The Financial Side of Fix and Flip

By s98support | August 21, 2019
“Flipping” real estate has come into the popular lexicon due to reality television shows and investment seminars that make the process seem simple and easy. While it is possible to build a business out of fixing and flipping real estate, it does require an understanding of the financial side of these transactions. Because they approve loans more quickly and without the red tape required of banks and mortgage companies, private money lenders (or hard money lenders) are often the lender of choice by fix and flip buyers. Originating in the 1950s, the term “hard money loan” refers to a loan that is based on property assets, not credit. Specifically, by lending on investment property rather than owner-occupied property, hard money lenders fall outside the mortgage laws and, thus, have more flexibility in how, and to whom, they issue hard money loans. This does not mean that hard money loans are freely given. Hard money lenders are businesses and, as such, require information from borrowers to ensure that their hard money loan represents a sound investment in the fix and flip project. Here are four numbers that will likely be considered before a hard money loan is issued:

Purchase Price

This is the acquisition value of the property. This is not necessarily the listing price if the buyer is able to negotiate a lower price with the seller. When negotiating the final purchase price of the property, buyers should keep in mind that most hard money lenders structure their fees differently from conventional mortgage lenders. Buyers may find it beneficial to speak to hard money lenders first to ensure that they have assets to cover the down payment (discussed next) as well as the fees needed to obtain the hard money loan.

Down Payment

As the saying goes, “there ain’t no such thing as a free lunch.” A key part of the real estate bubble that burst in 2008 was over-leveraging. Entire books have been written on how “no money down” housing loans created an environment where sellers, buyers, and lenders had incentives to act recklessly. But the result is that responsible lenders now expect borrowers to have a combination of good credit, assets, and a down payment. The reason for this is simple – when borrowers bear some of the risk, they have incentives to complete the renovations and flip the renovated property at a profit. In the case of a hard money loan, the loan is based on the property rather than the borrower. That is, the borrower’s credit history is typically not considered by hard money lenders. Rather, the asset, namely the property being purchased, and the down payment are the sole, or primary, considerations. The amount of a hard money loan on fix and flip projects is typically calculated as a percentage of the after repair value (or ARV) of the property. The formula for ARV is discussed below. For purposes of the down payment, however, if a hard money lender approves a loan for 60% of the ARV, the borrower will likely need to come up with at least some money for the renovations and down payment on the property.

Current Value

ARV is the sum of the current value and the value of the renovations. The current value of a property is the value in its current state before renovations. While this may be the purchase price in some cases, it is not necessarily always the purchase price. When a property can be purchased at a discount, such as a short sale, foreclosure auction, or another distressed sale, the current value may be higher than the purchase price.

Value of Renovations

This is the driving force behind fixing and flipping rather than just flipping. If a property can be sold at a profit without renovations, it would merely be flipped. However, if renovations would add substantial value to a property, profit can be maximized by fixing it before flipping. The value of the renovations is often difficult to calculate, but should at least exceed the cost of the renovations to make a profit. In sum, the current value and the value of the renovations, along with the purchase price and the down payment, will often be the key factors in qualifying for a hard money loan.

4 Steps To Flipping Property Successfully

By s98support | July 16, 2019

Fixing and flipping property is a great opportunity to make money in an exciting, fulfilling venture. But you need to follow some basic rules to make that venture successful, otherwise, you’ll see your investment flop. Follow these simple guidelines to make the most of your fix and flip investment property.

1. Know How Much You Can Afford

Flipping property isn’t an inexpensive gig. It requires a lot of capital, and knowing how much you can afford for property and repairs is critical to a successful fix and flip. You may also want to start looking at financing options at this point because some financing solutions, like a private mortgage, won’t cover the full value of the property you want to invest in. It can seem like a chicken and the egg situation; you need to know how much money you have to spend but you also need to know what your options are. Contact a hard money lender to find out what your options are and how they can help you make a decision.

