Hard Money Closing Costs

[Taylor Cartledge]

I'm a relatively new investor, and earlier this year took out my first hard money loan on a flip. The closing costs for the loan ended up being almost $9,000 on a $70,000 loan. I'm wondering if this is typical of hard money lenders or if I just got screwed (they are a reputable company). I would like to go the hard money route in the future but if those are the typical closing costs then it makes it much harder for a deal to pencil out. Thanks for any info that you can tell me.

[Robin Simon]

The issue you probably have is the loan size - a lot of times closing costs are more fixed than variable (percentage of loan amount), so the costs are going to seem very high on a smaller loan like this.  Lenders also need to be able to make a certain amount of money to make a deal work for them, and on deals this small, the fees are going to have to be a bigger percentage.  

You will probably have more luck penciling deals a deal sizes a bit bigger, and then the closing costs will likely not seem as high (smaller proportion of the loan)