HardMoneyHome.com Private Lending Blog -

Regardless of the type of investor you are and your loan scenario, there is an array of loan
programs that are designed to meet all your mortgage needs.

Hard Money and Fix & Flip Loans are among the most popular programs that investors utilize
for their real estate investments. Although they are two different programs, many inside and
outside the industry believe them to be the same loan…but this is the furthest thing from the

Hard Money Loans

A true Hard Money Loan is an asset-based loan, which means the financing is based on the
Loan to Value (LTV) of the Asset. Unlike the Fix and Flip loan, it doesn’t go through full
underwriting and there’s no minimum FICO requirement for the borrower, as it doesn’t have
many guidelines and criteria.

This type of loan doesn’t have as many restrictions as one might think considering that it’s just
money, so no more having to worry about bankruptcies, foreclosures, collections, etc.
Due to the lack of guidelines and underwriting, a true Hard Money Loan is generally capped at
65% LTV or less. For example, let’s say you have a home worth $1M, if you want $500K against
it (50% LTV), you’re able to receive the money within 1-2 weeks (from day of application),
commonly as a first lean position – because it’s just money. It’s normally in the form of a Bridge
Loan, which is short term financing in a period of 12-24 months.

One of the reasons why Hard Money Loans are for investment properties ONLY, is due to the
high cost regulations and predatory lending – you can’t put such high interest rates and cost on
an owner occupied property.

In certain states, there are non-judicial foreclosure laws, which allow a Hard Money lender to
get their money back quickly if the borrow defaults on the mortgage.

These foreclosure laws make the lender more comfortable doing high-risk loans, usually the
money is not sold on the secondary market – the lender holds the note, they don’t sell the

Fix & Flip Loans

Fix & Flip Loans are also asset-based loans, however they utilize more underwriting guidelines
and criteria. While Hard Money Loans focus solely on the asset, Fix & Flip loans look at both the
asset and the borrower.

The reason why people confuse Hard Money Loans with Fix & Flip Loans, are because both the
loan and the laws are very similar – they are both private money to an investment property.
Virtually all fix & flip and hard money loans are funded by hedge funds, the money comes from
the same place, but the underwriting is different.

Contrary to Hard Money Loans, Fix & Flip Loans are usually sold on the secondary market and
goes through a full underwriting with tighter guidelines. For instance, depending on the lender,
Fix & Flip loans have a minimum FICO requirement. Additionally, the borrower can’t have late
payments, foreclosure, judgments, or bankruptcy on their credit for 24-36 months.

Furthermore, a Fix & Flip loan is a rehab loan, a loan that you utilize to acquire a property and
then receive the funds to rehab that property in short term financing (12-18 months).
Depending on whom you are working with, it’s important to bring something dynamic to the
table, to help you close your loans quickly, efficiently, and professionally.

However, make sure that when you move forward with a mortgage lender that you know all
the details of your loan, why they are utilizing that program, and whether or not that loan
program is being properly presented to suit your needs.

Written by New Jersey based Mortgage Expert, Michael Mikhail, CEO of Stratton Equities.

If you are new to the world of flipping houses, then you may feel a bit overwhelmed by all of the tips and tricks out there—and all of the different lingo that is often used in this industry. There are many different terms that you will need to learn and understand if you want to integrate yourself in this business and really find a lot of success in this market.

While there is no end to the list of different terms that you will run across in this market—one of the most common “rules” that you will run across is one known as the 70 Rule. The 70 Rule has been one of the oldest and most trusted rules in the flipping property and before you start securing your financing and looking at homes to flip—you need to understand what the 70 Rule is, and how it works.

The 70 Rule, or the 70% Rule, is an easy guideline to help you when buying fix and flip properties, and while some more experienced investors may be able to be flexible with this rule, for new investors, they should do their best to stick as closely to this guideline as possible.

The 70% Rule applies to the maximum price you should consider paying for a property, with repairs so that you don’t overspend and so you can still turn a profit after all is said in done.

According to the rule; you should not pay more than 70% to the after the repair value (ARV) of the home, minus repair costs.

The ARV is the estimated value of the property after all of the repairs are completed.  So, if the ARV of a home is $200,000 and the home needs $50,000 in repairs, then the 70% Rule means that you should pay no more than $90,000 for the property. That remaining 30% ($60,000) left over will leave room for both your profits and some of the unforeseen expenses that will likely come up in the flipping process (because they will).

