Hard Money Draw Fees- Are these common?!
Has anyone else had experience with a Hard Money Lender charging fees for every draw you take during a rehab?
My partner and I are working with a different lender on our second flip. We met them at a local meetup and they offered 12% with 1 pt and we only needed to pay the 1 pt up front at closing. This was better than the lender we had used for our prior flip, so we decided to go with them. Our deal in Longmont, Colorado is very good: $105k purchase, $55k rehab, $300k ARV, so the lender was willing the lend us 100% of purchase and rehab. I asked if there were any additional fees and they said no. We closed and now that we are going to take our first draw, they have explained to us in an email that they charge $200 for every draw we take throughout the rehab. To me, at the very least this will be another $1k we pay them just in fees.
I looked online and on BP and couldn't seem to find any other situation where draw fees are mentioned. So now I'm thinking this might be a "fee" they created to try and get more out of us. We also cannot find it mentioned in our loan docs. This would be fine if we knew it was part of the deal, but springing it on us now a few weeks into the rehab seems very underhanded.
Lastly, he mentioned Inspection fees as well. What are these and how and when can the lender charge them? If we send him all receipts and pictures of rehab on time, they should not need to charge for additional inspections, right?
Does anyone have advice or experience with this? Thank you!
