Gap funding

[Daniel Dubeck]

Has anyone had any luck with gap funding? Are their any pro's or con's? Thanks in advance for your response and knowledge!

[Nnabuenyi Anigbogu]

It depends on what exactly you are referring to with gap funding. I have heard it used different ways.

I have used a version of gap funding where the hard money lender funds 85% of the flip (purchase + renovation) and the gap funder funds 10% of the deal. That leaves me with 5% to come from my own pocket. Some have used this method to obtain 100% financing. The key is that the gap funder is usually someone you know and have a relationship with. In my case it was someone who knew a friend of mine and that friend vouched for me.

In my opinion it is a great way to go if you have it available. It can increase your capacity to pull off certain deals.