Promissory Note rates

[Grant Farrell]

I've lent money via promissory notes to 3 different people, a friend and two acquaintances. They've all been less than 1 year durations and have been for 7% and two for 9% interest with properties securing them each. Just curious what anyone else is charging/paying for a similar loan. Thanks

[Alex Breshears]

Hi Grant! Depending on the market you are located in, the lien position of these notes, and the total LTV of the loan - rates can be all over the place. For example, the West Coast is seeing lower costs of capital than the New England area, while Florida can still get maybe 2 pts origination and 12% annualized for a 1st lien position loan.

To see what's happening in your specific market, you can secret shop some local hard money lenders, community banks, and brokers to see what their rates and terms are for different products and the qualifications to get those products. Are they going to require a full appraisal? Do they require a credit check? Are they verifying assets for closing? etc etc.  When you have a good idea of what is available in your market, how they are lending, their timelines - you can build a private lending business centered around those competitive advantages and ask for the rates you want (as long as they are within the limits of the usury laws for your state).