As for the cost of a Hard Money loan that's for the investor to decide. Some simply view it as a cost of doing business. Of course cash is always better but not everyone has 50-$60k laying around to turn a rehab deal. At the same time, many potential rehabs deals will not pass muster when it comes to a conventional appraisal due to the condition of the property. Some choose to use a HML because it gives them the opportunity to make a solid offer with a quick closing time. Yes, you likely need to have skin the game but very often you can get in with as little as 10% and borrow money for the repairs held in escrow. You also don't have to worry about endless, rediculous conditions that typically accompany a traditional loan in this environment. Cost of funds is typically 12-14% and usually set up as interest only. If you borrowed $50k that would be $583/mo payment. You skip a month after you close so if the investor knows what he/she is doing, does a good job on repairs, and prices it right, then he/she could get a contract in 30-45 days and only end up making 2-3 payments. For many, that works if they have the chance to make a 25-30k profit on the deal.