One thing I think investors should look at before taking on capital is whether the funding actually matches the timeline of the project.
A 3-month rehab and a 12-month project don’t necessarily need the same type of financing.
Before using any funding, I’d look at:
• How long the rehab should realistically take • How long the property could sit before selling • Monthly carrying costs • When payments on the financing begin • Total cost of the capital if the project gets delayed • Whether you have reserves if the timeline changes
Sometimes the lowest payment isn’t automatically the best option, and sometimes having access to flexible capital can be more valuable than simply choosing the largest approval.
The goal should be to make sure the financing fits the deal—not force the deal to fit the financing.
Always run your own numbers, do your due diligence, and only leverage what you can comfortably afford.
How do you decide what type of capital makes the most sense for each flip?
Investor · Collierville, TN 38017 · Member since 2017 · 678 posts · 491 votes
3d
I don't flip — I buy, rehab, and hold. But the funding question is the same: match the money to the timeline.
Short project, fast exit: hard money or a credit line works because speed matters more than rate. You're in and out in 90-120 days.
My model is different. I rehab Memphis single-family houses and hold them as Section 8 rentals, so I want long-term money from day one. I use DSCR loans at 70-80% LTV, underwritten off the rent — $1,395 to $1,950 on my 3-bedrooms. The rate matters more to me than speed because I'm carrying that loan for years.
The mistake I see: investors pick the cheapest rate for a 4-month project or the fastest money for a 5-year hold. Run the total cost of the capital over YOUR actual timeline, not the lender's best-case scenario. If the project runs 90 days long, does the math still work?
Great points, James. I agree 100%. Matching the financing to the investment strategy is something more investors should pay attention to. A short-term flip and a long-term rental require two completely different approaches to funding.
From the business funding side, I also believe having access to additional capital through business lines of credit can be valuable, especially for renovations, unexpected expenses, or opportunities that come up while other capital is tied up.
I like your approach of looking at the total cost of capital rather than just the interest rate. That’s an important distinction.
I’m curious, with your buy, rehab, and hold strategy in Memphis, do you typically use your own cash for renovations before refinancing, or do you leverage additional funding to preserve your cash reserves?