So I’m shopping around for a Hard Money loan. I found a lender that’s willing to work with me. The terms are 30% down, 16% interest for 12 months then balloon at the end of 12 months. No points upfront. How does this sound. This will be my first Investment property. Anyone have similar terms? How did it turn out?
@Michael Morin is this Monroe Capital by chance? They offer a very similar program at 16%, no points. There could me much more affordable options out there depending on the property type, loan amount etc. You can probably obtain terms from other HMLs between 9-11% and 2 pts - this comes to about 11-13% over 12 months vs 16%. Depends on how quickly you can exit the deal to determine best options!
Can you tell us more about the deal
When you say "is willing to work with me" is there something that is holding you back from having you choice of any lender out there?
I ask because there are terms out there that are better than that, but those other lenders may have requirements that you may not meet. If that is not the case I would suggest at least getting 1-2 other quotes as that will let you know if the deal you are being offered is the best or if another lender has a better option for you.
Below are some ideas of where you can find additional hard money lenders to compare...
- The ‘Network’ tab on BiggerPockets has a hard money lenders tab, and you can search by state.
- Local meetups
- Speaking with local realtors
- Speaking with title companies
Speaking with experienced investors in your area can be particularly helpful. If they've had a good experience with a lender, then chances are you are setting yourself up for success down the road.
Lastly, online search/databases - Simply by searching online you can find a number of quality reputable national lenders. If you want to get more specific, then you can type in your location, e.g. 'New York' along with your hard money lender search query. 'New York hard money lender' would be a reasonable starting point.
Hope this helps,
Hey Micheal. I’m actually working on my first investment property as well. Been researching lenders for some time now and have found many with better rates. As @Marty Johnston said between 11-14% on the high end. They are also some great people. One that comes to mind is express capital’s John Sotiropoulos who offers closer to 9.5% with other terms as well. But @Michael Glist has a point with the willingness factor, I think it will help to know more about your position and deal as well. Still if you want I can share with you the other lenders I’ve spoken to. Feel free to message me at anytime. And kudos man on reaching your goals!
Sounds terrible. You can easily find 90% of LTC and 10% (or better) granted with 1% in and 1% out.
I'd recommend finding an investor who would give you the same terms without the points, so basically an 8%-10% preferred return.
@michael morin Where is this property? This will impact your terms as well. I'm seeing HML penalize people for investing in places like WA, NY, CA right now. I do like the fact that it is no points to you which makes the 16% rate more palatable. What makes me pause is the 30% down. Is that purchase and rehab? Or on purchase? I agree, you could probably find a better lender. If you don't have a track record (yet!), private money might be a little hard to secure.
@Michael Morin unless there is something abnormally wrong with the property you intend to invest in, those fees are far above market for hard money. Keep shopping. If you have a solid plan in place for the invest showing a realistic ARV, rehab budget, timeline for repairs, present a good exit strategy, and you are getting the property at a price that makes all of the above a no-brainer, then you won't have an issue getting money for the deal. What it sounds like is that either you haven't presented a good enough plan to get good terms, or you haven't talked with enough money sources. As a comparison, here are the last three hard money quotes I was given for a North Seattle acquisition (all with a $600K acquisition cost):
Lender 1: 8.5% interest, 2 pts, 6-month term w/extension at same rate for 6 addition months, 10% down
Lender 2: 9% interest, 4 pts, 9-month term, 10% down
Lender 3: 10% interest, 1 pt, 6-month term w/extension at same rate for 6 addition months, 10% down
Happy to share more if needed.