Fix and Flip Funding - Does Gorilla Capital Program Work

[Chris P.]

So the program seems pretty simple to me especially for someone starting out with not much capital that would allow them to be part of a flip.  Yes I know there are hard money lenders but this does not appear to be a loan and would allow you to hedge the risk with little mone down with an experienced real estate company.  Seems like a win/win to me and I'm curious as to what other people thing about this route.   

• Gorilla Capital provides 90% of acquisition and remodel costs
• Fix & flip operator provides remaining 10% of acquisition and remodel costs
• Gorilla Capital charges a monthly 1% management fee for capital in use
• Fix & flip operator earns 12% per annum on their capital in use
• Remaining net profit is split 50/50 upon closing

[Tom Pritchett]

I have not heard of Gorilla Capital nor do I know anything about their business. With what you have outlined, here are my thoughts. 

Gorilla Capital provides 90% of the total funds. A hard lender may provide 90% of the total funds

Operator would come up with the remainder for both programs. 

Gorilla Capital charges 1% monthly management fees. This is 12%.  Same as many hard lenders. 

Splitting profit of 50%?  Ummm, a hard lender makes the money in the interest and you get to keep 100% of the profit. This is where I think the deal goes south. 

Most hard lenders would take first position on the home to protect their investment just like Gorilla Capital. 

I think I will start doing a program like Gorilla Capital instead of hard money lending, I could make more money!