Funding Your Next Deal: Hard Money, Private Lenders, and Creative Financing in Asheville

Getting a real estate deal funded in Asheville comes down to matching the deal to the right kind of money, not chasing the lowest rate. That was the throughline at Funding Your Next Deal, the September 2024 AVLmeetup at The Mule at Devil's Foot Beverage, where 98 people heard loan officer Mitch Davidson, private lender Nancy Duggan, and fix-and-flip investor Matt McMaster.

Key Takeaways

Zac Ruiz walked through his own hard money new construction loan: a $389,000 spec house financed at 65% loan to value based on the broker price opinion, needing about $21,000 in extra reserves to cover draws over a 9 month build, and netting him roughly $6,300 before taxes.
Nancy Duggan, who bought her first property more than 50 years ago, said her lending decisions come down almost entirely to collateral rather than credit, and that she has never had to foreclose on a borrower.
Mitch Davidson, a loan officer at Movement Mortgage, closed a $2.3 million DSCR loan in Sedona, Arizona that took seven rounds with the appraiser because it leaned on short-term rental income to qualify.
Matt McMaster, who has done roughly 100 to 120 fix and flips through WNC Property Solutions, once funded a wholesale deal by having a private lender pull cash from a 401(k) for 60 days, penalty free, and made about six times a standard wholesale fee.
Davidson put the going 30-year mortgage rate that night at about 6.4% and guessed it would land closer to 6% a year out; Duggan and McMaster both expected rates to drift down as well.

Zac Ruiz's Hard Money Loan, Step by Step

A hard money loan is a short term, asset based loan for real estate, secured by the property itself rather than the borrower's credit. Ruiz opened the night with his own construction loan, framing it as "Zach's love story with Alfie Loans and 2020 builders."

The lender capped his loan at 65% of the broker price opinion value and would not finance a primary residence. On Ruiz's $389,000 house, draws released as work was completed rather than as bills came due, so he needed roughly $21,000 in extra reserves to cover the gap, and was still hit with a $32,000 shortfall on one draw. After the lot, build cost, 6% realtor fee, and debt service, he walked away with about $6,300 before taxes. His refrain was that you make your money when you buy, and that the relationship with the lender, not the rate, got him through the rough patches.

What Makes a Deal Fundable

Asked what separates a fundable deal from one that never gets money, Matt McMaster was blunt: "The only ones that don't get funded are not deals." A deal with real equity finds money. Nancy Duggan added the other half: match your loan to your lender, since it is "futile" to bring a hard money need to a DSCR lender or vice versa. Mitch Davidson said perseverance and a clean, documentable income picture matter most on the conventional side, where variable income, bonus pay, commission, a nurse's fluctuating year to date, is what most often trips up a strong borrower.

McMaster's best outcomes have come from staying local, since Asheville's market can put a $250,000 double-wide one street from a million-dollar house, and out-of-market lenders miss that.

Creative Financing When the Straight Path Doesn't Work

Duggan's favorite deals split one property across several entities, an LLC, a C corporation, Roth IRAs, so a house needing fixing, a house needing paint, extra land, and a mobile home on the corner can each be worked, sold, or held separately. McMaster described a wholesale deal a bank would not fund, so he had a private lender pull money from a 401(k) for 60 days without penalty, closed it himself, and resold it to an end buyer 35 days later for roughly six times a standard wholesale fee, with the caveat this only works once you have relationships and a fallback plan.

Davidson's Sedona, Arizona example showed the same creativity institutionally: a $2.3 million DSCR loan that leaned on short-term rental income to qualify and went through seven appraisal revisions before closing. All three panelists circled back to Ruiz's point: the terms matter less than whether the lender is actually a partner when something goes sideways.

Questions

If you had to start over, what would you do differently? Nancy Duggan said she would start sooner. She bought her first property more than 50 years ago and, at that closing, accidentally bought an entire island off South Carolina rather than the single lot she intended. She credited her success partly to marrying, in her words, "the smartest man in the world," a brilliant deal maker.
What advice would you give someone brand new to investing? Duggan said to prepare, learn continuously, and never quit, pointing new investors to CREIA meetings and telling them to ask Rodrigo, Zac, or Matt when they don't know something. McMaster's advice was to look at as many properties as possible and not fear hearing no, calling the early years "a volume volume game" until you can size up a deal within 5% just by walking through it.
How do smaller local builders compete with production builders like D.R. Horton on middle-market spec homes? A custom home builder moving into spec building asked how to compete on price while building quality homes. McMaster said D.R. Horton is not a real threat if you build a genuinely better product, since buyers in West and East Asheville want one-off lots in established neighborhoods, not a 50-home subdivision. Duggan pushed further, saying Asheville needs middle-market and workforce housing in the $350,000s, and described building a 1,200-square-foot house decades ago for around $25,000 even after the county forced her to buy a $45,000 permit.
Would any of you lend against Bitcoin or other cryptocurrency as collateral? With new Bitcoin ETFs entering the market, Davidson said no. Ruiz closed the thread by noting that lending comes down to whether the lender understands the specific asset: a real estate panel says no to crypto, but somewhere is a lender who specializes in commodities or art and would say yes.

Ruiz closed the night pointing the room to the Ruiz Report for monthly Asheville market data and REMC.co for live MLS analytics. The next AVLmeetup, Hospitality in WNC & Why It Matters, followed a month later with operators from three regional hospitality venues.