If you analyze these numbers correctly, and pull accurate comps, you are going to be in a good position to actually make money on your fix and flip. You can also use this information and work backwards to determine an offer price. Plus, you the 70% Rule is easy to figure out on-the-go, so you can use it as you are looking at different properties to determine whether or not the house in front of you will be a good investment.

Now that you know all about the 70 Rule, make sure that you keep this term in mind when you look for your next fix and flip property so you can make a smart investment for you and your future.

As every real estate investor knows, nothing is more important than location when looking for any property. The old term “location, location, location” has been around for a long time and it continues to be one of the golden rules of real estate. After all, you can change everything except location.

Of course, when you are buying a home for yourself, it is worth putting in the extra money to get the location you want. However, when you are investing in a property, you want to find a location that is up and coming—so that you can keep your overhead low put still benefit from being in a great neighborhood.

This is why you want to find investment properties in up and coming neighborhoods and look for neighborhoods that are about to be hot. This can be difficult to determine, but here are a few signs that you are in a soon-to-be-hot neighborhood.

  1. There are Other “Flipped” Properties for Sale in the Market—Check your comps. If you see other flipped properties for sale in a neighborhood, then it is a good sign. You don’t want to be the first person to come in and start flipping, but you also don’t want to choose a neighborhood that has already turned and has an over-saturated number of flipped properties for sale.
  2. Trendy Businesses Are Moving In—If you see a Trader Joe’s, Starbucks, Whole Foods or other big, on-trend business moving into the neighborhood, then this is always a good sign. Big businesses often look to emerging areas when they want to find a new location.
  3. You See Lots of Popular Ride Share Programs—Do you see lots of scooters and bike rentals out and about in the neighborhood? This is a good sign that people not only like living in the area, but they also like staying in the area and feel safe biking or scooting around.
  4. Properties Aren’t Staying on the Market for Long—Even if there are a lot of flipped properties for sale in the market, that doesn’t mean the property is necessarily “up and coming.” Look at how long those properties are spending on the market. If a property is staying on the market for 90 days or longer, this isn’t a good sign. Look for neighborhoods where properties are moving quickly.
  5. There Are Hot Adjacent Neighborhoods—The best sign that a neighborhood is about to be hot and is about to be hot, is to look at the neighborhoods around it. A neighborhood can be up and coming, but if it is surrounded by dangerous or undeveloped neighborhoods, it is going to be really hard to sell properties in this area. You want to find an up-and-coming neighborhood that is surrounded by other hot neighborhoods to make a sound investment.

Keep these tell-tale signs in mind as you start looking for your next fix and flip property, so you can make sure that you are buying the right property for you and your financial future.

There are many things you can do in order to improve your upcoming fix and flip property. Now that the weather is warming up, there is no better time to start thinking of outdoor improvements that can help not only add curb appeal but help turn your back yard into a dream oasis for buyers.

If you are looking for outdoor improvements that can help transform your property, increase its value, and get the attention of buyers—here are some great outdoor improvements that are perfect for your investment property.

1. Update the Front Door and Garage Door- Curb appeal is important and you want to make sure that you make a great first impression. Swapping out the garage door or front door are affordable projects that will give your property that extra appeal.
2. Add Some Plants- Planting a few flowers here and there can go a long way in both improving the front and back of the home.
3. Sod or Plant Grass Seeds- Make sure that you put a lot of grass in the backyard to create some usable space. Sod is expensive, but sometimes necessary. If you are able to plant grass seed, make sure to time it out so that it is growing by the time you start showing the house.
4. Fence in the Yard- Privacy is a really big deal for people with back yards where they butt up to their neighbors’ yards. If you want to define your space, and add some privacy that makes the yard seem more private, invest in a fence. You can look for privacy fences that aren’t as expensive as some of the more ornate wrought-iron ones and add a lot of appeal to the space.
5. Add a Deck- If you have a good contractor and don’t overdo it with the materials, you can add a deck in your outdoor space for relatively affordable amount. They have a high ROI. Just make sure that the deck is done right so it passes the inspection.
6. Paint the Exterior of the Home- A fresh coat of paint on the home’s exterior can really transform a space, and it is way cheaper than replacing siding. Keep paint colors classic and fresh, not too trendy.
7. Stage the Outdoor Area For Fun- Think about how you envision your backyard being used at this home. String lights a staged grill, some outdoor furniture or even a fire pit can all show potential buyers how they can use the outdoor space. This is particularly important if you are trying to sell a home with a smaller back yard. Buyers love having a great outdoor space to enjoy, so pay close attention to the yard, with these easy fixes that will add a lot of value to your property.

