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Updated 25 days ago on . Most recent reply

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Waylon Bruce Moore
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26
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need to know what the normal cost is for borrowing money from a friend for a rehab.

Waylon Bruce Moore
Posted

We normally have been using our cash to buy, reno, and hold houses for rentals. Recently, my neighbor approached us about buying her home. It needs extensive renovations, and we would probably flip it once finished. There is a return of about 16% and annualized 33%. one of my close friends recently offered to fund any projects we were going to do and since i dont have much expereince in getting loans what is the normal return i should offer them for a loan of about 400k over a 6 month time frame (purchase-reno-sale)?

  • Waylon Bruce Moore
  • Most Popular Reply

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    Peter Mckernan
    #1 Rehabbing & House Flipping Contributor
    • Residential Real Estate Agent
    • Irvine, CA
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    Peter Mckernan
    #1 Rehabbing & House Flipping Contributor
    • Residential Real Estate Agent
    • Irvine, CA
    Replied

    The nice thing on this is that it is a private money loan so it really is up to you/them on what they want and you want. Sometimes people want something so high it does not make sense and sometimes they don't care... I would suggest 9-10% with no points and if they want some points I would suggest starting at 1 point. The market rate for something you are talking about right now is about 9.85%-11%, 1-2 points, and doc fees totaling about $1k-$2K.

    • Peter Mckernan
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    The McKernan Group
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