Typical hard money lending rates

23 Replies

What are the typical rates one could expect on hard money loans for short term flips and also for buy and hold investors. I know they vary quite a bit depending on your experience/relationship/reputation etc, but I'm looking for some general numbers. I am thinking about lending in my area to flippers or buy and hold investors that need a short term loan.

Thanks

-John 

what is the norm in your market? what are you hoping for? I see rates all over the place.

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Rates are typically 9-12% 2-4 points for hard money acquisition+rehab loans. 

States with judicial foreclosures tend to be a bit higher, and California (and most west coast states) tend to be a bit lower. 

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@Jesse Goldberg , what is the private SBA loan ? I know there are SBA loans to purchase owner occupied real estate I believe the owner has to occupy at least 51% of the space is this something similar?

@Joseph M. Yes, it's a similar program that banks offer, but we have made a private SBA product, meaning we take the position of the bank and capital and it is still backed by the SBA. The property can be non-owner occupied, but for owner-occupied properties, it is similar and does have the same 51% requirement. 

Thanks everyone, very helpful.

@Jesse Goldberg   private SBA loans...@Joseph M.   never heard of that.. 

so are you saying the government is backing your private loans like a standard SBA loan.. ??

Be advised from a local attorney on the foreclosure rules in NY  NJ  once I learned what those are I simply would never loan there.. to many other markets were the default and foreclosure works so much faster.. in those states its measured in years .. I like working in markets that are measured in months... you have a loan go bad and take 1 to 3 years to foreclose and by the time you got it back you are usually taking a pretty serious loss

@Jesse Goldberg   also we have talked about this before you can't advertise as a lender without being licensed either NMLS, or BRE broker license or CF license and it must be  on all your adds or internet communications.. which its not on your sig line or in your bio.. so your in violation.

Originally posted by @Jay Hinrichs :

@Jesse Goldberg  also we have talked about this before you can't advertise as a lender without being licensed either NMLS, or BRE broker license or CF license and it must be  on all your adds or internet communications.. which its not on your sig line or in your bio.. so your in violation.

 Thanks for your input, but we are completely within our rights to advertise as a lender for private money.

Originally posted by @Jay Hinrichs :

@Jesse Goldberg  private SBA loans...@Joseph M.   never heard of that.. 

so are you saying the government is backing your private loans like a standard SBA loan.. ??

Yes, the SBA is backing the loan and only a couple of private lenders are currently doing it to my knowledge. 

@Jesse Goldberg   not to argue with you but your completely wrong.. LOL.. I guess someone will just have to file a complaint and you can take it up with the BRE

Originally posted by @Jay Hinrichs :

@Jesse Goldberg  not to argue with you but your completely wrong.. LOL.. I guess someone will just have to file a complaint and you can take it up with the BRE

 I am fully aware of section 1026.24, but you are welcome to follow through with that, as we are in compliance. 

This is very much market based and even more than that is based on experience and relationships. When we first started flipping in Connecticut our first hard money loan was 14% interest only, 5 points, 6 month term, 20% down on the purchase price. The only positive about a loan scenario like that is in order for the numbers to work it has to be a really good deal. At the time we were just excited someone would be willing to loan us money with no experience. 

Now our terms, rates, etc are substantially better but we have done 15-20 projects total between me and my business partner with the HML we use who is different than the one who financed our first deal.

50-50 with your name in second place.  9% interest.

12-14% with 2-4 points.  You can find that all day.

In Denver the lowest I have seen is 8%, 2% upfront and can go upwards of 14%.

Rates vary greatly based on experience and not so much on reputation with a certain lender. 
If you have verifiable flipping experience, you typically get the best rate from lenders. 5.99 to 12% is the range to look for. 

If you have zero experience in flipping, I suggest you get a friend(s) or family member to front you the money as the terms would be more favorable to you than seeking a non-conforming loan. 

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If anyone is still looking I used a great HML in NJ 12% +2pts. Very smooth process.

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