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?  

Curt Davis, Real Estate Agent in TN (#00321765)

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.

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!)

David Begley, Real Estate Agent in GA (#357208)

@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, Real Estate Agent in GA (#357208)
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.  

David Begley, Real Estate Agent in GA (#357208)

Join the Largest Real Estate Investing Community

Basic membership is free, forever.