I'm trying to close on my first rehab using hard money. The lender will give up 60% to someone on the first deal. The loan will be approximately 95k but he states that I need to come up with 35k. I didn't understand this number since the 95k would be around that 60 percentile. He explained that I will pay no payments during the six months but he collects his interest, insurance, and taxes on the property for one year up front. The interest rate will be between 12-15%. I've never worked with hard money and wanted to know if this is common. Thanks
I've never seen that in my borrowing nor in any of the numerous hard money email advertisings I receive. With that being said, it's not surprising to hear of someone being creative and/or seeking more security. My only concern would be paying so much upfront. In my market stuff moves fairly quickly. I'd be expecting a refund from my lender on a deal like that. It would be important to know this lender is reputable...
He's very reputable but I heard that's just how he does business. We will sit down and talk numbers eventually. Much of that is refunded but it appears that he wants to be set if he has to take it over. If I do go this route this time it would be the last. Thanks for the input.
I found a new lender. LOL
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