What’s reasonable private lending

4 Replies

I have talked to a few private lenders and they are all over the board for terms and conditions. I would like to get a sense of what the reasonable terms I should be looking out for. Just for hypothetical reason, Purchase price is $1MM Loan term 6 - 1yr Credit score- 740+ Multiple rental props Can do upto 20% down. Please post what you think are reasonable private funding terms to consider in Seattle area. Appreciate all your comments in advance. Any other creative idea at lower rates are all welcome.

The shorter term the loan the higher the rate. Are you capping it at 6 years because this is what fits your needs? If we're talking purely private lenders in the sense that you're seeking individuals to lend out their own money then the rates are going to a bit more unpredictable, it's up to that individual! But, with that said, what's 'fair' or in-line with the 'market' is a different story. It depends on what you're trying to accomplish as well: is it a flip, is it a rental? If it's a rental, what's the property's DSCR or property's DTI look like? Do you have any experience in flips or owning/operating rentals (like Lane above mentioned, this plays a role). I would think something in the 7.00% - 8.500% would be do-able if everything discussed looks good and your fico is 740+ and having multiple rental properties. I would expect to see it go up to 8.500% if you're going for only 20% down, the more money down the better the LTV and better rate.

@George Despotopoulos , appreciate the info. I meant 6 mo - 1 yr. This will be a flip. Private lenders are asking 

- 2 point transaction fee, 

- 12% interest rate

- $750 processing fee. 

If anyone has better terms and can close in 2 - 4 weeks please let me know.