What are the going Hard/Private money rates near you?

Private Lending & Conventional Mortgage Advice

What are the going Hard/Private money rates near you?

Lender · Member since 2016 · 16 posts · 7 votes

Curious what kind of rates hard and private lenders are offering near you?

I am in Boston area- have heard some crazy hard money terms out there recently- 25% down, 5 points, 15% interest. That's an extreme though, I think most are between 20-25% down, 2-3 Points, and 10-12% interest. Also some more creative private lending terms out there- 0% down, 2 points, 8% interest, profit split on the back end (2/3 to developer 1/3 to lender).

If you're struggling for the down payment and faced with cash flow problems- look for 0% down lenders. They are out there! And they make it possible to take on many more deals at a time & make more money, if you're willing to think outside the box.

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

10y

@Andrew Michael your are exactly correct the PUMP and DUMP due DILIGENCE schemes are rampant on sites like this.

think about it is there a more target rich environment for scammers than BP a site that is loaded with first time folks who even make post that they are first timers and new investors .. what is a very innocent post turns out to be a lead for a scammer...

Just place on post on this site saying your looking for money.. I flat guarantee you will get hit by no less than 5 of these scammers... Pump and Dump due diligence schemes are as old as Real Estate my dad warned me of them when I first started in RE in 1975....

There was an episode on American Greed about Remington financial.. they were in business over 20 years their target was small commercial to bigger multi or commercial.. they charged 5 to 10k DD fee's estimated they brought in over 200 million in the 22 years they operated.. by the time the FBI was done with them.. they could not establish that they had made more than 11 loans in all those years.... long prison sentences.

your instincts are fine and intact.

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Andrew Michael
Lender · Frederick/ Falls Church DC, Maryland & Virginia · Member since 2014 · 794 posts · 612 votes
10y
In the DC area the going rates are 3-5 points at 10-15%.
I would really be cautious of 0 down lenders. This is usually a scam of some sort or they annihilate your profits on the back end.
Think about this logically. If you were lending someone money and they had nothing to bring to the table would you give them 100% of the money they needed? If an investor has no money to bring to a deal most likely it means either they are bad at investing or brand new . In either case, does it make sense that someone would fund them 100% or even 90% for that matter. That puts the lender at a huge risk and from a business standpoint is very very risky.
Often times the people who are lending 100% are either in the Lend-to-own business or they are big fans of the non-refundable EMD's. Just be sure to do your homework.
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Jason Gray
Note Buyer · Fresno, CA · Member since 2014 · 34 posts · 11 votes
10y
I see you're a private lender. What is your sweet spot for deals valued at $60-70k ARV where the purchase price would be at $30-35K? I've been in talks with a hybrid hedge fund/hard money group out of San Francisco who lend at 7.99% I'm curious what money is available these days as I get geared up to get back into the NPN>BRRRR route. Thanks! Jay
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OP
Lender · Member since 2016 · 16 posts · 7 votes
10y
@Andrew Michael I see what you mean about 0 money down seeming like a scam- but taking a profit on the back end actually aligns them with the investors success and allows them to cover their risk that way. Think of it this way: if a hard money lender gives you a loan, takes their down payments, points, and monthly interest, they could care less if your project is a success of a flop. They get paid either way. These lenders with a profit split on the back end actually invest in what you're doing and believe in the deal. It's more of partnership than your standard lender-investor relationship.
It certainly is a different model, but it isn't always a scam if you do your homework on the company, I'd say keep an open mind about it!
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John CasmonPro Member
Cincinnati, OH · Member since 2013 · 1k+ posts · 1k+ votes
10y
Terms I see frequently in Chicago are something like this:

90% loan on acquisition and rehab
2-4 points
11-14% interest
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Sean BlomquistPro Member
Lender · Blaine, MN · Member since 2013 · 303 posts · 131 votes
10y
@Account Closed in MN and CO we charge 4 points and 15% on a 9 month term. All lenders are different, and some do require 20%+ down.
In reference to Andrew's comment, we are a true no money down lender. If our 70% ARV covers all your costs (purch, repairs, CC), then we will cover it. Anything we can't cover, you would need to bring to closing. You would then make the monthly interest payments only as long as you have the loan, no prepayment penalty. We don't take part of the profit on the back end either.
But, like I said all lenders are different.
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OP
Lender · Member since 2016 · 16 posts · 7 votes
10y
@Sean Blomquist Interesting model! Thanks for sharing.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
10y
CA is 1 to 2 and 8 to 10 20% down.. Oregon and WA is 2 to 3 and 10 to 14 20 to 30% down.
those WITH experience and long track record with a certain lender can get near zero down deals..
not going to happen for newbies or someone not know to the lender..
Do Hard money says they will do no money donw but they want 3k up front .. with no gurantee of a funding.. and mixed reivews on if they actually fund and what they will fund on.
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Andrew Michael
Lender · Frederick/ Falls Church DC, Maryland & Virginia · Member since 2014 · 794 posts · 612 votes
10y
@Account Closed My post came off as super skeptical. There is without a doubt a need for hard money. I use it all the time.
Where we part company is saying that down payments, points, and monthly interest cover the cost of the loan. Even in that case, they still have a vested interest that you succeed. Taking back a home and going to foreclosure is a long costly process. A lender does not want their money to be tied up this way. UNLESS they are in the loan to own business.
The reason I am skeptical of 0 down companies is because I have encountered several clients in the past few months who lost money to phony lenders. They promised them a 0 down loan, took a hefty nonrefundable EDM and then prevented the loan from closing. I see this scenario play out often.
If the company has nothing to hide and will give you a 0 down loan, go for it by all means. I am just encouraging people to do their homework that's all. Real estate investing is awesome and I want everyone to succeed but if it seems to good to be true it probably is.
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OP
Lender · Member since 2016 · 16 posts · 7 votes
10y
@Jay Hinrichs You're right. 0% down lenders are taking a huge risk and aren't going to lend to newbies. We usually look for a solid 2+ years experience. We don't charge any fees up front, but I am sure it happens elsewhere. We are certainly picky about what we fund on: because of the risk we take on a bad investment hurts us as much as it hurts the flipper! I kind of like that about our model though: we are partnered with the investors success. If they lose, we lose, so we do our due diligence before funding anything. But, when we do fund a deal, we are endorsing the deal as a smart investment.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
10y
Julie I get it I have owned 3 sizeable HML companies in my day.. and done well over 2,500 transaction as the owner principal of the company.. and I have done them every which way.
from no money.. to needing money.. to equity share etc etc.. end of the day its the character and capacity of the flipper that is paramount.
tough thing right now for most is finding deals that meet the LTC ratios that make 100% funding even remotely safe.
however you are new to BP I see and generally speaking this is a beginners site.. I would be surprised if you found many rehabbers in boston that troll this site looking for a lender.. or at least that would meet your requirements I suspect you already have those targeted and like most of us in the business today we spend most of our time supporting KNOWN players to us.. instead of trying to cast a huge wide net and or train newer folks.
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1 Reply
Ben McMahonPro Member
Investor · San Diego CA · Member since 2014 · 341 posts · 140 votes
10y
@Andrew Michael I agree with you Andrew, if I was a hard money lender I would be looking for skin in the game. I disagree that you are either new or a poor investor. I always use private lenders, and rarely put any of my own money into the pot. I have yet to let one tank. I know several other investor friends of mine that are on the same plan, and we are all experienced investors with good track records.
It makes more sense for me to use as much of my lenders capital as possible, so that I can save my own for more deals.
But if I was a private lender I would probably only do 0% if I already had a relationship with the investor. Or do what @Account Closed said about partnering with the investor on the backend.
I dont do hard money because I have yet to find terms that beat my private lenders. Which is 0% down, no points, on 10% over 12 months.
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Account Closed
OP
Lender · Member since 2016 · 16 posts · 7 votes
10y
@Ben McMahon I don't blame you for sticking with your private lender- those are great terms!
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
10y
@Andrew Michael your are exactly correct the PUMP and DUMP due DILIGENCE schemes are rampant on sites like this.
think about it is there a more target rich environment for scammers than BP a site that is loaded with first time folks who even make post that they are first timers and new investors .. what is a very innocent post turns out to be a lead for a scammer...
Just place on post on this site saying your looking for money.. I flat guarantee you will get hit by no less than 5 of these scammers... Pump and Dump due diligence schemes are as old as Real Estate my dad warned me of them when I first started in RE in 1975....
There was an episode on American Greed about Remington financial.. they were in business over 20 years their target was small commercial to bigger multi or commercial.. they charged 5 to 10k DD fee's estimated they brought in over 200 million in the 22 years they operated.. by the time the FBI was done with them.. they could not establish that they had made more than 11 loans in all those years.... long prison sentences.
your instincts are fine and intact.
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
3 Reply
Andrew Michael
Lender · Frederick/ Falls Church DC, Maryland & Virginia · Member since 2014 · 794 posts · 612 votes
10y
@Ben McMahon I agree. That is why I said *Most Likely. Yes if your money is tied up or you want to increase volume it is completely valid to need hard money. As I said, I use it all the time.
My post was more aimed at the new investor so they don't fall victim to the bad lenders out there.
1 Reply
Sean Cole
Investor · Cincinnati, OH · Member since 2012 · 506 posts · 331 votes
10y
I'm currently charging $10,000 down payment, 1.9 points and 15% I/O. We'll lend 65%-75% of ARV depending on the neighborhood where the house is in Cincinnati.
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Steven Bibbs
Wholesaler · longview, WA · Member since 2014 · 15 posts · 0 votes
10y
http://thewealthinvestors.com/ are these guys for REAL?
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Sean Cole
Investor · Cincinnati, OH · Member since 2012 · 506 posts · 331 votes
10y
He posts on BP...
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OP
Lender · Member since 2016 · 16 posts · 7 votes
10y
@Jay Hinrichs like you said, I am new to BP (and real estate investing as a whole). I graduated college a few months ago. I am on this site to learn about the industry as a whole, so all input is appreciated.
Thanks!
Julie
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Dylan TanakaPro Member
Real Estate Agent · Detroit, MI · Member since 2008 · 455 posts · 178 votes
10y
Julie Manning If you're really serious about investing in real estate long term you should learn all that you can about Private Lenders and how Private Money works. With private lenders you negotiate between the two of you the rate, term, etc. Paying 15 and 5 is going to make it very difficult to profit, not impossible but difficult. Learn how to cultivate your long term relationships. Private money can be had easier than most people think. You just have to become an expert on how the process works and how to explain it simply and confidently.
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Account Closed
Real Estate Investor · Rancho Santa Fe , CA · Member since 2016 · 323 posts · 107 votes
10y
Here In San Diego, some of My clients loan at 20%,4 points and 9.5% depending on the deal. down payment may go up to 30%, but my best guy stays at 9.5% which adter reading the thread I think is pretty good.
1 Reply
Justin R.
Developer · San Diego, CA · Member since 2015 · 1k+ posts · 1k+ votes
10y
Originally posted by @Andrew Michael:

