Hard Money Payments

[Brennon Manske]

We are new to the private lender concept. If you are getting a loan from hard money. The loan is set up on a 1year term. When is first payment due? Would we have to make largest payments while in rehab before selling?

[Jeff S.]

This area of the business is generally unregulated, @Brennon ManskeHard/private lenders are usually free to create whatever repayment terms they want. There is no blanket answer.

The traditional hard/private money loan is not much different than a conventional loan, involving payment of all points, fees, and origination costs when you close your purchase. If your lender expects one, you might also have to pay an appraiser up front. Hope you have some cash.

Traditionally, you'd make your first payment at the end of your first month. This could also include repayment of rehab costs, if you borrowed those as well. All of this can be negotiated, however.

Some lenders will be completely inflexible, yet others might accept some or even all amounts owed when you sell your completed property. Your negotiating strength will generally be based on amount of experience that you have, the number of successful deals you've done with a particular lender, your relationship with them, and the quality of your deals. Never be afraid to ask.

Good luck, Brennon.

Jeff