Should I ask for more? Private Lending Rates and current interest environment.

[Curt Bixel]

I have been doing private lending in the Ohio area with a house flipper who is experienced, organized, and trustworthy.  I see little risk that he will run into significant difficulties with any of his flips.   I have been asking for 10% for the loans so far.  Recently, my bank has raised the interest rate it pays on savings accounts from 0.5% to 4%.

I am curious if this is signalling a significant change in the interest environment and if I should consider asking for more.  

[Doug Smith]

One of our capital sources are smaller investors and people with money in IRAs that don't have the systems in place, the deal flow, or the underwriting expertise to run a portfolio. We set up a debt instrument with the investor and pay them a fixed return over a period of time...24-48 months depending upon their needs...and then we pool that money with our money and other investor money to lend out. 10% is right at what we normally pay out to the investor and then we mark up the deal a little bit when we lend it out for our operating costs and profit. I don't think you're 10% amount is out of line. We charge a bit more to investors for short-term money, but 10% is very attractive to a savvy investor.