Understanding Hard Money Loans
A hard money loan is short term property financing. It is often used by investors, flippers, and builders. The lender focuses on collateral strength, exit plan, and borrower cash. Rates are usually higher than bank loans. Terms are shorter too. That makes cost control very important.
Why This Calculator Helps
This calculator estimates the main numbers before a deal begins. It combines purchase funding, repair funding, points, fees, interest, reserves, and selling costs. It also displays loan to value, loan to cost, and after repair value exposure. These ratios help investors judge lender risk and project leverage.
Key Inputs To Review
Start with the purchase price and after repair value. Then enter the repair budget. Add the percent of purchase price funded by the lender. Add the percent of repairs financed. Enter the annual rate, loan term, points, and closing fees. The tool can estimate an interest only payment, which is common for hard money loans. It can also show an amortized payment when needed.
Reading The Results
The monthly payment shows the expected debt service. Total interest estimates the carrying cost for the selected term. Cash to close includes down payment, unfunded repairs, upfront points, fees, and any interest reserve. Total financing cost combines interest, points, lender fees, servicing charges, and exit fees. Estimated profit compares the sale price against purchase cost, repairs, financing cost, and selling costs.
Using Results Wisely
Good analysis also separates profit from cash flow. Profit measures the whole project. Cash invested measures money tied up before closing. A strong deal should show margin, a clear exit, and enough reserve for delays. Compare several offers, because points and small fees can change returns quickly. This supports better offers, safer draw planning, and stronger talks with sellers and lenders today.
Use the output before making an offer. A profitable deal on paper can fail when points, reserves, and resale costs are ignored. Try conservative values. Raise repair costs. Lower the exit sale price. Increase the holding period. These stress tests show whether the deal still works. The calculator is an estimate. Real lender terms, draw schedules, default interest, extensions, and local closing charges can change final numbers. Review all documents before signing.