Why Hard Money Lenders Might Say No: The Top 4 Reasons on Long Island
I've funded a lot of fix-and-flip projects across Nassau and Suffolk counties. And I've developed a pretty clear picture of what makes or breaks a loan application and a great real estate investment. The truth is, when I do not fund a loan, it's rarely personal. It's about the numbers, the plan, and whether you've done your homework on our specific market and the real estate project.
Living and investing in this market for decades, I've seen every cycle. Right now, Nassau County's median price sits at $840,000 while Suffolk County runs $690,000. But those numbers hide the real story. The real story is in the details that separate fundable deals from the ones that end up - unfunded.
What's In This Guide
- The Fantasy Numbers: Why Your Budget and ARV Don't Add Up
- The Missing Exit: When There's No Clear Path to Repayment
- The Cash Crunch: Running Out of Money Before the Finish Line
- From No to Yes: How to Get Your Deal Funded Quickly
The Fantasy Numbers: Why Your Budget and ARV Don't Add Up
The most common issue comes from unrealistic numbers—either your renovation budget is a fantasy or your after-repair value (ARV) is inflated. Sometimes both. Let me break down what I see all the time.
The Renovation Budget Reality
It's common for an investor to show me a renovation budget of $100,000 for a full gut rehab of a 2,000-square-foot house. In what universe? On Long Island, a realistic renovation runs much more its not 2020 any more. That same gut rehab is actually going to cost $125-140,000 or more when you factor in our local labor and material costs.
A kitchen renovation here starts at $20,000. A bathroom remodel easily exceeds $15,000. Finishing a basement begins at $20,000. These aren't luxury finishes—this is just what it costs to do quality work on Long Island in 2025.
When I see an unrealistic budget, it tells me you haven't actually gotten bids from contractors. You haven't done the work. You're guessing, and in this business, guessing with other people's money doesn't fly. I need to see signed contractor bids, not numbers pulled from thin air.
The ARV Fantasy
Then there's the after-repair value issue. You tell me your fixed-up property in Levittown will sell for $950,000. Great. Show me the comps. And by comps, I mean recent sales—within the last 90 days—of similar properties within a quarter mile of your subject property.
If your "comps" are from six months ago, from a different school district, or from the nicer section of town two miles away, they're worthless to me. I'm going to get my own valuation done, and if your ARV is off by 10% or more, your credibility is shot. The deal is dead.
You can rely on a great realtor to provide accurate CMAs, but I'm still going to verify. This isn't about trust—it's about protecting both of us from a deal that doesn't work.
Ready to get your deal evaluated? Apply online now and I'll review your numbers within 24 hours.
The Missing Exit: When There's No Clear Path to Repayment
Hard money isn't long-term financing. It's a bridge to something else. So when someone can't clearly articulate their exit strategy, I can't approve the loan. It's that SIMPLE.
I need to know exactly how you're paying me back in 1 to 12 months. Are you selling the property? Then show me the market analysis. What are comparable homes selling for? What's the average days on market in that specific area? In some parts of Long Island, homes fly off the shelf in 24 days. In other areas, it's 60-70 days or longer.
Are you planning to refinance into a long-term rental loan? Then show me the rental comps. Prove the property will generate enough income to qualify for a DSCR loan. What's your backup plan if the refinance falls through?
The borrowers who get funded come to me with both a Plan A and a Plan B. Plan A might be to sell the property in six months for $925,000 based on recent comp sales. Plan B might be to refinance into a rental loan because the property would generate $4,500 per month in rent, easily covering a DSCR requirement. That's the level of thinking I need to see.
The Timeline Problem
Your exit strategy also needs to account for Long Island's unique challenges. We have 13 towns, two cities, and over 90 incorporated villages, each with its own building department and permit process. If you're planning major renovations in the Village of Garden City, your permit might take months, not weeks.
I've seen projects delayed 60-90 days waiting for permits and inspections. If your exit strategy doesn't account for these delays, it's not a strategy—it's wishful thinking. Factor in the real timeline, including the bureaucratic friction that comes with our fragmented municipal landscape.
