Hard Money / Bridge Loan
Will the fix-and-flip 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
project cost not covered by loan
Points (upfront)
$4,500
2% of loan
Total interest over hold
$16,500
$2,063/mo for 8 mo (full loan from day 1)
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 are 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.
Flips that take longer than planned eat profits fast at hard-money rates. Delay is the biggest risk in flipping. If the hold runs past the loan term, extension fees and any rate step-up aren’t modeled.
This calculator charges interest on the full loan from day 1, which is conservative. Many lenders hold the rehab portion in escrow and charge interest only on draws as they’re released, so your interest may be lower. Check your term sheet.
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). Dealer profits are also subject to 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.