Private Lending Terms?

I am looking at getting a down payment for a property through a private investor. I might offer a 8% return each year for 5 years and pay back the principle in year 5. I am not sure what terms private investors are usually agreeable to, but this seemed fair to me. What is your experience when seeking private money.

Thanks! :D

Edited: 06/26/2010 at 07:24AM

Colin Ralls

Real Estate Investor · Phoenix, Arizona

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Mar 05 '09, 10:51 AM

My experience is that most hard money lenders will want you to put down at least 20% and expect anywhere from 12-16% Interest.

Edited: 06/26/2010 at 07:29AM

Adam Black

· Ridgeland, Mississippi

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Mar 05 '09, 10:56 AM

Yeah, 8% is going to be hard to find. But with this economy, you never know. Probably should plan on more though.

Edited: 06/26/2010 at 07:29AM

Tiara Murray

Wholesaler · Detroit, Michigan

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Mar 13 '09, 12:17 PM

Are there any HML's out there that doesn't require a down payment?

Edited: 06/26/2010 at 07:34AM

Franklin Lee

· Virginia

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Mar 13 '09, 03:42 PM

Haha. NO. You need to set some sort of collateral in order to influence the hard money lender or banker. No one in their right mind is going to give 100% financing to someone who is in college and in debt.

Edited: 06/26/2010 at 07:34AM

Jon Holdman

Real Estate Investor · Wheat Ridge, Colorado

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Mar 13 '09, 11:01 PM

I disagree you can't find 100% hard money. Its possible to find it. But you're going to need to have cash reserves, good credit, and a solid exit plan for paying off the hard money loan. Its probably someone local, though. Go to your REIA and start asking around.

Edited: 06/26/2010 at 07:34AM

Jon Holdman, Flying Phoenix LLC

Demos Loizides

Real Estate Investor · Dale City, Virginia

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Mar 14 '09, 12:43 AM

I agree with Jon. I just started researching HMLs and found some that will fund 100% including closing costs that also require no payments for 6 months. The property cost can't exceed their set ARV %. Some are no doc loans, while others need proof of income and excellent credit.

Edited: 06/26/2010 at 07:34AM

Jon Holdman

Real Estate Investor · Wheat Ridge, Colorado

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Mar 14 '09, 12:55 AM

I would, however, that its going to be 12-18%, several points, and a six month term, maybe a year.

If you're really looking for a five year term, you'll have to find a real private investor. Someone with money in an IRA or a CD who's looking for a better return. Ask them what return they want rather than offering something.

Edited: 06/26/2010 at 07:34AM

Jon Holdman, Flying Phoenix LLC

B G

Real Estate Investor · reading, Massachusetts

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Mar 14 '09, 08:46 AM

i attended my local REIA meeting last night and networked w/ two guys looking to put some cash to work...i asked for any equity partners ...so thats an excellent idea and good starting point

however i have no idea on how to approach these guys...i will be speaking w/ them this wk and im trying to get some idea of what to expect

one guy says he would want to be an equity partner and just own on the building and not the note

for example say i have a $200K 3 family property...if they put down the 50K down payment and have no participation at all in the maintainance or management

i was hoping an interest only loan at 10% 5 year balloon and maybe 20% of any appreciation on the purchase price?

how does that sound?

Edited: 06/26/2010 at 07:35AM by B G

B G, Robten Realty LLC
Bob Granara Robten Realty LLC Rgranara@comcast.net 781 526-7836