Seattle - are these good terms for Hard Money?

[Ryan Kennedy]

Hey guys,

Hoping to get an offer accepted on my first deal tomorrow and trying to get hard money lined up for the purchase price. The deal pencils out with a safe 70% ARV so I think this is a very attractive offer for a local lender - Do you think these are the best terms a newbie can get? I also want to make sure this isn't just something they advertise and then give me a crappy offer after pre-approval.

• 10% down payment (no minimum credit score required)
• Optional construction component available, ask ESF for details
• 12% annual interest, with 1% monthly interest-only payments
• 5 month term with a 2% origination fee or 9 month term with a 4% origination fee (get a point back if you do 9 month and close in 6)
• Administration fees totaling $780.00for auction and $995 for non-auction.

And while I'm at it, does anyone have recommendations to help me accurately present myself as an awesome borrower to attract the best terms?

Cheers!

[Scott Hollister]

Hello @Ryan Kennedy,

Have you shopped around for other hard money lenders? 

*Be careful when you use the word safe in Real Estate:) Just like you I was a newbie this summer when I sat down with a VP in lending at RCN Captial. Before that I was just a BP podcast junkie.

• I had no prior flipping experience, only a house hack 3 years ago. (Just closed on 4th house last week, A-properties in great neighborhoods, purchase price 100k+) Just shows you that YOU CAN do it. Have confidence. 
• Present yourself by: Showing up early, being prepared with notes and quality questions, listen more speak less, interview them, ask how you can add value to their goals/mission, negotiate the terms after you shop around (Important to know what others are offering), firm handshake and eye contact. 
• Get an introduction! Find someone here on BP that has used that specific hard money lender before, an introduction doesn't just make you an applicant anymore. I have found this to be extremely useful in banking as well. 
• USE THE BP calculators! I cannot stress this enough. I handed it to the loan officer with all costs included in the income/expenses, pro forma cap rate, NOI, Cash on Cash return, financial projections, 50% cash rules, analysis over time, IT IS great stuff!

So here is the exact terms from RCN 5 months ago as a first time hard money loan. Remember, I had an introduction. Typically they like to see 4 deals under your belt. 

• 12 month term
• 12% interest with 1% each month
• 10% down, rehab costs covered as draws (My rehab was small at 6-7k)
• Points: Typically 3-4 depending on how many you have done. Gets cheaper and easier with more experience. 
• Not sure what the administration fee is for that you listed above? 

Just shop around, ask for Chris at RCN and see if he can offer you better terms.

(Disclaimer: I don't get paid or get anything in return for recommending them. I have used them once and had a great and fast experience) 

Good luck Ryan, you are at the best place for Real Estate investing!