2. Find A Financing Solution

There are several different financing solutions available to fix and flip a property, but which one is right for you will depend on what you need and what you’re trying to do. The most common types of financing solutions include:

  • Private Mortgage
  • Hard Money Loans
  • Fix and Flip Rehab Loans
  • Commercial Real Estate Loans
  • Investment Property Loans
  • Construction Loans

Are you ready to invest? Contact GW Private Capital today.

private loans

Do You Need a Hard Money Loan or a Private Loan?

By GW Private Capital | July 11, 2019

If you’re looking to purchase a piece of real estate but need a loan to do so, you might have some questions about which financial route you should take. After all, there’s not just one kind of loan to choose from. Better yet, each kind of loan has its own pros and cons.

The main two loan categories to consider are hard money loans and private loans. They have the same purpose, but they work in different ways, making them useful in a variety of situations.

What Is a Hard Money Loan?

Hard loans come from loan companies that have set terms for their loans, making it somewhat like a bank. There are criteria you must meet and rules you must follow in order to obtain and successfully pay back these types of loans. However, they may not always be as strict with their criteria as a bank would be.

These loans are generally short term and are usually paid back within 24 months. They’re also only available for non-owner occupied properties which makes it a popular option among home flippers. They are based more on property assets than credit history, which can be useful for someone who has been turned down by a bank due to poor credit in the past.

What are Private Loans?

Private loans are another flexible option for loan-seekers. This is because they come from a private citizen or company rather than a bank. In this case, you don’t have to follow the strict rules set by banks or loan companies. It could come from a friend, someone in your family, or just someone in your community who wants to invest in your project. There may be more room for negotiation in this situation and it’s ideal for someone with low credit or who might need a little wiggle room with their payments in the future. However, it also depends on finding a private loaner who is willing to back you.

Which Should You Choose?

There really isn’t a single answer to this question. Realistically, you could go either way assuming that both options are available to you. Not everyone has the option for private money loans and may need to rely on a hard money loan company for help. Both choices can help to avoid a bank if you are struggling with your credit, although a private loan might offer you more flexibility. The best thing you can do is look at what options are available to you and find out what will be easier to manage with your financial situation.

For more information on private loans and hard money loans, rely on GW Private Capital.

Private Money Lending: What It Is and How It Works

By GW Private Capital | July 8, 2019
private money lenders for real estate

Across America in 2017, only 40% of business owners applied for a loan. This number is down from the previous year when an estimated 45% applied for a loan. This information from the Federal Reserve shows that fewer are applying for the loans their company needs, however, loan programs have proven to be a good option for many. Private money lenders and hard money lenders in Los Angeles and beyond work each day to help American investors and business leaders choose loan options that are right for them.

Here are some of the most common forms of loans and why your business can benefit from private money lenders.

The Types of Real Estate Loans

Hard money loans and private money loans are the primary types of real estate loans you can choose among. Neither of these two forms is directly associated with loan programs provided by the bank and other mainstream sources. Rather, you need to work with a quality private capital service provider to receive a loan that works for you. They’re known as real estate loans because the loan provider relies on a piece of real estate or other property to serve as collateral should you be unable to pay back the loan. More often than not, the loan is used to purchase a piece of property in the first place, making it a savvy investment for house flippers and other real estate investors.

However, these two types of loans are quite different. As a savvy investor, it is important to be informed regarding the types of lenders available in the California area before making the right decision for your business.

Hard Money Loans

Investors for real estate often use hard money loans when time or other reasons disallow other forms of loans to happen. More often than not, a bank or credit union requests long-term payments over the course of a few years. Hard money loans, on the other hand, are designed to be paid back quickly.

This type of loan is favorable for many business owners since they’re often a lot less strict regarding credit history. Because they don’t rely on stringent loan standards, like banks, hard money loans rely on the loan being paid back quickly, typically between six and 24 months. For house flippers, this often the length of the entire project, from purchase to selling the fixed-up abode. These types of loans are interest based and often deal with properties that are non-owner occupied.

