Hard Money Lender Example for Real Estate Investors

Last Updated: December 1, 2025

In the fast-paced world of real estate investing, particularly for those focused on fix and flip projects or the fix and rent BRRRR method, access to quick and flexible financing is essential. Traditional bank loans often fall short with their lengthy approval processes, stringent credit requirements, and aversion to distressed properties. This is where hard money lenders step in, providing asset-based loans secured by the property itself rather than the borrower's personal finances. For investors targeting 1-4 unit residential properties, such as single-family homes, duplexes, or small multifamily units, hard money loans offer the speed and leverage needed to capitalize on opportunities.

OfferMarket stands out as a reliable hard money lender in this space, specializing in loans for fix and flip and fix and rent strategies. OfferMarket's guidelines emphasize high loan-to-value ratios based on after-repair value, short terms with interest-only payments, and support for dual exit strategies, allowing investors to flip for quick profits or transition to long-term rentals. Loan amounts range from a minimum of $25,000 to $2,000,000, with terms of 12 to 24 months and no prepayment penalties. Interest accrues on disbursed funds for loans over $100,000, helping preserve cash flow during rehab. Origination fees are 1.5 to 2 points, with up to 100 percent of rehab costs covered through draw requests processed in as little as zero to two business days.

What makes OfferMarket particularly appealing is our tiered system based on investor experience, which unlocks better terms without requiring prior flips for entry-level borrowers. Tier 1 investors with no experience can still secure up to 70 percent loan-to-after-repair value, while seasoned Tier 5 investors access up to 75 percent. Properties must be non-owner-occupied 1-4 unit residential, with a minimum size of 700 square feet for single-family homes or 500 square feet per unit for multifamily. Geographic coverage spans most U.S. states, excluding a handful like Alaska and Hawaii.

This article dives into practical examples of hard money lending through OfferMarket, tailored for investors like you who are scaling portfolios with 1-4 unit deals. We will explore a purchase scenario for a classic fix and flip, a cash-out refinance to fuel portfolio expansion, a mid-construction refinance to handle unexpected delays, and the strategic value of streamlining into a DSCR refinance for BRRRR success. These scenarios draw directly from OfferMarket's guidelines, illustrating how to leverage their products for maximum returns while managing risks.

Understanding Hard Money Loans: The Foundation for Your Deals

Before jumping into examples, it is worth grounding ourselves in the basics of hard money lending as offered by providers like OfferMarket. Unlike conventional mortgages, hard money loans prioritize the property's potential value post-rehab over the borrower's debt-to-income ratio. This asset-based approach suits investors dealing with distressed or outdated 1-4 unit properties that banks might reject.

Key elements include loan-to-cost up to 90 percent for purchases and 100 percent for rehabs, with overall leverage capped at 75 percent of the after-repair value to ensure a safety margin. Borrowers need verifiable liquidity covering at least 25 percent of the rehab budget, plus a minimum down payment of $10,000 for smaller deals. Credit scores start at 660, but higher scores and experience tiers improve advances. Rehab scopes are categorized from light (under 25 percent of purchase price) to extensive (over 100 percent), with eligibility tightening for heavier rehabs in lower tiers.

For fix and flip investors, the focus is on achieving a minimum 30 percent return on investment and $15,000 profit, supported by projected gross margins. BRRRR practitioners benefit from rental projections requiring a 1.1 debt service coverage ratio post-repairs, enabling a seamless shift to long-term holds. Documentation is straightforward: purchase contracts, scopes of work, appraisals, and bank statements suffice, with closing in about 10 days.

These features make hard money ideal for time-sensitive opportunities, such as wholesaler deals where assignment fees up to 20 percent of the purchase price can be financed. Now, let us examine a straightforward purchase scenario to see this in action.