The Cash Crunch: Running Out of Money Before the Finish Line
Even with good equity and realistic numbers, I still turn down borrowers who lack sufficient cash RESERVES. This is about more than just your down payment. It's about your ability to weather the storm when things go wrong. And things always go wrong.
The Holding Cost Hurricane
Let me paint you a picture of what monthly holding costs look like on Long Island. You've got a $650,000 hard money loan at 12% interest—that's $6,500 per month. Now add property taxes. For an $800,000 property, you're looking at $1,700 to $2,100 per month in taxes alone.
Don't forget insurance, utilities, and maintenance. You're easily burning through $10,000 per month just to hold the property. Can you cover six months of that? Nine months? What if your renovation takes three months longer than planned?
When I ask for proof of funds, I'm not just checking if you have the down payment. I need to see you can cover at least six months of holding costs plus a 20-25% contingency on your renovation budget. If you're cutting it close, you're setting yourself up for disaster.
The Surprise Discovery Problem
Open up the walls of any older home on Long Island and you'll find surprises. Corroded plumbing that needs complete replacement. Unpermitted electrical work that has to be brought to code. Foundation issues nobody saw coming. Mold remediation that adds $15,000 to your budget overnight.
These aren't rare exceptions—they're the rule when you're flipping distressed properties. If you don't have the cash reserves to handle these surprises, you'll end up with a half-finished project and no money to complete it. That's my nightmare scenario as a lender, and it's why I scrutinize your liquidity so carefully.
The successful investors understand this. They come to the table with significant cash reserves, knowing that every project will cost more and take longer than planned. It's not pessimism—it's experience.
From No to Yes: How to Get Your Deal Funded Quickly
Now that you understand why loans do not get funded, let me tell you exactly how to get funded. This isn't rocket science, but it does require preparation and professionalism.
Come Prepared With a Complete Package
When you contact my office, have these items ready: Your purchase contract, detailed scope of work with line items, signed contractor bids from licensed professionals, recent comparable sales (within 90 days and quarter-mile radius), proof of funds showing all required capital plus reserves, and your entity documents (LLC or corporation).
When you're organized and professional, it tells me you'll run your project the same way. You can schedule a consultation to review your package before formally applying. That preliminary discussion can save us both time.
Build Your Team Before You Need Them
The time to find your contractor isn't after you're in contract. The time to identify your real estate attorney isn't the day before closing. Build relationships with these professionals now. Get on their schedules. Understand their processes and pricing.
If you're new to investing, sign up for the newer borrower loan program which includes pre approvals and mentoring from a Long Island business person and investor. It's a win-win that gets deals funded.
We have relationships with reliable contractors, attorneys, and other professionals throughout Nassau and Suffolk counties. When you work with a local hard money lender, you get access to these networks.
Think Like a Lender
Before you submit your application, ask yourself: Would I lend my own money on this deal? Look at it objectively. Is the equity sufficient? Are the numbers realistic? Is the exit strategy solid? Do you have enough reserves?
The deals that get funded are the ones where the borrower has already done this analysis. They've stress-tested their assumptions. They've built in cushions for delays and overages. They've thought through the what-ifs.
Ready to put together a fundable deal? Start your application here, or call my office to discuss your project.
The Bottom Line: It's a Business Decision
When I do not fund a loan, it's not personal. It's a business decision based on risk assessment. My goal isn't to say no—it's to fund good deals that make sense for both of us. Every successful loan strengthens my business and helps you build yours.
The Long Island market offers incredible opportunities for prepared investors. With median prices continuing to rise and very strong buyer demand, the profit potential is real. But this is a sophisticated market that punishes the unprepared.
Take the feedback from any loan application and my mentoring as free education. If your equity was insufficient, save more or keep looking for the deals that the numbers work on. If your numbers were unrealistic, do better research. If your exit was weak, develop multiple strategies. If you lacked reserves, build your war chest before trying again.
The investors who consistently get funded aren't necessarily the most experienced—they're the most prepared. They understand that hard money lending is a partnership, not a handout. They come to the table with solid deals, realistic plans, and sufficient capital to see projects through to completion. When you can do that, you'll find lenders like me ready to fund your success.