Long Term Hard Money Loans?

[Don Konipol]

I have been making hard money loans for 12 years. All loans are interest only payments, one year, renewable for an additional year with additional fees and points. All secured by commercial property.

I am contemplating adding longer term (15 year) fully amortized hard money loans. The premise of all the loans I made in the past was that borrowers would pay the high interest rates only temporarily and refinance out as soon as possible. The premise with a long term HML would be that the return on the investment would have to be high enough to support the interest rate charged. My question to the BP community is how high a fixed rate can make sense on a HML over a long term? I am trying to see if there exists an overlap between the investment return I demand and what borrower's are willing and able to pay.

Any comments or thoughts would be appreciated.