When real estate investors think of hard money loans, they often assume these loans only cover the purchase price of a property. While that’s the primary function, there’s more to the story. Depending on the deal structure and the lender’s terms, hard money loans can also help fund renovation costs and, in some cases, even closing costs. Understanding these options can help investors maximize leverage and scale their businesses faster.
Funding Renovation Costs
One of the biggest advantages of hard money loans is their ability to finance renovations. Many lenders, including Low Tide Private Lending, will fund a portion of your rehab budget based on the after-repair value (ARV) of the property. This allows investors to:
✅ Take on larger projects with less out-of-pocket cash
✅ Preserve liquidity for unexpected expenses
✅ Improve properties quickly and maximize resale value
By working with a lender who understands fix-and-flip strategies, you can ensure that your rehab budget aligns with the deal’s overall profitability.
Rolling in Closing Costs (When Margins Allow)
Closing costs—including lender fees, title insurance, and other transaction expenses—can add up quickly. Some hard money lenders may allow these costs to be rolled into the loan if the margins are there. That means if the deal has enough spread between the purchase price and ARV, the lender may structure the loan to cover some or all of the closing costs, reducing the amount of cash an investor needs upfront.
This can be particularly useful for:
✔️ Investors who want to preserve capital for renovations
✔️ Deals with strong profit potential but limited upfront liquidity
✔️ Scaling quickly by reinvesting funds into multiple projects
Understanding Loan-to-Value (LTV) and After-Repair Value (ARV)
To make the most of these financing options, it’s essential to understand how lenders determine loan amounts. Hard money loans are typically structured based on:
- Loan-to-Value (LTV): The loan amount as a percentage of the property’s current value.
- After-Repair Value (ARV): The estimated value of the property after renovations are complete.
A lender will analyze both figures to determine how much they’re willing to lend. Knowing these metrics can help you structure deals strategically and ensure you’re maximizing financing opportunities.
Work with a Lender Who Understands Your Strategy
Not all hard money lenders operate the same way. At Low Tide Private Lending, we work closely with investors to structure loans that make sense for each deal. Whether you’re funding renovations or looking for ways to minimize upfront costs, we’re here to help you navigate the process.
If you’re looking for fast, flexible funding for your next investment property, let’s talk! 1-844-LOW-TIDE