Investor · Cleveland, OH · Member since 2011 · 603 posts · 130 votes
I am using the purchase with hard money, rehab, rent, then refinance with commercial lender plan.
My hard money lender charges 5 points on the first deal, 4 points on the second, 3 points on the third ect... Now that we have done some deals, I am not only getting charged 1 point + 12 % interest over a 3-4 month period.
When I refinance - my commercial lender charges 1% on the loan along with around $600 in appraisal and doc fees.
These bank fees + hard money add up and might be worth shopping.
Are these pretty good rates from the lender and bank or can I do better?
Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
9y
Relationships matter. Looks like you've got a good one with your lenders. You should do what you can to cultivate it and keep it, not throw it away.
You've done a few loans and now you know the rules of engagement and your lender can trust you to pay their money back. Risk is reduced, so they've reduced their cost to recognize that reduction, but unfortunately, you want them to go deeper. Risk ihas not been eliminated, just reduced.
Every part of this business has risk and those risks cost money. The painter needs to get paid, the carpet guy needs to get paid and the guy who makes it all happen, the lender, needs to get paid. Your lender is giving you an opportunity you wouldn't have otherwise (to buy, rehab, rent, refinance and repeat) and in this instance, looks like a fair (even low) price.
Factor the cost of the money into the cost of doing business and if the numbers work, pay it and go get another.