Wildcat Lending is now Crebrid—powered by a new partnership with Barings. Press release here.

| Sign In

Common Mistakes First-Time Hard Money Borrowers Make

Jumping into your first hard money loan is exciting, but it’s easy to make rookie mistakes that can cost you time and money. From underestimating costs to skipping exit strategies, here’s what every first-time borrower should know before closing their deal.
Investment , Loans , Private Lending

Jumping into your first hard money loan can be exciting—but there are pitfalls that can slow your deal, cost money, or derail your flip entirely. Knowing the common mistakes ahead of time gives you the edge.

1. Underestimating Total Costs

Many first-time borrowers focus only on the interest rate. Hard money loans often include points, fees, and shorter terms. If you don’t budget for everything—loan points, interest, rehab costs, and unexpected repairs—you could end up upside down on your deal.

2. Overestimating ARV (After Repair Value)

It’s tempting to imagine the finished flip at its ideal selling price. But aggressive ARV assumptions can lead to borrowing too much and leaving no margin for profit. Analyze comps realistically and include a buffer for market fluctuations.

3. Poor Communication with Your Lender

Delays often happen because borrowers don’t provide clear, complete, or timely documentation. Hard money lenders move fast—but only if you move faster. Upload your rehab plan, income proof, and other documents early.

4. Ignoring Exit Strategies

What happens if the property doesn’t sell on time? First-time borrowers sometimes neglect backup plans. Whether it’s holding as a rental or bridging to another loan, plan your exit before closing.

5. Neglecting Insurance and Compliance

Some borrowers overlook insurance or municipal requirements until it’s too late. Hard money lenders expect properties to be insured and compliant. Skip this step, and you risk both funding delays and financial loss.

Take Control of Your First Loan

Avoiding these mistakes is simple: plan, budget, and communicate. Have a clear rehab plan, know your ARV, and stay in lockstep with your lender. With the right preparation, your first hard money deal can set the foundation for a profitable flipping career.