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Is it worth using a hard money lender for a first-time flip?

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Zoya_99
Joined:
13.06.2020
Posts: 1184
Topic Starter
01.01.2025 15:46
I've been looking at a distressed property in my neighborhood that seems like a perfect candidate for a fix and flip. My savings are a bit tight, so I'm considering using a hard money lender to cover the acquisition and rehab costs. I've heard horror stories about high interest rates and points, but I'm worried about missing out on the deal if I wait to save more cash. Has anyone here used a hard money lender for their first project, and did the numbers actually work out in the end? I'd love to hear some honest feedback on whether this is a smart move for a beginner or if I should just keep looking for cheaper ways to finance.
12 replies in this topic
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Maistor_Ivan
Joined:
29.05.2020
Posts: 1399
26.01.2025 11:38
Hard money is a double-edged sword. If you have a solid margin, it's just a cost of doing business, but if your margin is thin, those points will eat your profit alive.
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Fari_P
Joined:
12.08.2022
Posts: 72
31.01.2025 11:53
In reply to a previous post
I used a hard money lender for my first flip three years ago. It was stressful as hell because of the time pressure, but I cleared 20k. Just make sure your rehab budget is bulletproof.
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Kaya_J
Joined:
18.11.2020
Posts: 1946
22.02.2025 07:49
In reply to a previous post
Honestly, if you're a beginner, do you really want the added pressure of a 12% interest rate hanging over your head? That's a lot of risk for a first timer.
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Fabi_W
Joined:
06.02.2020
Posts: 1912
10.05.2025 01:42
Does anyone have recommendations for reputable lenders? Most of the ones I find online look like total scams.
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simon_v
Joined:
21.09.2020
Posts: 367
21.05.2025 01:15
In reply to a previous post
Listen to the advice above about the rehab budget. Whatever you think it will cost, add 20%. That's your real budget.
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Fabi_W
Joined:
10.07.2023
Posts: 2478
20.06.2025 16:03
I skipped the hard money route and went with a private money partner instead. It took longer to find someone, but the terms were way better than any commercial lender offered.
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seba_bg
Joined:
17.02.2022
Posts: 185
02.09.2025 06:18
In reply to a previous post
I'm with you on that, finding a private partner is definitely the way to go if you can network enough.
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Viktoria_S
Joined:
17.05.2022
Posts: 2282
10.09.2025 11:07
In reply to a previous post
If it's your first flip, the biggest risk isn't the interest rate, it's the unexpected structural issues you'll find after you start demo. Can you cover the overages without the lender?
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Hani_B
Joined:
13.01.2021
Posts: 1892
14.09.2025 06:33
In reply to a previous post
Keep looking for cheaper financing options. If the deal is truly great, you might even be able to find a seller carry back situation.
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Aleks_K
Joined:
13.05.2023
Posts: 369
21.11.2025 03:44
In reply to a previous post
I'm currently in the middle of my first hard money project. It's expensive, but it allowed me to scale faster than waiting for my savings to grow. You just have to be disciplined.
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kamilo
Joined:
16.02.2023
Posts: 1084
12.01.2026 16:58
In reply to a previous post
What's the ARV on the property? If the numbers don't show a 20-30% profit after all costs, I'd walk away.
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Maistor_Ivan
Joined:
28.11.2024
Posts: 1618
01.03.2026 06:23
Great thread. I've been lurking for a while and this is exactly what I needed to read today.

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