There is no shortage of advice for the fix-and-flip investor in 2019. An endless litany of websites, podcasts and social media feeds shout tips, tricks and everything in between. But what does a fix-and-flip investor really need to know? What are the essentials of house flipping?

After more than 20 years helping fix-and-flip investors succeed, we’ve found it comes down to four essential questions. Knowing the answers to these questions will put you well on the way to achieving your goals and succeeding in this highly competitive business.

Essential Question #1: What is a good investment property?

What makes a fix-and-flip investment worth pursuing? That’s a simple question with a complex answer, one that cuts to the very heart of real estate investing. In short, it comes down to value. Certain properties are obviously more valuable than others, and understanding that value will make or break your fix-and-flip investing career.

Traditional measures of value apply to fix-and-flip properties as well. You’ll never go wrong considering factors like the quality of a school district, local population movement or overall market strength. But, for the fix-and-flip investor it’s important to understand other factors as well. The most important of these is a calculation of a property’s value after it’s been renovated, or After Repair Value (ARV).

ARV is a measure of the value of a fix-and-flip investment property after it has been renovated to meet the standard of local comparable properties. Calculating a property’s ARV correctly will allow you to judge what you should offer for a property, what it will cost in repairs and upgrades, and what you can expect as net profit. When weighed alongside traditional factors, a property’s ARV will help you more accurately determine its value as an investment.

Essential Question #2: What makes a successful fix-and-flip investor?

As a fix-and-flip real estate investor, you’re in business for yourself and no one has more control over your success than you. In this respect, fix-and-flip investors have much in common with other entrepreneurs. Studying entrepreneurship, in general, can teach us a few important characteristics of successful fix-and-flip investors. The three most important are a goal-oriented mindset, patience and discipline.

  • Like any entrepreneur, fix-and-flip investors should be goal-oriented. Setting goals can help you stay focused and motivated and is a good way to monitor your overall progress. Identifying and setting Specific, Measurable, Achievable, Relevant and Time-Bound Goals will help you hone your entrepreneurial mindset.
  • For fix-and-flip investors, patience and self-discipline go hand in hand. The real estate market (fix-and-flip or otherwise) is subject to change, and it takes both patience and discipline to succeed. A previously hot market may slow and a slower market may heat up, moving so quickly investors can get overextended. Having the patience to ride out market cycles and the discipline to stick to your investment plans can separate you from unsuccessful fix-and-flip investors. Crafting a well-made business plan will help you strategize your way through fluctuating real estate cycles and sticking to your plan will help you avoid investment missteps.

Essential Question #3: How do real estate cycles affect the fix-and-flip market?

All forms of real estate investing are, at least in part, affected by market trends. Sometimes a hot market means properties will only be available for days or even hours. Other times, a perfectly good property may linger for weeks or months.

Many factors play into these cycles, but fix-and-flip investors should be especially aware of population movement, overall economic strength and construction trends.

Population movement affects the number of potential buyers entering or exiting your market of choice. If your market’s population is growing, that could bring more buyers looking for a deal. The U.S. Census Bureau has reliable information on population trends that may affect your investment strategy.

Considering the overall strength of your local economy can also give key insight into long-term fix-and-flip trends. If your market’s economy is heating up, real estate growth is likely to follow.

Finally, the construction of new homes can also be a noteworthy indicator of market cycles. When construction spending is on the rise, that can mean there is a short supply of housing in a given market. Monitoring construction spending with data (updated quarterly) from the U.S. Census Bureau can be a good starting point.

Essential Question #4: What should fix-and-flip investors read to learn more?

Business leaders across all industries list reading as one of the keys to their success. The same is true in real estate, where reading the right books can help you hone your approach to investing and business in general.

Anchor Loans CEO/President and co-founder Steve Pollack recommends Deep Work by Cal Newport. “Newport’s book opened my eyes to more efficient and productive ways to create more meaningful project results,” said Pollack in a rundown of the business books recommended by Anchor Loans staff.

If you have been working on flipping or renovating a home and waiting for the spring housing market to hit, then you are almost ready to list that home in one of the most popular times of years for sellers. However, after all of that hard work on your part, you want to make sure your property is in the best condition possible to sell, so that you can make as much money as you can off your property. If you are about ready to list, here are a few tips on last minute details that will have your home ready for the market.

  1. Pick a Date and Stick With it

If you are trying to get some of those last-minute things ready on your investment property, you want to stay as motivated as possible in order to get these things done. After all, every day you hold on to that house is costing you money. Pick a date to list and work backward from it, and do not budge from that date.

