Credit Union or Hard Money

[Ashley Jones]

Hello BP, I'm a new real estate investor looking to do my first fix/flip in the DFW area. My main question pertains to financing; would you recommend utilizing hard money or my credit union for financing? My first flip will be a 2-4 bedroom SFH.

[Jon S.]

Positive and negative to both....really depends on your liquidity and the specifics of the deal.

Credit Union
- Positives: low rates and fees...cheapest solution
- Negatives: requires money in the deal, sometimes will not fund rehab, slower close

Hard Money
- Positives: requires less money in the deal, faster, less difficult process
- Negatives: high interest rate, high fees

If it is your first deal I would suggest using a hard money lender just to remain as liquid as possible.  You may need that capital as things pop up throughout your first project.  Start with a smaller deal so you can get in and out quickly.  Most hard money lenders also have experience in the space and can help provide valuable insight into your project.  A little guidance is always good as you start.  Once you build a capital stack and gain experience you can move to cheaper capital that may require a little more skin in each deal.