Читать книгу Flipping Houses For Dummies - Ralph R. Roberts - Страница 78

One of the big drawbacks to hard money loans is that they come up short — you may not get all the money you need to buy, hold, and fix the property. This is where gap loans come into play. With a gap loan, a private investor or partner puts up the rest of the money in exchange for a cut of the profits. The gap loan covers any remainder of the purchase price, all carrying costs (including payments to the hard money lender), and the costs of repairs and renovations.

The benefit of a gap loan is that you get to flip a property with zero out-of-pocket expenses. The drawback is that it costs you a significant chunk of any profit you earn.

To get gap lenders to partner with you, you need to convince them that your project will be profitable enough to generate a return on investment that’s significantly better than the percentage they can earn from a bank or from other investment options.