  1. Bring Someone Else In

This doesn’t have to necessarily be a professional, but just someone that you trust. Bring them in to look at the property and let you know what they think about some of these last-minute details you need to get done. Investment properties involve so much effort on your part, and you spend so much time looking at the big picture, that you may accidentally be unable to see the little details. Having a fresh pair of eyes can really help.

  1. Don’t Forget to Treat This Home Like the Investment It Is

This is so important for any investor, because it is so easy to forget that your property is a business. You put so much blood, sweat and tears into the home, that you can start to accidentally put your own personal touches on it and feel overly emotional about the property. Don’t forget, this isn’t your home, and you are not going to be living there. Keep things as neutral as possible to appeal to as many buyers as you can.

  1. Staging, Staging, Staging

Staging is one of the best ways to highlight the features of any home, especially one that has just been renovated and doesn’t have anyone living in them. It helps people visualize spaces in the home and see its potential. Staging can seem like one other expense that you don’t want to deal with, but it is one that is worth the extra cost.

  1. Don’t Forget About Curb Appeal

Curb appeal is important because it is the first thing that people see about your home when they pull up to the home. It is easy to get so overwhelmed with all of the little things you need to do indoors, that you ignore the outside of the home. First impressions are everything—especially on the outside.

The spring is a great time to try to sell an investment property, as so many buyers are done with the hectic holiday season and ready to find a new property to buy. Keep these little tips in mind when you get ready to sell your home so you can finally see the results of all of the hard wok you put into this property.

Most investors know that foreclosures can be a great way to get a quality property for a low price. While foreclosures are very unfortunate for the individual owning the property, they present a great opportunity for those who are buying it.

However, if you are interested in buying a foreclosure, then you need to have a better understanding of foreclosures, especially the different types of foreclosures, so you know what you are getting into before you start browsing for potential foreclosure properties.

There are three basic types of foreclosures and three ways for you as a buyer to acquire one of these properties. How easy it is to buy one of these properties all depends on where the property is in the foreclosures process. Here are the three stages.

  • Pre-Foreclosure

During this stage, investors will be able to offer the most incentives to distressed homeowners. This stage prevents there from being further damage to the home owner’s credit rating and allows an investor to come in, buy the property at a mutually-agreed upon low price, and handle the transaction before the lender gets involved.

As a buyer it can be hard to find pre-foreclosure properties, but when you do, you have so much to offer the seller that you can often strike the best deal and don’t have to worry about third-parties such as banks getting involved.

  • Foreclosure

While the term “foreclosure” is used as a blanket statement for all three stages of the foreclosure process, the foreclosure stage is different from pre-foreclosure. If you are looking for foreclosure properties, you can go through the county clerk’s office.

The foreclosure process varies from state-to-state. However, across the board, there are two main types of foreclosures.

Non-judicial foreclosures pertain to deeds of trust, where a third-party (or trustee) handles the entire foreclosure process in 2-4 months after a borrower has stopped making payments and defaulted on their loan.

Judicial foreclosures pertain to mortgages, rather than deeds of trust. They take a lot longer to complete.

Whether the foreclosure is non-judicial or judicial, after the property passes through these two stages, then it will be sold at-auction to the highest bidder.

  • Post-Foreclosure

The post-foreclosure stage happens when the lender has already taken control of the property. The home is then owned or in possession of the lender’s REO or Real Estate Owned department. Simply put, after the property is in the hands of a new owner or an investor (such as a bank) then you can make an offer. Most banks are willing to negotiate.

While this isn’t typically the time to get the best deal, you can still save by buying properties at this time.

Buying a foreclosure property is often much more challenging than many investors realize. There is a lot of unpredictability involved with buying foreclosures. However, if you are able to stick it out, then this foreclosure can be a great way for you to save on the initial expense of buying your investment property.

Real estate investing is a big undertaking, and while many projects can ultimately make a project a great flip, there are just as many that will make it a flop. This is one of the biggest considerations when trying to decide on which improvements can actually make an investment sell faster and which ones can cause it to be a flop.

Opening Walls

This is something that a lot of flippers like to do and it is one that can sometimes add value but not always. When opening up walls, think about how much it will really add to that “open concept” space and how much it costs. If the wall is load bearing, then it may not be worth the thousands of dollars it will cost to do this type of project.

High End Kitchen Appliances

These are overkill in most homes, unless you are selling a really high-end luxury flip. The average buyer just wants something that is clean, new and nice when buying a flip. It doesn’t have to be over-the-top.

