7 Things to Know Before Funding Your Next Flip

Boston, Massachusetts
Private Lending & Conventional Mortgage Advice
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7 Things to Know Before Funding Your Next Flip

Priscilla Tagoe
Member since 2026 · 3 posts · 3 votes

Most investors only compare interest rates. But the rate is just part of the story. Here's what to know before you sign:

1. Points add up fast.

2 points on a $250K loan is $5,000 due at closing. Compare total cost, not just the rate.

2. Rehab money comes in draws.

Lenders reimburse you after work is done and inspected, so have cash to get started.

3. Your loan has two caps.

It's limited by total project cost AND after-repair value. Whichever is lower is what you get.

4. You'll pay during the rehab.

Most flip loans need monthly interest payments. Count them in your holding costs.

5. Ask about extensions early.

Projects run long. Know what extra time costs before you need it.

6. Watch for early payoff fees.

Some loans charge penalties or minimum interest, even if you sell fast.

7. The appraisal sets your ARV.

Not your spreadsheet. Strong comps help support your numbers.

What's one thing you wish you'd known before your first loan? 👇

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Robin SimonBusiness Member
Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
1mo

I wouldn't necessarily say 7 is universal, the true "ARV" is set from the market, not the appraisal, and lots of hard money lenders have no appraisal options or reduced valuation methologies too

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  • Tim Maloney
    Melbourne Florida · Member since 2026 · 19 posts · 13 votes
    1mo

    Great points. The other side of the equation is leverage: a fix-and-flip loan can allow an investor with relatively little cash to acquire a $400,000 property with only 5%–15% down.

    Yes, the costs are higher, but consider a typical example: a $300,000 purchase, $50,000 renovation budget, and $425,000 after-repair value. With the right financing, the project could be started with less than $60,000 out of pocket, including the down payment and initial costs.

    Once the renovation is complete, the investor may be able to refinance into a DSCR loan at 75% of the new appraised value—approximately $319,000—paying off the flip loan and potentially recovering a meaningful portion of the original cash invested.

    The rate and points matter, but so do leverage, cash-on-cash return, and having a solid exit strategy. The most expensive loan in the world is often the one for the property you missed out on...

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  • Robin SimonBusiness Member
    Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
    1mo

    I wouldn't necessarily say 7 is universal, the true "ARV" is set from the market, not the appraisal, and lots of hard money lenders have no appraisal options or reduced valuation methologies too

    [email protected]
    Harpoon Capital514 Reviews
    WebsiteView Page
    2Reply
  • Bre Norris
    Lender · Boston, MA · Member since 2026 · 12 posts · 3 votes
    1mo

    Good list, Priscilla. A few things I'd add from the lending side here in Massachusetts:

    • Ask how fast draws actually get paid. "Reimbursed after inspection" can mean 2 days or 2 weeks, and that gap is what strains your GC relationship and your cash. Get the turnaround and the inspection fee in writing.

    • On #6, ask specifically about minimum interest, not just prepay penalties. Ours, for example, is a 4-month minimum and then no prepay penalty, so a fast flip isn't punished. Some loans quietly charge 6 months no matter what.

    • Build permitting into your timeline. In Boston and a lot of the older inner suburbs, permits and inspections can add weeks before you swing a hammer, and that's where people end up needing the extension from #5.

    • Budget for the house's age. Older New England stock hides knob-and-tube, old oil tanks, and sewer lines that need replacing. Those surprises land in your contingency, not your lender's draw schedule.

    The one I wish more first-timers knew: talk to your lender before you're under contract. Knowing your real numbers up front makes your offer a lot stronger.

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