Contingent Interest / Shared Appreciation Hard Money Terms Common?

[Andrew N.]

Hey All, Sorry if this has been answered before but I didn't see much regarding this when I tried to search the topic. I went to my first REIA meeting last night and met two Hard Money lenders. One of them loaned up to 65% of purchase price charging 2-3 points at 8%. This is the type of deal I am more familiar with. There was another HM lender who advertised loans up to 70% ARV (so possibly 100% of a deal plus rehab cost if purchased at the right discount) but then charged points as well as 12% and a contingent interest of 25-50% shared appreciation (which I was led to believe was basically a profit share on the deal without any liability on the lender side). I had never heard of shared appreciation loans before and my question was how common are these loans? Does anyone have experience on either the lender side or the borrower side for these loans? Anything special to keep in mind with these loans? Thanks in advance!