Just curious what IRA lenders that loan money out are getting or wanting for return and duration??
I am not talking about companies that up fees but a direct individual loaning out their IRA money on a property to an investor.
I only have a few friends that are actively loaning IRA money, but I think 10-12% with 3 Points is what I have recently seen. Perhaps you could negotiate something long term that is better. What were you looking for or expecting?
Here are couple samples of loans that I made out of my 401k:
1) $30K, 2nd position (I normally don't do 2nd but this is to investor I know well personally and property has over $50K in equity on top of my loan so I would not mind taking the property in case of default), 10%, interest only, 5-year term
2) $43K, 1st position (property worth about $75K), 9% interest rate, amortized over 15 years, note term 2 years. I received 4 points.
There is a commercial project I am looking at right now. Lot's of upside. HML's want 30% down of whatever you buy it at regardless of it's value.
Example you could buy something for 600k that is currently worth 1 million and the seller is highly motivated. The HML's do not care and want 30% down of purchase price. I see it more of the buyer is preserving cash to turn around the property. If the loan defaults the lender can easily resell.
If a borrower has to put 30% down and place a ton of money to get the place leased up that is a huge cash call and over slanted for the lender. I think there are overly slanted lenders demands, over slanted borrower demands, and then middle ground that makes sense for both sides to want to do the deal.
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