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Example 1: Purchase Scenario for a Fix and Flip Single-Family Home

Imagine you are a Tier 2 investor with one completed flip under your belt, eyeing a distressed single-family home in a suburban market like Atlanta, Georgia. The property, a 1,200-square-foot, three-bedroom ranch built in 1985, is listed at $150,000 through a wholesaler. It needs moderate cosmetic updates: new flooring, paint, kitchen cabinets, and minor plumbing fixes, totaling a $40,000 rehab budget. A quick appraisal pegs the after-repair value at $240,000, based on three recent comps of renovated homes selling for $200 per square foot.

Under OfferMarket's guidelines, this deal qualifies for a hard money purchase loan. As a Tier 2 borrower with a 720 credit score, you can advance up to 85 percent of the purchase price initially, or $127,500. The remaining 15 percent, or $22,500, comes from your pocket, meeting the $10,000 minimum down payment. For the rehab, OfferMarket covers 100 percent through construction holdbacks, adding $40,000 to the loan total of $167,500. This equates to 70 percent of the after-repair value ($167,500 divided by $240,000), well within the 75 percent cap.

The loan term is 12 months, interest-only at an estimated 10.25 percent, accruing on disbursed funds since the total exceeds $100,000. Origination fees of 1.75 points amount to about $2,931, financed into the loan. You submit the purchase contract, a detailed scope of work with contractor bids, and an interior appraisal dated within 120 days. Your LLC borrowing entity provides articles of incorporation and a W-9, backed by your personal guarantee.

Closing happens in eight days, with funds wired directly to escrow. You break ground immediately, drawing rehab funds via OfferMarket's app: after completing the flooring (30 percent done), you upload progress photos and request $12,000, incurring a $270 draw fee and $30 wire fee. Funds arrive the next business day, keeping your crew on schedule without tying up personal cash.

Three months in, the rehab wraps under budget at $38,000, thanks to negotiating bulk material discounts. You list the home at $245,000, accepting an offer at $242,000 after two weeks on market. Selling costs, including 6 percent commissions and closing fees, total $18,000. The balloon payment of $167,500 plus accrued interest (roughly $14,000) and fees leaves you with a gross profit of $42,500. After taxes and reserves, your net take-home is $32,000, a 19 percent return on your $62,500 total investment (down payment plus rehab overage).

This scenario highlights hard money's speed: without it, you might have missed the wholesaler's deadline or drained reserves on a slower bank loan. For fix and flip enthusiasts, OfferMarket's dual exit option shines; if market absorption slowed, you could pivot to renting at $1,800 monthly, achieving a 1.15 DSCR and refinancing later. Such flexibility turned a potential $10,000 loss into a win for a similar investor who faced buyer pullouts mid-flip.

Scaling this, repeat the process on a duplex next: $220,000 purchase, $50,000 rehab, $350,000 ARV. Tier 2 terms yield $198,000 initial advance, $50,000 holdback, totaling $248,000 at 71 percent LTARV. Profits could hit $50,000, compounding your portfolio. Hard money purchase loans like this fuel the acquisition phase, setting the stage for profitable rehabs.

Example 2: Cash-Out Refinance to Recycle Capital After a Cash Purchase

For BRRRR investors, the "refinance" step is crucial to pull out capital for the next deal without selling. A cash-out refinance via hard money bridges gaps when you've bought with personal funds and need liquidity for rehab or new acquisitions. OfferMarket's cash-out refinance guidelines allow tapping equity on properties seasoned at least three years or recently purchased with proof of sunk costs, up to 90 percent of the as-is value or purchase price.

Consider Sarah, a Tier 3 investor with three flips completed, who cash-purchased a $120,000 triplex in Phoenix, Arizona, using savings from prior deals. The 2,400-square-foot property (800 square feet per unit) is habitable but outdated, with peeling paint, worn appliances, and deferred maintenance costing $30,000 to fix. ARV post-rehab is $210,000, supported by comps of updated triplexes renting for $1,400 per unit.