Often times the people who are lending 100% are either in the Lend-to-own business or they are big fans of the non-refundable EMD's. Just be sure to do your homework.
Or, based on my experience, there is an established relationship already.
I don't personally look for that (since I've judged my backend profits to be more valuable than the alternative), but I know people locally who do.
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Charles Worth
Investor · New York City, NY · Member since 2015 · 808 posts · 417 votes
10y
@Andrew Michael
Your instincs are spot on, however what @Account Closed
is really more equity than debt. If someone offers 100% financing in the debt area (esp at a low rate) and esp if newbies are welcome its probable something is wrong. However, the equity arrangement is much more typical and makes sense. In short, if you can evaluate a deal as an equity player and its the right deal you will be compensated both in fees/interest and in an equity split. If the deal doesn't work and you know the market you can always sell it and if it does its a much higher return than debt. There are a number of people who fund these types of buys that are legit including some of the better known people on here. At the more experienced level its even more typical.
1 Reply
Account Closed
Investor · Miami, FL · Member since 2014 · 80 posts · 32 votes
9y
Anything above 2 points and 9% for a major rehab or new construction is insane;
Even in the conditions cited above, if the smallest thing goes south you lose your shirt.
Just a delay with your builder, bad weather or a slowing market can wipe you out
With rates between 9 and 20 you're better off finding equity partners, or do smaller deals in cash
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