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Updated over 6 years ago on . Most recent reply

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Ashley Parker
  • Investor
  • Middleburg, FL
1
Votes |
7
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How to make sure a private lender is legit?

Ashley Parker
  • Investor
  • Middleburg, FL
Posted

I have been talking to several private lenders and for some reason I keep getting thrown for a loop. Everything starts off seeming legit and then things turn and I start second guessing the lender. I have found two that have offered me a 5% interest rate on the loan and are doing payments back like a mortgage where you can choose the years. But one I found I looked into their state business search and states the business is suspended, so of course the type of person I am I start questing this lender and she state that her company is struggling over ownership. That to me sends a red flag. What's your opinion? Also what have you came across for interest rates in your lender deals so I know what is realistic when talking to private lenders?

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864
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Darrell Shepherd
  • Rehabber
  • Smyrna, GA
510
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864
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Darrell Shepherd
  • Rehabber
  • Smyrna, GA
Replied

I pay my private guy 2 pts and 12%.  I started off back in the day paying high rates, I think I offered 20% on my first loan (it was a 2nd behind a sub2 to cover repairs and payments).  I had that down to 12% with no points before the crash.   Money was tight there for a bit so I offered the points and get great terms with my guy so never bothered to renegotiate. 

4% is a dream.  Love it.

If you want to look at institutional, my primary lender is at 2.5% origination and somewhere between 8-14% for rate, depending on LTV and experience.

I generally get the bulk of the money from them and the rest from my PL on my deals.

I personally dont worry as much about money costs as I do about the availability of the funds.  After a certain point, of course.  Shouldn't be in the loan more than 6 mos. so I'm more interested in doing more deals than squeezing every penny out of one or two of them.

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