Transcript: I’m Corey Dutton. I’m a private money lender and today I’m going to talk to you about 3 ways to maximize your profit on a fix and flip with a hard money loan.
1. Bring in more money as a down payment
The bigger the down payment the lower the interest rate and the points. If you bring in a larger down payment you will maximize your profit on a fix and flip using a hard money loan.
2. Resell the property as fast as possible!
First of all, you need to understand how hard money interest rates work. If you have a hard money loan at 12 percent annual interest, that’s 1 percent interest per month, and you pay as you go. So if you hold the property for 4 months, you pay 4 percent in interest. If you hold the property for 6 months you pay 6 percent in interest.
The faster you sell the property and pay off the hard money loan, the more you’ll maximize your profit on a fix and flip using a hard money loan.
3. Look out for “junk fees” and hidden fees that may be charged by your hard money lender.
Besides points that you’re going to pay as part of your loan fees, there are also “junk fees” associated with some hard money loans. Make sure you have a full list of all of the junk fees that are involved in your hard money loan. Also, read your loan documents. If you miss a payment, what is the default interest? If you are late on a payment, what is the late payment charge? Make sure you understand all the fees and hidden costs in your hard money loan before you sign on the dotted line. This will help maximize your profit.
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