Cash at 187k or hard money at the same price, and which one actually costs more over a 90 day flip
Here is a decision worth working through as a scenario. Say a flipper has 187k sitting in a money market at 4.9 percent, so the opportunity cost of deploying it over 90 days is roughly 2,300. Hard money on the same deal runs 12 percent annualised plus two points, which comes out to around 5,650 over the same period. On paper cash wins by 3,300. But the cash version ties up the whole 187k, and most operators only have one of those. The hard money version leaves enough liquidity to go after a second deal if one shows up, and in a market like Brockton or the parts of Quincy south of the centre, two or three reasonable cosmetic candidates surface every month. So the 3,300 saved by paying cash might be worth less than the optionality given up. Run it as many times as you like and there is no clean answer, because it depends entirely on whether a second deal actually materialises inside those 90 days, which nobody knows in advance. The flip itself is a straightforward cosmetic scope, kitchen and two baths, maybe 28k in work, ARV around 265k. The deal works either way. The open question for the room is whether there is a cleaner framework for the cash versus borrowing decision when the opportunity cost is real money and the hard money is also real money.