Six weeks post-closing, Sarah seeks a cash-out refinance to fund the rehab without dipping further into reserves. OfferMarket requires the original settlement statement, proof of $120,000 sunk costs (bank wires and receipts), an updated scope of work, and progress photos showing no major issues. With her 740 credit and experience, she qualifies for Tier 3 terms: 88 percent initial advance on the $120,000 purchase price, or $105,600. The $30,000 rehab holdback brings the total loan to $135,600, at 65 percent LTARV ($135,600 / $210,000), comfortably under 75 percent.

The refinance closes in five days, netting Sarah $84,000 in cash after paying off any minor existing liens (none here). Interest is 10.25 percent on drawn funds, 12-month term, interest-only. She finances 1.5 points ($2,034) and uses the proceeds to hire a general contractor, drawing $15,000 after electrical updates.

Rehab completes in 10 weeks, under budget at $28,000. Sarah secures tenants at $1,450 per unit, generating $4,350 monthly gross rent. For BRRRR, she now eyes a DSCR refinance, but the cash-out has already enabled a parallel flip: $80,000 of the proceeds funds a $90,000 single-family purchase elsewhere, with $10,000 rehab, yielding $25,000 profit upon sale.

Without this refinance, Sarah's capital would sit idle, limiting her to one deal annually. Instead, she scales to three properties, boosting annual returns from $30,000 to $70,000. OfferMarket's quick turnaround and high advances make cash-outs a powerhouse for recycling funds, especially in appreciating markets where equity builds fast. A similar triplex deal in Denver cashed out $95,000, funding two more acquisitions and turning a solo investor into a small portfolio holder within a year.

This scenario underscores hard money's role beyond initial funding: it acts as a capital accelerator, aligning perfectly with BRRRR's repeat ethos.

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Example 3: Mid-Construction Refinance to Overcome Rehab Delays

Rehabs rarely go perfectly; permitting issues, supply chain hiccups, or contractor no-shows can stretch timelines, risking default on a maturing hard money loan. Enter the mid-construction refinance, a lifeline under OfferMarket's guidelines for extending terms without distress signals. Eligible if the project is at least 30 percent complete, with proof of delays (e.g., city inspector emails) and no payment arrears, this refinance resets the clock based on current progress toward ARV.

Take Mike, a Tier 4 investor with five flips, who purchased a $180,000 duplex in Orlando, Florida, via hard money: $162,000 initial advance (90 percent as Tier 4), $45,000 rehab holdback for roof replacement, HVAC upgrades, and unit separations, totaling $207,000 at 73 percent LTARV ($280,000 ARV). Term: 12 months at 10.25 percent interest-only.

At month five, 40 percent complete ($18,000 drawn), a hurricane delays roofing permits by eight weeks, pushing the end date past the six-month mark. Material costs for HVAC surge 15 percent due to shortages, inflating the budget to $48,000. Facing a balloon in seven months, Mike applies for a mid-construction refinance. He submits progress photos, revised scope with $3,000 overage, and a letter explaining delays, plus updated comps confirming $285,000 ARV.

OfferMarket approves a new $215,000 loan: $162,000 pays off the original principal, $48,000 covers remaining rehab (100 percent holdback), and $5,000 handles overruns, at 75 percent LTARV. The refinance adds three months to the term (now 15 months total), with a 1 percent extension fee ($2,150). Interest resets on drawn funds, and closing takes three days via wire.

Mike resumes work, drawing $20,000 post-permits for HVAC. By month 10, rehab finishes at $46,000. He flips the duplex for $282,000, netting $40,000 after $20,000 selling costs and $17,000 interest/fees. Total return: 18 percent on $66,000 invested (down payment plus overages).

This refinance saved Mike from a forced sale at 60 percent completion, potentially losing $15,000. Instead, it preserved equity and timeline, allowing full value capture. For BRRRR variants, Mike could have rented units mid-project at $1,600 each, hitting 1.12 DSCR. OfferMarket's app-based draws and low extension fees (1 to 2.5 percent) minimize disruptions, a boon in volatile construction environments. Another investor in Miami used a similar refi during flood-related delays, extending a quadplex project and boosting profits by $12,000.

