Hard lender terms

5 Replies

What are typical terms for borrowing from a hard lender?

@Tom Wayland

They vary depending on things such as the location, the lender, and even the deal. Typically I see a lot that are charging interest rates in the low teens with maybe a point or two.

@Tom Wayland

The HML I am working with is charging 12% and 3 points.

Usually the more deals you do with them the better the rates get and sometimes if you are going to hold the property as a rental they will give you better rates if you promise to refinance the property using them. But either way HML will always be expensive. Just trying to get a few projects under my belt so I can have a presentation and track record to put together for private lenders.

Great, now what is a typical payback period? Are there typical penalties for extending beyond?

Thanks for your responses. I have a friend who wants to be my investor. Neither of us have used hard money before, so I looking to see what is typical. 

Tom Wayland I have been using private money for some years and the rates vary for me depending on what ltv I'm borrowing at obviously the higher the ltv the higher the rate. As far as the payback period I always set up my deals with no prepayment penalties this way if I can get a refinance the next day I will pay them off. So as far as the length of the pay back period it should be as soon as you can and not a set time.

Most hard money are around 12% and 3-4 points.  I've seen some as high as 16% and 6 points.

Most will require 25-35% down too, and some will fund a portion of the rehab, some won't.

I talked to a local hard money lender and they do 80% of of the cost if the total is under 65% of the LTV.

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