Page 30 - From Ghetto to Gucci: The Basic Principles of Flipping Houses

What the hard money lenders are looking for is a quick flip. Hard money lenders usually charge
an origination fee that is one third of their interest rate, so the more flips they can loan to in a
year, the better their rate of return. The quick flip is sure to pique their interest more so than the
longer drawn-out flip.

If you’ve intrigued the lender, congratulations! That’s the first step. However, as long as you’re
flipping, you’ll need to keep in the good graces of the hard money lenders. Without hard money
lenders, your flipping operation can easily fall apart, so make sure that they’re happy with your
flips! You can make them happy in the same way you make yourself happy: by providing many
quick flips, and not making a big deal of any of the loan terms.

This last point is very important. If a hard money lender agrees to lend you money, you need to
bother him the least that you possibly can. Only if something is obviously wrong should you
bother them about any detail in their deed of trust or promissory note. And if any detail is wrong,
never correct it yourself! Always ask them to correct. There’s no surer way to never get a hard
money loan again than to edit their deed of trust or promissory note.

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