Evaluating Transactional or Hard Money Lenders

[Matthew C.]

What is the normal ROI and strings attached for local transactional or hard money lenders?

I'm reading for transactional lenders 1.9-5% depending on how long you use their money 1-90 days?

For hard money lenders I'm reading 8-18% but you're using the money longer than 90 days?

Also, what strings do transactional and hard money lenders require?

I've come across a transactional lender (1-7 days between closings) that requires you to have his guy sign-up your seller with the Option Contract. Then the hard money lender provides you with a proof of funds letter for me and my seller to submit the short sale package. The hard money lender may help with the BPO or final neogtiations if needed and will attend the closings to see they go smoothly.

With my real estate license I get the commission on the A-B. If I line up the buyer B-C then I'll get that comission. However, the hard money lender has a significant flock of realtors locally, nationally and internationally working to find buyers also.

The mechanics are unclear also. The hard money lender says to use the option contract but also involves his land trust in the deal.

Do these things co-exist?

Why do you need to land trust? Can't you use just an option and assign it?

Also, the lender does not want anyone to record the option intitially because it can "mess up the deal". I'm assuming this is because it may include my llc or lender's llc in the path of foreclosure lawsuits prior to the short sale approval?

Bottom line is that the hard money lender wants HALF of the total deal profits minus 7% commissions on both the A-B and B-C. So the hard money lender controls pretty much everything in the deal except the sweat equity and gets a 40% return on money that may sit 1-7 days.

How messed up is this?

I think I'll find local comps bought with cash and soliite to them in addition to networking among realtors.

Also, I've found various landing pages and other transactional lenders online that may require a deposit of like $500-1000 to get educated by them then you get it refunded once you close a deal using their transactional funds. It sounds scammy but the finance company seems legit from the websites and podcast calls though it's hard to tell as a rookie.

Thanks in advance for any advice / feedback.