Private Lenders : Advice on the numbers

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Private Lenders : Advice on the numbers

Tanya Maslach
Member since 2024 · 130 posts · 95 votes

Hi all,

This is for either private lenders or investors who have experience financing their properties with private lender support.

I have a 3 specific deals I'm analyzing (Ohio) and would like to know if I'm looking at this the right way. Prop details and my questions are below. One of those deals we (my husband and I) are financing with a HELOC.

The other deal we want is below.

Property (1) Details: 
MF - 2 units.  3/1 per unit. Almost turnkey. Just cosmetic updates.
Less than 1 mile to major hospital in Columbus. (Hospital is spending $3.1 bil to build out infrastructure, and is currently purchasing houses in area to support staff requirements)
Days on Market: 112

a. List: $339
b. Offer: $310K
c. Down: 25% ($77,750)
d. Rehab/Updates Cost: $12K
e. Cash flow: $1121/month
f. Est ARV (on an MTR): $365,000
g. CoC: 14.8%
h. ROI: 19.8%

I'm interested in private lending financing this deal and wondered:

a. Are the following proposed terms out of the ordinary or am I thinking about this wrong? 
   
Down payment + primary home loan for 5%, on a 12 month term with no PPP? 
SO:   $77K down + holding the loan. 


OR

Our financial and management responsibility for this deal would be sweat + financial equity (prop mgmt, GC work on site, purchase and install all furnishings (for an MTR)).

Thank you for you feedback and guidance on this.

Tanya

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Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
1y

@Tanya Maslach

You mention ARV as a MTR but a lender is not going to look at it that way they are gonna look at what the property is worth a single family home

If you go DSCR they will take lower if 75-80% of appraisal or a coverage ratio.

So you will need the $77,7500 + around $30,000 in interest payments plus + closing and refinance which probably another $10,000.

I think that will adjust you cash on cash etc

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    1y

    @Tanya Maslach

    You mention ARV as a MTR but a lender is not going to look at it that way they are gonna look at what the property is worth a single family home

    If you go DSCR they will take lower if 75-80% of appraisal or a coverage ratio.

    So you will need the $77,7500 + around $30,000 in interest payments plus + closing and refinance which probably another $10,000.

    I think that will adjust you cash on cash etc

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  • Tanya Maslach
    OP
    Member since 2024 · 130 posts · 95 votes
    1y
    Quote from @Chris Seveney:

    @Tanya Maslach

    You mention ARV as a MTR but a lender is not going to look at it that way they are gonna look at what the property is worth a single family home

    If you go DSCR they will take lower if 75-80% of appraisal or a coverage ratio.

    So you will need the $77,7500 + around $30,000 in interest payments plus + closing and refinance which probably another $10,000.

    I think that will adjust you cash on cash etc


     Okay so clarify / summarize:
     I need to come to table with the cash ($107K, plus, when the cash refi happens later, the closing cash for that), and then the priv lender holds the loan on whatever the interest rate terms are set for....

    Is that correct?

    0Reply
  • Tanya Maslach
    OP
    Member since 2024 · 130 posts · 95 votes
    1y

    Chris,
    There is another part of your note that is not clear to me:

    "If you go DSCR they will take lower..."

    I am currently cleared (by another lender) for DSCR on the properties I'm proposing deals on... if that helps.

    0Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    1y
    Quote from @Tanya Maslach:

    Chris,
    There is another part of your note that is not clear to me:

    "If you go DSCR they will take lower..."

    I am currently cleared (by another lender) for DSCR on the properties I'm proposing deals on... if that helps.


    IF the property appraisal comes in at $300,000 instead of $365,000 - even if it cashflows the DSCR lender will not give you the loan you want, they take lower of DSCR ratio and appraisal.

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  • Tanya Maslach
    OP
    Member since 2024 · 130 posts · 95 votes
    1y
    Quote from @Chris Seveney:
    Quote from @Tanya Maslach:

    Chris,
    There is another part of your note that is not clear to me:

    "If you go DSCR they will take lower..."

    I am currently cleared (by another lender) for DSCR on the properties I'm proposing deals on... if that helps.


    IF the property appraisal comes in at $300,000 instead of $365,000 - even if it cashflows the DSCR lender will not give you the loan you want, they take lower of DSCR ratio and appraisal.


