Ask Cornerstone: When should I line up a hard money lender for flip financing?
I am currently looking for my first flip property. Should I line up a hard money lender first, or wait until I’ve found a property?
It is a good idea to consult with a few lenders while you are looking for an investment flip look at this site. You should know the lenders’ requirements for down payment, points, interest, other fees, and conditions. This will give you a good idea of how much house you can buy based on your available funds. Many lenders require 20%-30% down and then they will finance 100% of the fix up costs. Fix-up money are controlled funds that are paid out as work is done (i.e. as milestones are hit).
Get to know your local private money lenders at real estate investment clubs and association meetings. Try a Google search or meetup.com for listings of clubs. You can get good referrals from other flippers and meet and great some lenders.
Also, to help you analyze lender costs and project profits, use our flip calculator. It provides side by side analysis for comparing lenders’ terms or for projecting potential profits by changing variables. The flip calculator spreadsheet is available to subscribers of our weekly newsletter for which you can sign up here.