Current Hard Money Terms

21 Replies

OK, I know I'm probably asking a question where the best answer is "It depends". However, I'm wondering what hard money terms YOU might consider for a $100K loan on a SFH rehab, with an expected in and out term of 9-12 months? I don't have a specific scenario to propose, but I figure instead of asking "What are the current market terms, i.e. rate and points, for a hard money loan?", I'd pose the above question to experienced hard money lenders.


@Jim Farrell

I see market rates as follows:  5% loan origination fee and 1% monthly interest only normally for 6 months or less then another 5% loan origination fee if you have to renew the loan again.

Why do you need it to be 9-12 month?  

Around here 15% and four points, nine month term.

8-9%, 1 point, 9 month term with the availability to extend, 90 % of price + rehab, no more than 80 % of appraised value

Shop around, talk to local investors and you will find these or better rates/terms.

Thank you, @Jon Holdman  .  Also, thanks, @Curt Davis . I'm not necessarily suggesting that the loan term needs to be that length, just that this is probably the typical cycle I'm looking at for an SFH deal in our market.

I am a Texas lender in DFW (includes Arlington), and rates are improving.  That said, my experience is that "9 and 1" is going to be through a bank and not a hard money lender.  There are probably private lenders, too, but I am not aware of any HMLs at 9% with 1% origination.

To my point about rates improving, we are implementing a new program (in Texas for now) with rates as low as 7.75% and origination as low as 1.5%; however, it would be 85% of price (as opposed to 90% and would max out at 70% LTV as opposed to 80%). Again, his terms are attainable through local banks, but I am not aware of HMLs in that range.

I draw the distinction because financing through a bank and through a hard money lender are not interchangeable processes for many borrwers. So, yes, it DOES depend.

Thank you, @Sam Elder  .

What is the distinction between HML and private lenders?

A private lender is a person that seeks to deploy their own capital.

A HML is a business that seeks to deploy its own capital or the capital of others.

Individual v. business basically.

My current Hard Money Lender funds my Rehabs at 2 Points (1 at purchase 1 at sale) and 12% on 6 month term with option to extend for 2 additional points per quarter.  

The typical HML is going to charge higher rates. You really have to shop around to find a HML that offers reasonable rates.

To answer your question, I believe 2 points and 12% is about as reasonable as you can find.  I have other lenders who do 4 points and 12% as well which is not bad.

Some are very low here. A lot would have to do with how you present your deal and your experience. 

Lowest I have seen in Atlanta (with other lenders) this year is 13% plus 3 points for relatively experienced investors. 

2014 best was 11.5% plus 2 points for $450k deal in December, a seasoned borrower. Calif and Texas seem to be very competitive.

The best of luck with your deals!

I am getting into HML also, on the borrowing end for rehabs and from what I have heard the more experience and relationship you have with the HML the better rates and terms you can get. Which makes sense.

@Jim Farrell  

Getting more competitive in central / south Texas markets. 

12% & 2 pts. on 6 mo. term. @ 70% ARV

I pay my private lender 2 & 12 for 9 months, with no LTV requirements. Each deal evaluated on its own merits. After I successfully repay the two outstanding deals, he will evaluate to underwrite at 1 & 10 for my next deal. Since I no longer have a W-2, I consider that better than the banks!

As a prior banker, it would gall me to no end to pay 5 pts and 15% with another 5 pts if I had to renew.  Ouch!  (It would also make me wonder the creditworthiness of  someone that would have to borrow at those rates, but that is just learned bias!)

@Jim Farrell  

If you'd like to place it with me, I'll gladly accept.  I'm just that kind of guy. 

@Jim Farrell And if you can match the 1.0% origination, 10% rate for 9 months and a 75% LTV, you can also place with me! Let me know.


@David Begley  Just to clarify, does that 10% over 9mos mean 10%annualized over a 9mo period, so effectively less than 8%, or is that a full 10% but paid over 9mos?

Originally posted by @Jacob Michaels :

@David Begley Just to clarify, does that 10% over 9mos mean 10%annualized over a 9mo period, so effectively less than 8%, or is that a full 10% but paid over 9mos?

 No, the 10% is an annualized rate, so over 9 months you'd effectively be paying 13.33%.

Thanks for the clarification.


@David Begley  Wow, so if it's a $100k 10% loan for 9mos, you're saying I would be paying $10k over the 9mos?

Originally posted by @Jacob Michaels :

@David Begley Wow, so if it's a $100k 10% loan for 9mos, you're saying I would be paying $10k over the 9mos?

 Yes, and that is very cheap compared to the market rates for hard money and/or private money.  As many posters have noted, 4 points and 14% to 18% for hard money and private money 3-4 points with 10% to 14% rates.  

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