assumption going perfectly. Preserving liquidity is valuable because it protects both this project and the next opportunity—but only if the debt structure remains manageable when the timeline or budget changes.

J Castro · Answer

@Alex S. great points. I agree that the draw schedule and turnaround time are often overlooked when investors are evaluating a rehab loan.

Preserving liquidity isn’t just about the initial cash-in—it’s also about making sure the investor has enough capital available to cover the project between draws, unexpected costs, and other obligations.

I’d also add that the exit strategy should be considered upfront, particularly if the investor intends to refinance into long-term financing once the property is stabilized.

Every deal needs to be evaluated based on the property, ARV, scope of work, borrower experience, liquidity, and exit strategy rather than simply targeting the highest leverage available.

Appreciate you adding this perspective, Alex. This is exactly the type of discussion I was hoping to generate. 👍

For everyone following along: Would you rather have a lower cash-in requirement or a lower overall cost of capital if both structures accomplish the same project?

How would YOU structure this deal? 👇

How would YOU structure this deal? 👇

How would you structure this deal?

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