Chicago contractor willing to work with hard money loan?

[Kimmy G.]

Hi,

I'm purchasing a property that I intend to flip using hard money loan in Chicago. The contractor I normally use requires a big percentage of deposit before and in the beginning of each project, so using hard money loan to fund the rehab does not really work for him, since the lender will only pay me the rehab expenses in draws each time after a certain portion of the project is finished and inspected.

Does anyone know contractors that are comfortable working with hard money loans and getting paid in draws without too much upfront deposit?

Thank you so much!

[John Warren]

@Kimmy G. this is a big part of the problem newer investors run into when they use construction loans. You still need a lot of cash to "float" the project in between draws. I would look into getting your hands on some more cash through a line of credit, credit card, 401 loan, etc. 

You can also speak with your contractor and offer to put the materials on a credit card to lessen his initial cash outlay. Most good contractors fear getting stiffed the material costs which is why they require a deposit. If you can get the material costs off the table, then your contractor may be willing to play ball here.