Investor · Orlando, FL · Member since 2015 · 16 posts · 2 votes
Hi BP
I have a great flip under contract that I am looking for a short term 40k loan that I am willing to pay back in 3-4 months with 30% interest. I currently have two rentals and 1 flip in the central Florida area now and most of my cash is tied up in these investments.
The only way you'll be able to pay 30% is through a JV agreement. I frequently pay 20-50% interest, however, as John Thedford said above, anything over 17.99% per annum on a LOAN is illegal - an equity partnership has no ceiling.
The return sounds great. Anything over 18% in Florida is usurious. I don't think advertising such a high rate does you service. As a HML, when I see ads offering such high returns, it makes me suspicious of the borrower and the deal. That is strictly an observation, and certainly not meant to call into question your ability, motives, or the transaction.
I understand your concern because it is a very high return. The only reason I am willing to pay that high interest is because the deal I have under contract has a potential profit of 100k. It's a off market deal that has strong comps to support the ARV. I have a few rentals and have flipped 3 properties myself. I use HML on all and it's always 12% with a few points. This would be the second note not the first that's why I jacked up the interest. I have plenty of equity in my other properties and one is going for sale this weekend. Problem is until that sells I won't be able to close on this new flip I have under contract in time so I am willing to pay that high interest to make sure I don't lose this deal because like I said its a home run flip on a newer house that needs just a cosmetic rehab. Those are coming very hard to come by these days.
The only way you'll be able to pay 30% is through a JV agreement. I frequently pay 20-50% interest, however, as John Thedford said above, anything over 17.99% per annum on a LOAN is illegal - an equity partnership has no ceiling.
Ok thank you Ben. I did not know that. I already have someone that is willing to do the deal and we were going to have attorney draw up contract in next few days. I appreciate it the info
Darren, If you have equity on other properties, why not ask for the 2nd on those. I think you don't have to pay such a high interest if CLTV is less then 65%.
Because every one I have spoken with wants to be the first. So I figured to make sure I can close in time I am willing to pay that return because I still will walk away with a nice profit.