Fix and Flip 101: Funding Your First Deal With Hard Money
Banks are slow and picky. Hard money is neither. What it costs, how it works, and how to make the numbers work before you buy.
By Tyson E. Sam, Founder and Broker of Record · August 14, 2026 · 2 min read
If you have watched a flip show and thought "I could do that," the first wall you hit is usually money. Conventional lenders do not like distressed properties, tight timelines, or borrowers without a track record. Hard money lenders were built for exactly that.
What hard money actually is
A short-term loan, usually six to eighteen months, secured by the property itself rather than your personal financials. Lenders care mostly about the deal: the purchase price, the rehab budget, and the after-repair value (ARV). Approval can take days instead of weeks, and closings in two weeks are common.
The trade-off is cost. Expect a higher interest rate than a mortgage plus origination points. That is the price of speed and flexibility, and on a well-bought flip it is simply a line item.
The 70% rule
Before you fall in love with a property, run this: maximum purchase price = (ARV × 0.70) − rehab cost.
If a house will be worth $400,000 renovated and needs $60,000 of work, you should pay no more than $220,000. The 30% cushion covers your financing, holding costs, selling costs, and profit. Break the rule and the deal breaks you.
What lenders want to see
- A realistic rehab budget with contractor quotes, not guesses.
- Comparable sales that support your ARV.
- Some skin in the game, typically 10% to 20% of the purchase price.
- An exit plan: sell, or refinance into a long-term rental loan.
Where the deals are
Off-market properties, estate sales, pre-foreclosures, and tired landlords. In South Florida, the older housing stock in central Broward and northern Miami-Dade continues to offer the best spread between purchase price and ARV.
Learn it live
We run a free webinar that walks through exactly this process. Save your seat and bring your questions.