Private Money Loans

Private money lenders for real estate is another form of loan program you can choose from. These type of loans come from a private investor. Having a strong investor network is crucial when it comes to private money lenders for real estate because unlike hard money loans, this type has a lot to do with making strong and trusted connections. In order to achieve this loan, it is good to make bonds with people that are both in and out of the industry dealing with real estate. The reason for this is simple: investors. After all, there a number of people who don’t want to put in the hard work but may be interested in investing in your project. Private money lenders for real estate may seem difficult to find, but with the right methods of connecting with others, it could be as easy as knowing a neighbor or friend who wants to jump into the world of private money lenders. Relying on accredited investors and hard money lenders, however, assures a business owner that they’re able to achieve their goals by a reliable third party.

When you feel private money lenders for real estate or hard money loans are right for you, it is important to know as much as you can regarding these types of loans. For more information, rely on the experts at GW Private Capital today.

How Do Private Mortgage (Hard Money) Lenders Differ?

By Jay Green | June 13, 2019

You may think that all private mortgage (hard money) lenders are the same, but they as similar as comparing one restaurant to another.  

There are two primary factors that make private mortgage lenders different from one another.  The first difference is the types of loans they arrange and the second is whether they are a direct lender or a mortgage broker.  Some private lenders only lend on residential properties, where some lend on all types of properties, including apartments, office buildings, land, mixed-use, and other property types.  

The secondary reasons that differentiate private mortgage lenders are their funding and capital capabilities.   Are they a direct lender or a mortgage broker?   It is important to know where the actual funds are coming from and can the lender or broker fulfill their loan commitment and actually fund the loan.     Some private mortgage lenders have their own funds and or may manage a mortgage pool.  Other private lenders may only be brokers, which is not always bad, and will need to locate the lending source outside their office and internal capital resources.   

GW Private Capital arranges every loan with its own capital or with the funds from friends, family, and small boutique mortgage funds.

Another way in which private mortgage lenders are different is the minimum loan amounts they arrange.  Most private mortgage lenders have a minimum loan size, this may be $100,000 or it may be $250,000, this is set by each individual lender.   Every private mortgage lender usually has a maximum loan that they will arrange, $500,000 or $10,000,000.  Each lender will establish their own maximum limits.  

GW Private Capital, Inc. arranges loans as small as $30,000.  

Private mortgage lenders also differ in the lien position that they arrange.  Some only arrange 1st position mortgages, where some may arrange both 1st and 2nd mortgages.  

GW Private Capital Inc. arranges 1st and 2nd mortgages and in rare instances will also arrange 3rd position loans.

Not all private mortgage lenders arrange loans in all 50 US States, most lend only in one state or just a few.  Furthermore, many private lenders only lend in regions within a particular state. Some lenders may be licensed to lend in the entire State of California but may only lend in the Southern or Northern areas within the state.  Most private mortgage lenders will also only lend in certain counties and cities that they are comfortable lending within.  The majority of private lenders will only lend in major cities with higher populations and may stay out of areas that are in outlier areas, or rural communities.

Private mortgage lenders also differ based on the types of loans they arrange, consumer versus non-consumer loans.    Most private mortgage lenders will only arrange loans where the funds are for business or investment purposes.  Also, most private mortgage lenders will not lend on properties that are owner-occupied or where the purpose of the funds are being used for a consumer purpose.  A consumer purpose is where the funds will be used for their personal use, such as to buy a home to be their primary dwelling.  A consumer purpose could also be paying a credit card, paying an automobile loan, paying a student loan or to paying for a wedding.   

The reason that most private mortgage lenders do not arrange consumer purpose loans is because of the legal compliance requirements for arranging consumer loans is much more stringent and tightly regulated than for arranging non-consumer purpose loans.  All private mortgage lenders who wish to arrange consumer purpose loans are required to have additional licenses and comply with all state and federal lending laws and guidelines.     Most private lenders do not want to have to meet these requirements and subject themselves to the possibility of being penalized for violating these laws.  

