I have been investing locally in Rhode Island for over a decade now. On occasion, in addition to my own real estate investments, I have provided some private financing to investors that I had an established relationship with. This was never something that I pushed. If someone that I knew and trusted approached me from time to time for a bridge loan, I would sometimes accommodate. I am now looking to expand the lending aspect that until now has been on the periphery of my business. I am curious what some of the terms are that people are currently experiencing in the market. I have heard people recently discussing 12 and 2, even 10%. I typically always loaned at 14% and 3 pts.
Additionally, there are several attorneys that refer me to clients in need of financing. Is there another avenue that I should be looking at to explore lending leads? I have focused primarily on real estate deals for so long, that lending warrants a thorough evaluation of the new model. Very curious to hear some thoughts from local lenders and borrowers alike who are actively involved with hard money in RI.
Lastly, posting in this particular forum required that I select a sub forum that designated an area. I would not be limited to the Providence area. Ideally, I would be lending in Providence, Kent, and South County investors as a first position lien holder.
Money is very cheap right now and its a race to the bottom. In DC, MD and VA, 14&3 days are all but gone for now unless you are talking 100% financing or a borrower with really poor credit. Typical rates I am seeing are 9%-11% and 1-3 points origination.
Attending local meetups, asking for referrals, teaming up with reputable wholesalers are three good ways to attract clients.
Careful asking for lending rates on a message board, @Brandon Ingegneri . As you wisely noted, these are local and will be as different in Rhode Island as they are in California and Virginia. If you charge what we do here, you could be swamped with business or never receive a call. You're not competing with us of course, and you should check your competition as locally as you can. Meetups are your best bet in my view, but understand too that it's not always about rates.
In our experience, your terms will be much more important than your rates. Do you insist on monthly payments? Will you fund both the purchase and rehab? What LTV will you loan at and how is that calculated; on ARV, purchase price, a crazy formula? How fast can you fund? Do you charge fees? There are also intangibles, such as your reliability.
Within reason, the more money you will loan on a deal and the easier you make it for your borrower to pay you back, the higher will be the rates you can charge. Obviously, if you're willing to accept more risk, your borrowers will have to qualify through smaller hoops.
A few of us detailed our lending processes in this thread, which might be helpful to you: I Would Like to Become a Hard Money Lender. Any Resources?
In our case, it's still about 95% accurate. Good luck, Brandon.
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