What Real Estate Flippers Need to Know Before Borrowing
Flipping real estate can be highly profitable, but success often hinges on access to the right kind of financing. Many rehabbers turn to private or hard money loans to secure quick capital for acquisitions and renovations. While these loans can unlock opportunities, not every borrower approaches them with the right knowledge.
At VenusVenture.us, we’re building our lending strategy to serve both investors and real estate entrepreneurs, and we know that preparation is key. Here’s what every real estate flipper should understand before borrowing.
1. Know Your Numbers Inside and Out
Lenders look beyond enthusiasm—they want hard numbers. Before borrowing, be sure you have:
- A clear purchase price
- A detailed rehab budget
- An accurate After Repair Value (ARV)
- A realistic timeline for sale
Flippers who can present these figures with confidence tend to secure better loan terms.
2. Loan-to-Value (LTV) is Everything
Most private lenders won’t finance 100% of your deal. Instead, they use Loan-to-Value (LTV) ratios to protect both you and their investors. For example, loans may be capped at 65–70% of ARV. Understanding this upfront helps you plan how much of your own capital you’ll need to contribute.
3. Speed Matters, But So Does Preparation
One of the biggest advantages of hard money lending is speed. While banks may take months, private lenders can move in days. But the borrower’s readiness is just as important. Having your documents, contractor estimates, and exit plan ready can make all the difference in getting funded quickly.
4. Interest Rates Are Higher—And That’s Okay
Compared to traditional bank loans, private lending comes with higher interest rates. Don’t let this discourage you. These loans are designed to be short-term and transaction-driven. As long as your deal has strong margins, the cost of capital is just another line item in your budget.
5. Exit Strategy is Non-Negotiable
Every lender will ask: “How will you pay us back?”
Common exits include:
- Selling the property post-renovation
- Refinancing into long-term conventional debt
- Using cash flow from another project
Without a clear exit plan, getting approved becomes very unlikely.
6. Reputation Matters
Even in private lending, relationships are everything. Borrowers who communicate well, meet deadlines, and repay on time build credibility. That credibility can unlock faster funding, larger loans, and better terms in the future.
7. Protecting Capital Protects Everyone
Borrowers sometimes view underwriting requirements as roadblocks, but they exist for a reason. Conservative loan structures protect not only investors but also borrowers from overextending themselves. Deals with too much leverage often end badly.
Final Thoughts
For real estate flippers, borrowing smart is just as important as finding the right property. By understanding LTV, preparing strong numbers, and having a clear exit plan, rehabbers can unlock opportunities that banks simply won’t touch.
At VenusVenture.us, our mission is to fund entrepreneurs with the speed and flexibility they need—while protecting capital and ensuring long-term success for everyone involved.