After the recent mortgage and real estate market crash of 2009, all states and federal agencies created new and strict lending laws that were designed to protect consumers.  With the passing of these laws, they restricted the supply of private mortgages.  The regulations and laws that private mortgage lenders must now comply with are arduous and difficult.  Most private mortgage lenders have decided to not lend on owner-occupied properties and do not arrange consumer loans.  Most will only arrange loans for rentals and non-owner occupied and commercial properties.    

GW Private Capital, Inc does arrange consumer purpose loans, however, on a case-by-case basis.  We will arrange loans on owner-occupied properties where the purpose of the loan proceeds will be used for business, investment or a non-consumer purpose.  

Most private mortgage lenders will arrange purchase loans and refinances.  What makes each private mortgage lender different is their own unique lending guidelines and requirements.  Some private lenders may require a minimum borrower credit score and some may not care if a borrower has poor credit.  One private mortgage lender may be an expert at arranging loans for fix and flip investments, and will only require a small down payment from the buyer, investor.  Understanding these important differences is what make each private mortgage lender unique and different from the next.  

To learn more about Private Hard Money Loans, please contact Jay Green at
(714) 747-1912 or email him at

private money lenders

Things to Know before Taking a Hard Money Loan

By GW Private Capital | June 10, 2019

Getting a bank loan today has become hard, especially if you have bad credit. Yes, you might get the loan, but the deal will not be as good. At the end of the day, you might find that you owe more in high-interest rates or have to pay a higher premium. This might cause you to pay almost double the amount of money you borrowed in the first place, especially if you took out a mortgage. Meanwhile, business loans come with loads of pressure and often have a higher price tag.

It’s no surprise that fewer people today are taking business loans out from banks. This isn’t surprising given that some studies have shown that American households owed $9.12 trillion in mortgage debt as of 2019. According to a Federal Reserve Survey, in 2017, only 40% of American business owners applied for a loan, down by almost 5% from the year before. Hard money loans from private money lenders have become an increasingly viable option if you need quick and cash.

What is a hard money loan?

So, what exactly is a private money loan or hard money loan? A hard money loan is a loan given by a private investor or a private company that is often secured by a property. Instead of looking at your credit score, private money lenders look at the value of your property or business. There is no standard interest rate for a private money loan. The interest rates depend on the hard money lender that you choose. Private loans are quick and are given for a short period of time, typically ranging between 6-24 months. This period can be extended depending on the agreement between you and the lender.

What types of properties do private money lenders accept?

Some private money lenders for real estate are selective about the type of property you can put down as collateral. Some prefer residential properties while some are more open-minded. Others might even be willing to accept a motorcycle as collateral. The best method is to be direct and ask the kind of property the lender prefers.

Are private loans the best choice?

Only take a private loan if you are sure you are going to pay it back quickly. Dragging it over time might end up costing more depending on the amount you took and the interest rates. Hard money loans are typical among property flippers who work within a short time frame. This is what makes private money lenders for real estate so popular.

If you choose to borrow from a hard money lender, put the following factors into consideration.

How to choose a great hard money lender

  • Experience and credibility: Make sure that the private money lender of your choice has a good track record and years of experience.
  • Payment flexibility: Although private loans are for a short time, make sure that you can get a proper payment plan.
  • Interest rates: What the loan will do for you should be worth the interest. Avoid suffering a loss by carefully analyzing your finances and planning how you will use them. Also, do your research and get a money lender with manageable interest rates.

When you’re looking for the best private money lenders around, rely on the experience of GW Private Capital to transform your life.


By Jay Green | July 22, 2017

With over 25 years of private mortgage “Hard Money” loan origination experience, I believe I am well qualified to answer this question. The terms Private Money and Hard Money are synonymous and there is no difference between the two. The term Private Money has become more widely used over the last 20 years. I think private lenders and industry professionals were trying to create a new term that sounded friendlier and less threatening to borrowers than “Hard Money”. Call these loans what you wish, Private Money Mortgages, Hard Money Loans or Private Hard Money Loans, they mean the same thing.

