How much is too much interest?

[Tim Emery]

How much is too much interest? 

I'm looking at an opportunity on a property that I want to buy. It looks like I can make $100k net profit if I put in $200k of my own money. But, if I put in 10% of my own money I can make $50k net. 

The rub is, I'll be paying 4 pts. and 20% interest on the 90%. Yes, I still should make the $50k net.  

This is more of a learning post, then a I can do better terms post. 

If you respond please help people understand why this works.

P.S. It's a short term loan. 

Thanks,

[Travis Sperr]

@Tim Emery - the missing piece to this puzzle is - how much is the 10% down? Cash has an important opportunity cost if you have a good deal flow, so putting out $200k could restrict you from doing other deals. 

No one is paying 4 points and 20% interest on money right now - unless there is a missing detail of unsecured, risky deal, etc.  

High cost money creates an opportunity otherwise unavailable, much like partnerships - they are expensive, but sometimes the best way to get a deal done.