What Are Private Lenders Charging for under-$100k Loans on SFHs in NWI?

Question

I'm a private lender looking to branch out in Northwest Indiana (never done a deal in IN before).

Woukd anyone be willing to chat about or share some ideas about how much to charge for purchase and renovation loans on single family homes in the area?

I know there are many, many details that come into play and that there is no one-size-fits-all answer to that question. That said, I'm looking for a very general baseline in terms of interest rates, points, fees, etc

Would anyone be willing to share that kind of anecdotal info?

Robin Simon · Answer

Under $100k you are probably going to need at least 2 points to make it economically feasible, biggest challenge in loans these size is that the fees don't tend to scale with the loan size and borrowers always feel like they are getting ripped off, when its actually the lowest profitability and razor thin margins for lenders on these

Robin Simon · Answer

Yeah makes sense - 2 points definitely a hard minimum -- can make sense as a larger lender to invest long-term to people just starting out and if you have excess capacity too -- a tough niche and certainly an opp for true "private money" to play in

Scott Smith · Answer

Yep, I'm beginning to see that. Thanks for the tip re: points.

Camden Lowrance · Answer

Not worth it IMO, what area of NWI do you invest in? I know a few local guys who will fund lopsided deals like this but it aint cheap.

James Driscoll · Answer

Robin's point about fee economics is pretty accurate from where I sit. After 31 years in the mortgage business, the single most misunderstood thing borrowers carry into a closing on a small-balance loan is the assumption that fees should scale proportionally with loan size. They don't. Title work, appraisals, processing, underwriting time, compliance costs... most of those are roughly flat regardless of whether you're doing a $90k loan or a $300k loan. So the lender's margin on a 2-point origination fee at $90k is genuinely thin compared to what it looks like on paper.

For a private lender doing purchase-plus-renovation on sub-$100k SFHs in NWI specifically, the risk profile adds another layer. Smaller markets, lower price ceilings, tighter resale liquidity if you have to take the asset back. Those are real risks that deserve real compensation. Robin's point about IRA lenders is worth sitting with too: a self-directed IRA investor doing one or two deals a year has a completely different cost structure than a business entity with overhead, so what's "enough" varies a lot depending on who's asking.

From the conventional/agency side, the same dynamic shows up with conforming loans under certain thresholds. Lenders add loan-level price adjustments partly because small balances are less attractive to service and sell. The economics just work differently at this end of the size spectrum.

If I were advising a new private lender entering this space, I'd say be transparent about your fee structure upfront rather than leading with a low point count and layering in fees at settlement. Borrowers in this niche are often repeat investors who talk to each other, and reputation matters more than squeezing an extra half-point out of one file.

Jim Driscoll

Erik Estrada · Answer

Yea I agree with @Jay Hinrichs

$5k minimum in lender fees to keep the lights on. Unless this is something you do on the side, or if you can work some sort of exit fee/profit sharing, charging less than $5k in loan fees will be tough to keep going.

Vijay Friedman · Answer

@Scott SmithThere definitely isn't a one-size-fits-all answer since leverage, borrower experience, and rehab scope all affect pricing. It may also help to connect with a few local rehab lenders and investors to understand what's competitive in Northwest Indiana, especially for sub-$100K projects where economics can differ from larger loans.

Brett Synicky · Answer

@Scott Smith There are private credit opportunities available that fit this mold where you don't have to originate. You'll get a nice pref plus a share of the points. Downside is the minimums are typically $50-100k and you must be accredited. Upside is less work and your money is safer since it's spread across a bunch of loans instead of just one. The good operators only have around a 6% default rate but that's across 100+ loans and will always pay their investors before themselves. Something to consider.

What Are Private Lenders Charging for under-$100k Loans on SFHs in NWI?

What Are Private Lenders Charging for under-$100k Loans on SFHs in NWI?

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