Are you actively using HMLs these days?

Question

I just wanted to get a sense of the volume of people utilizing Hard money or Private money these days and if so what sort of rates/terms are you receiving. I've been working on building my business model and this year i'm glad to say i'm finally executing, the reserves are there, the credit is good so just doing my due diligence and shopping around on various financing options.
regards,
Desmond

Daniil Kleyman · Answer

Desmond - I can't speak for anyone else, but for my buying, I've primarily been using private money, in 2 forms: 
          
          1) Tapping home equity lines from friends and family.  Let's say your cousin has a $30k equity line at 4% sitting unused.  He writes you a check for 30k, you pay him 6 points (6%) upfront and then repay his line over time  - until you flip or refi the property.  He is happy because he just made almost 2k cash and you get a cheap source of money with no qualifying.  
          
          2) More traditional private money loans - a private lender funds our purchase and rehab, we pay 8-10% interest rate, give them 1st deed of trust on the property plus promisory note.

I am also using a local bank for construction financing on a project but they are not really "hard money" - their rates are reasonable (under 8%) and very few upfront points.

Des Shei · Answer

Thanks for the replies guys. Since posting this topic i've aligned myself with 3 private lenders with decent rates around 10-11% plus 3pts.

Brian P. · Answer

I agree with Dan.

Most of the HML's in my area have you jumping thru as many hoops as the banks, so looking elsewhere is a good idea.

I've only been using HML's lately as a flash funding source,