Upgraded Kitchens

Kitchens sell homes, so adding new countertops and a nice backsplash can be a great upgrade. However, you want to make sure that you are following the trends in your neighborhood before you update your kitchen. Take a look at other flips that sold quickly to make sure you are choosing a style that your type of buyer will enjoy. Cabinets used to be a must for kitchen remodels, but there are many ways to refinish cabinets that are still in good shape, but not necessarily the best color—for a fraction of the cost of new cabinets.


Updating the flooring can be a big expense but it is one that almost always pays off. This is a cost-effective way to update a home if you are smart about it. Old carpet should usually go. If you have historic hardwood floors in the home you can try to salvage and refinish them, especially if you are flipping in a neighborhood where historic features hold value. In many homes, beautiful, yet durable vinyl plank is a good option for homes that need new flooring, but it depends on the feel for your area.


For some reason, a lot of buyers simply can’t look beyond paint color. The good news is, paint is an easy upgrade for any flipper and one that really does make a difference. Choose a light and bright, neutral paint color. Right now grey and greiges are very popular and look good in a number of homes. Don’t get too bold with the paint colors, but something clean and nice will really go a long way in upgrading the look of your home and the first impression that buyers have.

Keep these tips in mind before you choose which upgrades you make to your property so you can make the most of your fix and flip.

Flipping and fixing houses can be a great way for any person to make money. It can also be a great way for someone to lose money if they aren’t careful. This is why budgeting is so important when you are planning on fixing and flipping homes. As every home flipper knows, every cent counts with these types of projects, and you need to know where your money is going and whether or not you are staying on track with your expenses. However, it can sometimes be more complicated than it seems to keep track of these expenses.

The good news is, the right tools and apps can help you budget and stay on track with your expenses.

Here are a few programs to consider.

Expensify- This is a really popular app for flippers and real estate investors and it was designed for those who are on-the-go and spending money while they do. You can actually take photos of receipts and track your time spent and how far you drive and create printable reports that you or other people can share with the team. This is great for those who are flipping on a team.

Yodlee- This app is filled with tools that will help make sure you know where all of your money is going. There are even tools that can help you get ready for your next flip or investment. Simply put, it is like your own personal accountant, right from your phone. It is great for people who have lots of fix and flips in the works.

Budget Boss- This is a great app if you are spending a lot on your fix and flips. It will help predict your spending over time and it will help you make a budget (and stick to that budget) so you can stay on track with your expenses.

OneReceipt- As the name suggests, this app is designed to keep track of everything for IRS purposes and puts it into one convenient, easy, spreadsheet or report. Trust us, you will love this program when tax season rolls around.

The more organized you are when managing a fix and flip property, the better off you will be. Managing your expenses along every step of the way will help you make sure that you aren’t overspending and you are staying within the budget you set for yourself. So, in the end, you can make sure you are getting the most profit possible once you sell.

The HardMoneyHome.com Volunteerism and Entrepreneurship Scholarship winner for Spring 2019 has been chosen. Diana El-Koubysi, who is attending Kansas State University, will receive a $1,000 scholarship for her volunteer experience and passion for entrepreneurship.

Diana first started volunteering in middle school through her district’s volunteer program.  She continued to volunteer throughout high school as well.  In college, she was able to volunteer for organizations that she was especially passionate about.  One of these organizations is Girls on the Run.  She spends 4 hours each week helping the girls build confidence, have healthy friendships and deal with their emotions.  Diana loves getting to know the girls and watching them during their end-of-the-year 5k run.  She is also part of the Society of Women in Engineering, where she is a mentor for girls and teaches them what it’s like to be a woman in STEM.  She has also recently become part of an organization called School of Hope, where she spends an hour a week helping a child become a better reader.  Diana has learned through volunteering that “people can have really different lives, even though they’re from the same vicinity.”  She’s also learned a lot about herself and her passions.  Diana now knows that she loves to help kids achieve their goals and become successful.

Diana’s father owns his own business and while growing up Diana always thought it was very commendable that he is an entrepreneur.  This is where her passion for entrepreneurship started.  Diana started a t-shirt business with her teacher in high school and loved learning about starting a new business and experiencing the process.  Her school was so impressed that they put it into a curriculum and started a new class so other kids can take the class and learn what it’s like to run a successful business.  Diana wants to most likely start a non-profit or her own business after college graduation.  She is majoring in Industrial Engineering with a minor in Business.  Congratulations, Diana!

See Diana’s full scholarship submission video below.