What is Hard Money?

What is Hard Money?

Hard money is a term often used in the United States to describe a type of financing provided by private lenders. Hard money loans are typically short-term loans, lasting for one year or less. These loans are secured by real estate, typically properties that are in the process of being sold or renovated. A popular term in the industry is “fix and flip” or “fixer-uppers.

There are two main types of hard money loans: equity-based and debt-based. Equity-based hard money loans are given based on the value of the property being used as collateral. Debt-based hard money loans are given based on the borrower’s ability to repay the loan. Working with a quality hard money provider is essential in learning which type is the best for your investment portfolio. Hard money loans are often used by investors because they are easier to qualify for than traditional banks.

Are Hard Money Loans Popular?

Yes. In 2017, hard money lending volume in the United States totaled $23.2 billion, a 7% increase from 2016. The average hard money loan size was $305,000 in 2017. These numbers have consistently increased year over year with the real estate market becoming more competitive and more people wanting to become financially free.

Real Estate Investing

Types of Hard Money Loan Services:

Fix and Flip Loan: A hard money loan used to finance the purchase and renovations of a property. The goal is to sell the property for a profit once the renovations are complete.

Short Term Bridge Loan: A hard money loan used to purchase a property quickly, usually with the intention of selling it for a profit in the near future.

Transactional Loan: A hard money loan used traditionally by whole sellers to fund the purchase of a property and the subsequent sale of that property, usually within a very short period of time.

What are the Risks of Hard Money Loans?

As with any loan, there are risks associated with hard money loans. The most common risks are:

-The property may not be worth as much as the loan amount and the investor could end up owing more than what the property is worth.

-The interest rates are typically higher than traditional loans, so the monthly payments could be more than what was expected.

-If the property is not sold or rented out within the agreed-upon timeline, the investor could default on the loan and lose the property.

Despite these risks, hard money loans are often the best financing option for investors because they are fast, easy to qualify for, and have a lower interest rate than traditional loans.

If you’re thinking of getting a hard money loan, it’s important to work with a quality hard money provider who can help you understand the risks and structure the loan in a way that best suits your needs. Do your research and make sure you’re getting the best loan for your investment.

Get Your Hard Money Loan With FlipCo

If you’re interested in hard money loans, look no further than FlipCo. We are a hard money lender that provides financing for fix and flip projects, short-term bridge loans, transactional funding & more. We have funded millions in loans and have a team of experienced loan officers who are ready to help you get the loan you need to have a successful investment. Call or request a free quote today.

What Clients Say About Us!

FAQ's

A hard money loan is a type of short-term financing secured by the property’s value rather than the borrower’s creditworthiness. FlipCo Financial specializes in hard money loans for real estate investors, offering quick access to capital for property purchases and rehab. These loans are ideal for fix-and-flip projects, BRRRR strategy investments, and other short-term needs.

As a true asset-based lender, FlipCo Financial focuses on the property’s potential rather than your credit score. We provide flexible terms, faster funding, and a borrower-friendly approach, removing common pain points like lengthy underwriting processes, excessive due diligence requirements, and excessive deal delays.

Loan amounts are based on the property’s projected After Repair Value (ARV). FlipCo will lend up to 75% ARV. We follow industry standard underwriting guidelines, ensuring comparable properties (comps) are similar in size, type, and location. Our approach helps investors maximize their projects’ potential while managing risk.

Yes! As a true asset-based lender, we prioritize the asset over the borrower’s credit. Because of this, we do not have a credit score minimum or require a credit check as part of the application process. Although credit does not impact funding qualification with FlipCo, it can impact a borrower’s ability to get long-term financing if the exit strategy is to hold the property as a rental.

Yes! While experience can strengthen your application, we work with first-time investors and provide guidance throughout the process. Budgets larger than $60,000 will require additional review if a first-time investor.

FlipCo’s streamlined process allows us to fund loans within a matter of days. We move as fast as you do! Once your application is complete and approved, we work quickly to ensure you can close your deal without delay.

To apply, you’ll need to complete a loan application, submit your project budget in the FlipCo format, property photos, and purchase contract. If you do not choose to finance your rehab with FlipCo, we will still need to see your proposed SOW to understand the final product for accurate valuation. Our team reviews this information to ensure the project aligns with our lending criteria. Upon Underwriting Approval, final due diligence documents include entity documents, EOI, and Proof of Funds.

Borrowers can easily submit property photos through FlipCo’s online application portal or via email to their assigned account manager. We require clear photos of the property’s exterior, interior, and any areas requiring repair or renovation to support the underwriting process.

For property inspections, FlipCo accepts formal inspection reports from licensed inspectors, appraisers, or contractors. In some cases, detailed walkthrough videos or virtual inspections may also be accepted, provided they meet our underwriting requirements. Our team will guide you on what’s needed for your specific loan application.

Apart from the subject property, FlipCo requires the borrowing entity be registered and operating within the US as well as in good standing. Borrowers must provide proof of current liquid funds to meet calculated Minimum Reserves; this requires providing most recent bank statement and screenshot of current bank balance within 10 business days of closing. No active or pending judgements, liens, foreclosures, or bankruptcies personally or associated with a business entity.

FlipCo lends on residential, single-family homes and multi-family units. Property types include single family residence, duplex, triplex, quad. The property must be for investment purposes and cannot be owner-occupied and/or the borrower’s primary residence. Manufactured homes and shared wall units such as townhouses and condos are excluded.

FlipCo lends in several states and recently expanded to Ohio cities. Our states include Arkansas, Florida, Georgia, Indiana, Kansas, Missouri, North Carolina, Ohio, South Carolina, Tennessee, Texas, and Virginia. Check our website for a detailed list of states where we operate.

FlipCo can lend up to $1,000,000 per unit. FlipCo does not have a loan minimum. We do have an origination minimum of $2,500. 

How does FlipCo handle draw requests for rehab projects?
FlipCo issues reimbursements through draw requests once work is completed and paid. While there’s no required timeline for draw submissions, we encourage borrowers to submit within the first 30 days to keep their projects on track. To make a draw request, visit: FlipCo Rehab Draw Request – FlipCo Financial

Absolutely! FlipCo provides guidance to make the transition seamless with our in-house DSCR specialists!

FlipCo will only charge interest of funds drawn, not total committed. Your FlipCo quote will provide estimates on your minimum and maximum fully drawn interest payment for your review in assessing your potential carrying costs.

FlipCo offers short-term financing for 3- and 6-month terms. Extensions are available. Additional fees may apply.

Stay Connected:

Subscribe to our Newsletter for FlipCo Events, Tips & Tricks!