Mid-construction refinances exemplify hard money's adaptability, turning obstacles into opportunities for 1-4 unit investors.

The Value of Streamlining with a DSCR Refinance from the Same Lender

For BRRRR purists, the refinance phase is not just about cash-out; it is about locking in long-term, low-cost debt to fuel infinite returns. This is where OfferMarket's DSCR refinance shines, bundling seamlessly with their hard money loans for fix and rent strategies. DSCR, or Debt Service Coverage Ratio, measures a property's net operating income against its debt payments, requiring a minimum of 1.0 for approval, meaning rents fully cover principal, interest, taxes, insurance, and any association fees.

Streamlining with the same lender eliminates redundant underwriting, shaving weeks off the process. OfferMarket's Fix and Rent bundle starts with a hard money purchase/rehab loan, transitioning post-rental to a 30-year fixed DSCR loan at industry-low rates (around 6.5 percent), with up to 80 percent LTV for rate-and-term refis or 75 percent for cash-outs. No seasoning is needed for rate-and-term (under $2,000 cash-out), or just 90 days for larger pulls. Origination fees discount up to 50 percent ($1,500 minimum), and draws during rehab remain app-based for speed.

Eligibility fits 1-4 unit residential perfectly: minimum $55,000 loan on $100,000 as-is value, 660 credit, and reserves for nine months of payments. Borrow via LLC with 51 percent personal guarantee. Valuation uses full appraisals, testing 1.1 DSCR post-repairs during the hard money phase.

The value compounds in several ways. First, cost savings: that 50 percent fee discount on a $150,000 DSCR loan saves $1,500 to $3,000, directly boosting yields. Second, speed: same-lender continuity means pre-approved docs carry over, closing in 10-15 days versus 45 with a new bank. Third, better terms: fixed rates and interest-only options (over five or 10 years) slash monthly outflows from hard money's 10.25 percent to 6.5 percent, improving cash flow by 40 percent. For a $200,000 duplex at $2,000 monthly rent, DSCR payments drop from $1,700 to $1,200, netting $800 positive flow.

Consider a bundled example: You buy a $140,000 single-family in Dallas for BRRRR with hard money: $119,000 advance (85 percent Tier 2), $35,000 rehab holdback, total $154,000 at 70 percent LTARV ($220,000 ARV). Rehab cosmetic updates; rent at $1,700 (1.27 DSCR). Refinance to $165,000 DSCR loan at 75 percent LTV, cashing out $11,000 after payoff. Total investment: $56,000 (down plus rehab); net cash after refi: +$109,000 change, with $351 monthly cash flow.

Using the same lender avoids credit re-pulls and duplicate appraisals, saving $1,000 plus time for new deals. Risk-wise, it ensures alignment: hard money's dual exits feed into DSCR's stability, hedging market shifts. Investors report scaling 2x faster; one transitioned three properties in a year, generating $1,200 monthly passive income per unit.

In essence, OfferMarket's DSCR streamlines BRRRR into a repeatable machine, turning fix and rent from aspirational to operational for 1-4 unit portfolios.

Conclusion: Leveraging Hard Money for Sustainable Growth

Hard money lending through OfferMarket equips fix and flip and BRRRR investors with the tools to thrive on 1-4 unit residential deals. From swift purchase financing that captures undervalued gems, to cash-out refinances recycling capital, mid-construction extensions navigating hurdles, and DSCR transitions securing legacy wealth, these examples demonstrate real, guideline-aligned paths to profitability.

Whether flipping for 20 percent ROI or building a rental empire with 1.2 DSCR cash flow, the key is alignment: match your experience tier to deal scope, maintain liquidity buffers, and embrace dual exits. Start with an instant quote on OfferMarket's platform, submit your first scope, and watch opportunities compound. In real estate, speed wins; hard money ensures you are first to the finish line.

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