What is the Order in Which to Secure Hard Money?

[Account Closed]

Hi All,

I am an aspiring real-estate investor from San Diego, and after spending several months in the research phase, I have come to the conclusion that a buy-and-hold strategy for cash flow is going to be extremely hard to implement in the area given the insanely low cap rates and CCR. To put it into perspective, the house next door sold for over $800k and the renters were paying just under $3k a month in rent. This is not an exception to the rule by any means.

As a result, I have come to the conclusion that I will try to flip my first few homes to take advantage of the fact that San Diegans are willing to pay a premium for a turn key house and often avoid homes that need a lot of initial rehab. This will also be an amazing opportunity to learn the rehab portion of my future buy-and-holds.

I am in the later stages of building a step-by-step guide for myself on the process that I *expect* to take in my rehabbing journey and I am having trouble wrapping my mind around the financing part. It seems pretty obvious to me that I will need to use hard money at this point, but when can I expect to secure this money?

Common sense as well as every book / blog / forum post that I have read says that you should secure your financing before making an offer on a property, but this seems backwards for hard money, as the lender wants to see your investment before lending out any money.

Can anyone shed light on this part of the process? Would I expect to make an offer on a property, put in a financing contingency assuming that it is accepted, and then find a hard-money lender? Or would I find a property that I think is a great deal, put together an analysis on the property, and then propose it to the hard-money lender, hoping that the property doesn't get snatched up from under me? Or do I need to somehow build a relationship with several hard-money lenders before even looking, increasing the odds that they will lend me money once I find something?

Thanks in advance!