ballpark rates for private money?

[Mark Updegraff]

Hi all, I'm considering searching for private money. Can anyone give me some ballpark rates / terms etc?

Thanks much!
Mark

[Bryan Hancock]

"It depends."

We pay 12% with no points for 1sts below 70% LTV and 14% no points for 2nds.

It really depends on who you know, how comfortable they are with you, and what security you are offering for the loan. We offer a DOT and lien note in most instances, but you can sometimes get by with a promissory note to limit transaction costs.

What are you trying to get the loan for? What are you offering as security?

[Mark Updegraff]

thanks Bryan,
I was recently laid off and I'm trying to figure out my best path forward I'm not sure what you mean by DOT. I'm guessing a lien note is just a lien on a property you own as collateral to pay the debt. I have 2 properties free and clear in an LLC that I formed. I'm hoping to expand the buy / rent / hold portfolio or to step into some fix / flips. For use of private money, ideally I would use it to fund my REI company. What is the typical length of private money (range is OK)?

Thanks again!!
Mark

[Bryan Hancock]

There really isn't anything typical about a private money transaction. Ask your investor how comfortable they are willing to leave their money tied up. The longer it is tied up the greater the risk that they will unexpectedly need the money and you will be in a jam.

1-2 years is probaby fine. 5 years is okay for younger investors IMO, especially if they are investing with retirement funds. Anything longer is likely asking for trouble.

DOT = Deed of Trust...I think you are in a mortgage state so this doesn't apply for you.

[Bryan Hancock]

You should speak with some small regional lenders too and see if they will let you pledge your free and clear assets as collateral for the new loans. These rates will be much better than what you will get with private money, but the terms likely won't be as good.

I would start there, especially if you are looking to buy long-term assets. The private money will likely be better for fix and flip projects.