     Thank you.  So your comment is actually referring to the loan later, when I do the cash refi.
    That ARV is based on SFH now, that my agent referenced for me. 

    Current home price is listed for $339K though.  So my question was related to how the terms would work based on the financing NOW with a private lender. 
    And from your response (which I clarified in this thread), my understanding is I'm responsible for bringing ~ $107K to the table at closing. 
    Which -- is not possible.  So answers my question about how this might work with a priv lender.
    ;-)

    0Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    1y
    Quote from @Tanya Maslach:
    Quote from @Chris Seveney:
    Quote from @Tanya Maslach:

    Chris,
    There is another part of your note that is not clear to me:

    "If you go DSCR they will take lower..."

    I am currently cleared (by another lender) for DSCR on the properties I'm proposing deals on... if that helps.


    IF the property appraisal comes in at $300,000 instead of $365,000 - even if it cashflows the DSCR lender will not give you the loan you want, they take lower of DSCR ratio and appraisal.


     Thank you.  So your comment is actually referring to the loan later, when I do the cash refi.
    That ARV is based on SFH now, that my agent referenced for me. 

    Current home price is listed for $339K though.  So my question was related to how the terms would work based on the financing NOW with a private lender. 
    And from your response (which I clarified in this thread), my understanding is I'm responsible for bringing ~ $107K to the table at closing. 
    Which -- is not possible.  So answers my question about how this might work with a priv lender.
    ;-)


     What I saw missing was the interest you are going to be paying the private lender until you refinannce which would be around 12%+

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  • Tanya Maslach
    OP
    Member since 2024 · 130 posts · 95 votes
    1y

    Thanks so much @Chris Seveney!! :-)
     
    Qu:  Will private lenders consider terms with an interest only payment before the cash refi? And then a balloon payment for the whole loan 12-16 months later?

    0Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    1y
    Quote from @Tanya Maslach:

    Thanks so much @Chris Seveney!! :-)
     
    Qu:  Will private lenders consider terms with an interest only payment before the cash refi? And then a balloon payment for the whole loan 12-16 months later?


     Yes they are typically interest only paid monthly - so if you are borrowing $250k expect to pay around $2500/month and then $250k at end which would be a total amount of $280k paid which can hvae a big impact on your margins.

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  • Tanya Maslach
    OP
    Member since 2024 · 130 posts · 95 votes
    1y

    yes.   But I'm glad to do the math exercise correctly -- thank you for that.  I just needed to get to the nuts & bolts of this to make sure I could do my numbers right ...  thank you.

    0Reply
  • Jacqueline Wright
    Lender · Nashville TN, USA · Member since 2024 · 142 posts · 30 votes
    1y

    Hi Tanya,This looks like a solid deal with strong numbers, especially near the hospital—great strategy! For private lending:

    Your 5% loan proposal is ambitious; most private lenders expect at least 10-20% down. Sweat equity is valuable but usually doesn’t replace financial equity for lenders.

    Your cash flow and CoC are attractive, and the proximity to the hospital adds solid upside for an MTR. Highlight this when pitching.

    Typical terms might be 8-12% interest, 12-18 months, 1-3 points, and 75% LTV. Be clear on your exit strategy (refi or sell).

    If private lenders hesitate, consider a partner or a local portfolio lender for more flexibility.

    Good luck, it’s a great opportunity!

    1Reply
  • Tanya Maslach
    OP
    Member since 2024 · 130 posts · 95 votes
    1y
    Quote from @Jacqueline Wright:

    Hi Tanya,This looks like a solid deal with strong numbers, especially near the hospital—great strategy! For private lending:

    Your 5% loan proposal is ambitious; most private lenders expect at least 10-20% down. Sweat equity is valuable but usually doesn’t replace financial equity for lenders.

    Your cash flow and CoC are attractive, and the proximity to the hospital adds solid upside for an MTR. Highlight this when pitching.

    Typical terms might be 8-12% interest, 12-18 months, 1-3 points, and 75% LTV. Be clear on your exit strategy (refi or sell).

    If private lenders hesitate, consider a partner or a local portfolio lender for more flexibility.

    Good luck, it’s a great opportunity!


     Wonderful! Thank you for your insight and feedback.
    This is already something I'm shopping around today so am excited to keep the momentum going.
    I appreciate you!

    1Reply
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