How much cash does a beginner flipper need when using HML?

[Claire D.]

Hello all,

I am curious how much money (as a % of ARV) a beginner house flipper can expect to need to bring to the table when using a hard money loan. I understand it will vary depending on the lender and the experience of the flipper.. In my case no prior experience.

Thanks in advance for your input!

[Eric Loya]

@Claire D. A simple answer to your question is about 10-20% of ARV needed to do the deal.

There are a lot of other variables, so keep in mind the general structure of hard money loans as well.

Most lenders in today's market will offer a loan structure based on % of purchase price (80-90%) and % of rehab budget (75-100%) with a maximum loan limit of 65-75% of ARV. Expect the lower ratios if your new.

Any amount needed to complete the project (including closing and holding costs) will need to be brought out of pocket and confirmed available in the account funding the deal. Most lenders will confirm down payment available as well as 3-6 months of interest reserves.