Private Money Loans Are Mortgages Funded With Private Investor Capital

The term Hard Money has been terms used for many decades and originated in the 1950’s. Private “Hard Money” Loans are mortgages that are funded by private individuals investors. Private Money Loans are mortgages that are based primarily on the asset or property and not on the borrower’s credit. Hard Money Loans have higher interest rates and the loan origination fees than traditional mortgages. Traditional mortgage lenders look at the property and the borrower.

Why Do Borrowers Borrower Hard Money Loans?

Borrowers chose private money loans over traditional mortgages for several reasons. Sometimes a borrower cannot qualify for a traditional mortgage because of his credit or he may not be able to show sufficient income, such as showing a large enough adjusted gross income on her tax returns. Time is also a big factor in deciding between a private money and a bank loan. Private lenders can fund and close loans in days, where traditional lenders take weeks. The condition of the property is also another factor why private money is the only financing option. Fix and Flip properties “fixers” typically do not meet the standards of traditional lenders.

Where Does One Find A Private Money Lender?

If you are a borrower who is looking for a private hard money lender, you can use the internet a do a Google search for Private Hard Money Lenders. I would include the county or geographic are that you where your property is located to find the best private lender for your unique needs.

I have been arranging private hard money loans for over 25 years and my company GW Private Capital, Inc, located in Whittier, California can assist you with most private money loan products. Contact us at (562) 789-1000.

To learn more about Private Hard Money Loans, please contact Jay Green at
(714) 747-1912 or email him


By Jay Green | July 20, 2017

One of the questions that people often ask me is how does one find a good property in Southern California to “flip”? There are actually about 60 specific ways to locate a property that can be purchased, rehabbed (repaired) and resold for a profit – “flipped”.

As a full-time investor “flipper” I have flipped hundreds of homes and over the last 8 years nearly 100 properties. The primary way that I find my “flip” properties, and what I recommend to new or seasoned real estate investors, is to network with as many local Southern California Realtors as possible.

Network With As Many Local Realtors As Possible!

Don’t just meet one or 10 Realtors, but I mean meet and have hundreds of Realtors help you find the perfect deal! That sounds difficult, but it is not. There are thousands of licensed practicing Realtors in Southern California who interact and talk with thousands of homeowners each day about buying and selling real estate. Realtors are your property finders and if you treat them with respect and impress upon that you are worth working with, they will bring you deals.

Why Would A Realtor Help You Find a Good Deal?

Realtors want to work with buyers and sellers and they also want and should be working with a few experienced investors “cash buyers”. You want to be one of the investors that they keep in the front of their mind when a good deal comes their way. If you present yourself like a pro and eventually become a pro, they will call you when that good deal comes their way.

How Do You Present Yourself Like a Professional Investor!

You have to start somewhere. Every investor started as a “newbie” and that’s okay! The way you present yourself like a seasoned real estate investor is to become confident and knowledgable about as much as you can about “flipping” properties. To be more specific, be ready to purchase a home when a deal is presented to you by one of your Realtors. Have your proof of funds (POF), your buying entity, a corporation or an LLC, and know where to find your lending sources, such as a reliable private hard money lender, before you look at any property or make an offer. Also, find your contractors and handymen and go and look at some of jobs and inspect their work.

What Types Of Properties Should I Be Expecting From My Realtors?

What you should be looking for are “off-market” deals. What this means are properties that are not listed on the (mls) multiple listing service. In this market, the competition is so fierce that deals that are on the mls are not going to be good deals and are not deals that you should waste your time pursuing or inspecting. MLS deals are being watched and hunted by the masses and thousands of investors. People will over pay for these properties and they will pay the prices that I won’t pay and you shouldn’t either! You want Realtors to call you when they have a property that has not hit the market and has not been shopped around. You want to become the special investor who one of your Realtors call to come look at the deal before anyone else. If you follow my advice in upcoming articles, you can learn how to become a professional real estate investor!

To learn more about how to locate
Southern California “flip” properties, contact
Jay Green at
(714) 747-1912 or email him