Florida Hard Money Lending General Questions

[Eric Guasch]

Hello All,

I have recently been presented the opportunity to invest some family capital in HML in the South Florida area. At inception, we have decided to angle our business specific to home flippers (non-owner occupied). All loans would be first positioned mortgages secured by the property as collateral. The current arrangement is that a family member would hold the lending license under an LLC. while we simultaneously lend the money - through another LLC. - to prospective borrowers (please disclose if there is a better way of structuring this).

1- We have been told that 10.75% APR and 2.5 points is a competitive rate - in the current market, would it be feasible to exceed those returns at 60% LTV/6-18 months maturity?

2- I understand this is a very subjective question - but considering the current market situation, would it be in our best interest to issue more lesser-valued loans to diversify portfolio - or should we focus on getting out less higher-valued loans. If the latter, considering usury laws, can lenders get away with charging higher APR's on loans exceeding 500k in the current market. Generally speaking, I understand lending higher amounts typically would attract "better" borrowers, in turn further mitigating risk which should imply lower APR's, just curious?

3- Considering the above, what regulations should be our main concern going in to this?

My apologies for the general questions, we are in the early stages of this  - and we are looking to get as much insight prior to approaching a consultant and an attorney. Any direction would be greatly appreciated considering our current lack of knowledge of the lending industry... Thanks in advance and look forward to your feedback!