If you want to simplify hard money and almost guarantee that every deal you bring in will get funded, ask yourself this one question:

“If I were the lender, would I lend money on this deal?”

If you look at a deal and critically think whether or not you would accrue the risk involved, you can better understand if it’s worth lending on said deal.

Now, that might seem too simple, and if you don’t understand how funding works, the question isn’t going to do you any good. But, if you understand how to make sense of the numbers, and if you know what constitutes a good deal, then you’re more likely to make sense of why a deal isn’t getting approved.

Don’t get disillusioned by lending. Understand the makeup of a deal worth lending on.

That being said, let’s help you identify what constitutes a good deal.

First, you want to have a deal that is HIGH YIELD and LOW RISK.

How do you calculate this?

You need several numbers in front of you; the purchase price, the estimated repair costs, the ARV (after repair value) and the maximum percentage of the ARV a lender will give you for the project. This could be 55%, 65%, or other. So, if you have found a house that has an ARV of $100,000 and the purchase price is $70,000, that’s 70% of the ARV and you aren’t going to get a loan to cover the full amount let alone the repair costs. 70 cents on the dollar looks like a good deal until you factor in repair and holding costs.

Start with the final selling price and work backward to deduct the selling cost, profit margin, renovation cost, and buying costs. Don’t forget to factor in holding costs and margin for error. You figure out your MAO (maximum allowed offer) by first determining the ARV of a house.

Though you don’t need a background in real estate to flip a house, you do need to make sure that the time and money you are investing (whether the money is yours or a lender’s like at Cogo Capital) is well spent and maximized.

Fix and flip education teaches you:

  • How to find funding
  • How to find, negotiate and close a great deal
  • Which materials are trending
  • Which high price items are worth the investment
  • Which materials can be low-cost
  • How to hire contractors for the lowest cost
  • How to manage contractors to meet timelines
  • How to market your property
  • How to yield the highest profit
  • And much more

Essentially, getting an education in the field minimizes your risk and maximizes your profit potential. You’ll go into the industry confident and knowing what to do, when to do it, and why.

If you’re interested in getting started, be sure to check out the Cogo Capital Funded “FUNDING TOUR.” Click Here for more information and to see if we’re coming to a city near you!

Whats It Worth - Cogo capitalTo learn more

about determining the 

VALUE of a Property, CLICK HERE

Hard money works like this; say you need $100,000 for 6-12 months for the residential housing market (or 18-36 months, as commonly found in the commercial sector). A lender could charge you 5 points, which is $5,000, and you’ll also pay interest monthly.

$100,000 @ 5 points ($5,000) + 15% interest payment is going to run you $20k (I’m using simple, noncompounded numbers here for this example). That’s $20,000 spent for the $100,000 over the duration of the loan.

So, when is it a good time to borrow hard money? When it’s a good deal. If that $100,000 means you can fix that property up with a net of $50,000 made, then if you have to spend $20,000 to make $30,000, that’s a great deal!

Expect From The Loan Process - Cogo CapitalIf you want to

learn more about what to

Expect from the Loan Process, CLICK HERE.

Remember, my fiduciary obligation to our lenders is to assure their money is going into good investments, but my fiduciary duty to YOU is to make sure you aren’t getting over your head on a bad deal.

If you’re hearing “NO” from us or any other lender out there, it’s because your deal is too risky. Not getting a deal funded that you’ve worked hard to get under contract sucks; I get it. But you know what’s worse? Losing money on a deal because someone lent you money on a deal that didn’t have the makeup to be a success.

To Your Success;

Lee A. Arnold


The Lee Arnold System of Real Estate Investing

Follow me on Twitter: @CogoCapital  and @LeeArnoldSystem 

Have a deal under contract that you would like a quote on? Let us know. You can fill out a quick questionnaire at CogoCapital.com to receive a rate quote via email or you can call us anytime at (800) 747-1104 to talk to a loan officer. With millions deployed and millions to deploy, we want you to get the capital you need for your real estate investing.

When you come to Cogo Capital® looking for a private money loan on a property under contract, we’ll assure you have quick turnaround, excellent terms, and millions to lend. Cogo Capital® serves both local and national real estate investors, real estate agents, and private money lenders in quality, multiple loans.