How to Flip Houses when You Know a Hard Money Lender

So you’re a real estate investor, you know how to flip houses, and you know a hard money lender who is ready and very willing to finance deals. Thing is you just don’t know how to fit him into the picture. He seems out of place – at least at first. Truth is, he can fit in the picture whether you’re wholesaling houses or rehabbing them – the two famous forms of flipping. Here’s how.

For those who are rehabbing houses, the hard money lender is obviously easy to place in the equation. What you do now is go on with your business routine: find a cheap house that needs repairs and ask the lender if he can finance your project. If the deal is tempting enough, the creditor will surely fund your rehab. You have better chances of getting the financing you need because you know the lender. In hard money financing, trust plays a crucial part. If the lender trusts you and believes in your ability to rake in profits from the flipping houses deal in hand, you will get the loan.

To impress the lender, you must do your due diligence. Make sure he sees that you really know how to flip houses. Make your own comps, or comparable market analysis, on the property. Make the creditor’s life easier by providing him with comparable properties so when he performs his own comps, he’ll find the job easier.

For those who are wholesaling houses, the lender might be out of place. But actually he isn’t. If you know a lender, what you can do is to refer him to your prospective buyers or refer the buyers to him. In wholesaling, your usual clients will be rehabbers and other investors. These people will need money to purchase the property you are selling. Make their life easier by referring the lender you know. Before doing this though, ask the lender if you can get a small referral fee for every deal you bring to his table.

In short, you play the role of the bridge. You let the buyer and the lender meet and take home a small amount for doing so. If you know how to flip houses, you must also know how to make money various phases of the deal, from the lead to the actual closing. This way, you get to earn money with referrals and convince the buyer to proceed with the purchase since financing will not be a problem.

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