hard money

[Melvin McMillan]

Hey bigger pockets family!!! I have concerns about how would I pay interest rate percent on a hard money loan, if i decide to hold on to the property for long term jeopardy or cash flow.. The hard  money lender wants 18% of the profits on a 6month term with no monthly expense if i did the bird strategy and held it, HOW WOULD THEY MAKE THEIR PROFITS???

[Rivers Plowden]

It sounds like they want a balloon payment plus 18% of the profits at then end of the 6 month term. Which means you would have to refinance it at that time in order to hold onto it. Hard Money Lenders (HML) typically don't do anything over a year at the most.

I would look around at other HML for your area. Most of the time the terms are anywhere from 10 - 15% for a 6 -12 month interest only term. At the end of the term, you have to pay it off with either the proceeds of the sale or a refi.