Hard Money / Bridge Loan
Will the fix-and-flip actually pencil?
Estimated profit
$52,800
$350,000 sale − $21,000 sale costs (6%) − $225,000 loan payoff − $25,000 cash invested − $26,200 carry (points, interest, holding) = $52,800. Cash-on-cash return: 103.1%
Max loan
$225,000
LTC binding (90% of cost)
Cash required
$25,000
down + reserves
Points (upfront)
$4,500
2% of loan
Total interest over hold
$16,500
$2,063/mo for 8 mo
Holding costs
$5,200
$650/mo × 8 mo (taxes, ins, utilities)
Total carry cost
$26,200
points + interest + holding (10.5% of project)
Estimated profit
$52,800
103.1% cash-on-cash
What this calc doesn’t model
Sale-side costs: default 6% covers post-NAR-settlement listing commission + buyer-agent contribution if you're offering one + closing fees. Vary by state and how you negotiate buyer-agent comp.
Rehab overruns: almost universal. Plan for 10-20% over budget. The 70% rule (don’t pay more than 70% of ARV minus rehab) builds margin for surprises.
Time risk: flips that take longer than planned eat profits fast at hard-money rates. The single biggest risk factor in flipping.
Tax treatment: flip profits are usually short-term cap gains (ordinary income rates) for non-dealers, or ordinary income for dealers (if you flip regularly). Net of self-employment tax.
Hard money is for experienced operators who know their market and have a clear exit (sell or refi to long-term). For first-timers, consider partnering with someone who’s done it before.