Comparing bridge loans vs HELOCs for my flip in Cleveland taught me a lesson

I was trying to fund a quick flip property over in the Old Brooklyn neighborhood, and I spent two weeks going back and forth between a bridge loan and a HELOC. The bridge loan had a 10.5% rate but closed in 10 days flat, no questions about my other debts. The HELOC would have been 7.8% but took 45 days and they kept asking for more paperwork. By the time the HELOC was ready, I already had the bridge loan done, bought the house, and started the kitchen gut. The extra interest cost me about $1,200 but I made that back by getting the project started a month sooner. Has anyone else dealt with this tradeoff between speed and rate on a short term deal?

2 comments

2 Comments

dianal949d ago

Right? Speed always wins on a flip because time is literally money sitting in the foundation. That $1,200 is nothing compared to what carrying costs would have been waiting around for the HELOC.

aaronclark9d ago

Totally agree. "Time is literally money" is the whole game in flips. I dragged my feet on a plumbing permit once and it cost me way more than $1,200 in holding costs easy.