Exit Execution: Sale and Refinance Strategies

For fix-and-flip exits, the timeline from project completion to closing typically runs 60-120 days, including 1-2 weeks for staging and photography, 30-60 days on market, and 30-45 days for the buyer's financing and closing process. Smart investors begin marketing the property 2-4 weeks before renovation completion, listing "coming soon" to build buyer interest. The hard money carrying cost during this sale period can be substantial: on a $200,000 loan at 12%, each month on market costs $2,000 in interest. Pricing the property competitively at or slightly below comparable sales can generate multiple offers and compress the time on market, often saving more in carrying costs than the price reduction.

For refinance exits, the timeline depends on seasoning requirements (6-12 months from purchase), the refinance lender's processing speed (30-60 days), and the property's stabilization status (must be leased and cash-flowing). The refinance application should be submitted as soon as the seasoning requirement is met, with all documentation pre-assembled. Key considerations: the refinance loan must be large enough to pay off the hard money balance, closing costs, and any prepayment penalties. If the refinance amount falls short, the borrower must bring cash to close the gap. Beginning the refinance process 60-90 days before the hard money maturity date provides a timing cushion.

When the exit strategy takes longer than planned, extending the hard money loan is often necessary. Extension provisions should be negotiated at origination—typical options include 1-3 month extensions at $500-$1,000/month or 0.5-1.0 points per extension. Some loans have automatic extension provisions; others require lender approval. If no extension is available and the loan matures without payoff, the lender can declare default and begin foreclosure proceedings. The best protection against maturity risk is building a realistic timeline with buffer and beginning exit execution (listing or refinance application) early enough to close before maturity.