Hard Money Vs Cash (Flipping Single Family Homes)

[Ben C.]

Hello Everyone!

Just so you get an idea I flip single family homes. Sometimes I do complete tear downs and rebuilds and other times I do gut renovations and/or additions (depending on what the situation calls for). 

Up until this point I have been doing 1 deal at a time and as a result been using 100% of my own cash to fund acquisition, holding & renovation. 

As a result I can only do one deal at a time because I am in an expensive part of the country. 

The debate going forward is continue using my own cash (in total control, no interest, can make more competitive offers to acquire properties, higher $ amount returns, no contractor draw requests/inspections to deal with throughout entire project) or turn to a HML who is going to cost me around 10-11% with 2-3 points interest only loan with no pre-payment penalties (much less cash out of pocket, high cash on cash % return, potentially do multiple projects at once).

What are your thoughts on this debate I am having?

Look forward to hearing from everyone and great success to everybody on their ventures! 

[Brian Pulaski]

@Ben C. I may go look back through my previous flips and see what my offer would have been with a HML. Kind of a case study.