When using hard money loans what’s the avg ROI for the investor

Question

Hey guys so I have someone who’s looking to invest with me and let me use $30,000 of their money.

My question is what’s the average return on investment? My plan is to paint a good and clear pic on what to expect and how much of a return he’ll receive.

My next question is when talking to him initially he mentioned he like getting his money back fast. Is Brrr a good strategy to use in this situation ? I’m located in Connecticut and really want to make a good impression.

All opinions and recommendations Are appreciated in advance thank you !

Allan Smith · Answer

Hard money is 12 - 15% interest. I pay some private lenders 6 - 10%.

My equity partners on a 4-build development deal will make out with about 25%. When bringing equity partners on flips and developments, I shoot to give them enough equity that they are projected to make 25 - 30% on their money.

There's a developer buddy of mine here in Nashville and he gives his partners 50% for making the down payment and they make about 40% on their money.

Your $30k friend would probably do fine with 10 - 12%.

Joshua Janus · Answer

10% does seem a little high right now. Have you checked websites with private money? Make sure to set up a great proposal for your deal that way they know your serious and can execute.

Brad Derry · Answer

@Joshua Janus what would you consider high ? Is 10% good or is that too high. That’s what I’m trying to figure out so I can find the right brrr deal. My fear is the investor might expect to much and I rather set the expectations so I can find the right deal that leaves everyone happy.

Joshua Janus · Answer

You are going to get the best return on the investment by structuring the deal where the hard money is simply a bank, and they have no interest in the property. Even if the interest rate is somewhat high for the money, it can still be worth executing if you found a really good BRRRR for an example.

Jay Hinrichs · Answer

gotcha.. people do rates of returns at an interest rate and some do equity splits its what you can negotiate given the risk profile of the investor

Brad Derry · Answer

@Jay Hinrichs maybe I worded myself wrong but, I already have a muti family unit that I got with only around $9,000. There’s also people getting into real estate with lil to no money. So even if I use this money as a down payment or most likely what I will do is use the money for my rehab. I was just wondering what’s good rates people are using when receiving private or hard money loans.

When using hard money loans what’s the avg ROI for the investor

When using hard money loans what’s the avg ROI for the investor

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