Private money lender terms?

[Nino Miranda]

I've found someone in my network interested in being a private money lender towards my deals (SFH flips). What all should we discuss regarding terms?

Some of the basic items I have are…

Pay on debt or equity in property? (Pro v cons of each)

Interest rate

Term period

Points

I know there are more things to consider so what else should we be discussing when coming to an agreement?

I’m open to all ideas and points of discussions. Thanks for the suggestions.

[Issac San Miguel]

Hey Nico!

Typical terms for the best clients of HMLs get:

12-18 month term I/O

7%-10% interst.

Up to 90% LTC with 100% rehab funding ( some HMLs can go up to 100% financing for their super VIP clients)

1-3 pts depending on deal size

The biggest thing I would discuss with them is volume - how large of a deal can they handle? How much time is going to be lost waiting for them to vet your purchases and draws?

I heard a great quote this morning in my office - question posed from lender to client - "Why are you stepping over dollars to get to pennies?".  The idea here is finding a lender that trusts you and your process - a person or company that isn't going to stop you from winning because they don't like the neighborhood or subject property, only to save 50bps on rate or a 1/2 pt on origination.

Feel free to reach out if you want to discuss further.