Flip with Hard Money

[Danielle C.]

Hi All! 

My husband and I have recently gotten our LLC approved by Pennsylvania and are on the look out for our first fix and flip. I have a question about hard money. We are looking at multiple hard money lenders to finance our deal. Would we be able to use a credit card as the down payment for the loan? Is there a better way to get down payment money? We don't have much in the way of capital as of right now, but both of us have credit scores of 820. Thank you!

[Chinmay J.]

@Luke Mitchell and @Danielle C. - So let me get this right.. You want to use HML who charges about 10-12% plus 3 to 5 points, and in order to be funded by HML you want to use another source of money which even charges higher interest rate (anywhere up to 25%). This is not just a terrible idea in theory, but practically speaking, I won't be surprised if most HML would decline to work with you, It shows that you are not financially sound for the deal to begin with..

If you don't have the money yourself, have you considered a JV with someone who might be able to bring cash to the table? Of course, the JV might want you to have some skin in the game (unless you have some other skill you are bringing to the table), so you might have to contribute at least something...