18 % from Hard Money Lender to high?

[Davian M.]

BP,

Here is my current dilemma! I have a family member who is trying to avoid going into foreclosure and has agreed to let me buy the property for the remaining balance, which is about 23K. I recently finished a renovation project on a investment property which is why I am a bit strapped for cash. I have found a hard money lender who is willing to loan me the payoff amount of 23k with 25 percent down for 5 years at 18 percent interest. Is this the common rate or should I look else where for better rates? I am open to any suggestions and I look forward to your thoughts.

[David T.]

First of all you have to ALWAYS look at hard money as a temporary solution. You also would only engage with a HML if you have short term (high) profitability.

The best hard money deal I've come across is 12 plus 4 points for 6 months money, $200k with a PG. Hawaii is always going to be little more expensive, right!? :).

Don't go into this deal unless you can refi withing 6 months, after that you're dealing with one issue exclusively; profitability. That means you have to carefully analyze your costs and your exit process.

Sounds like you're rolling though. Good luck with it.