Typical rates for private and hard money.

[DJ Porter]

I've been searching for a while now and I've been finding widely varying rates from lenders. I want to get some flips funded but the rates, costs and fees are all over the place. What is typical? So I know which ones are way too far in left field and I should avoid.

[Robert Leonard]

@DJ Porter in simplest terms, private lenders (PML) are your friends, family, and personal acquaintances who will loan to you at 12% or lower. You don't want to go straight to 12% when you talk to them, most will be happy with much less than that.

Hard money lenders (HML) will usually charge 12% or more. As you've seen, the numbers can be all over the place. None of this is written in stone. You can expect to pay the highest rates from HMLs on your first deals until you establish a track record. Not everybody will be successful when they first try this and you have to understand that you are asking them to take a pretty significant risk to invest with you without any experience.

The best HMLs to deal with are the ones who will only fund your deal with a high probability of success. So don't be upset if you get denied on a thin profit margin deal. They are always taking the risk that they get the property back, but you definitely want to only use HMLs when an adequate profit margin exists.