Hard money loan

[Steve Smith]

As a new investor what Information is needed on calculating holding cost for hard money loan s?

[Douglas Larson]

I don't know the Florida market but Most hard money terms I see out west are 60%-70% of ARV (After Repair Value), although often their valuations tend to be on the conservative side. Then, there's the 2pts (2%) origination fee and about 12% APR interest-only payments each month. A six-month term is common and with another 1% you can usually re-up for another 3-6 months after the first six. Make sure to negotiate that option up front.

Most hard money is a close variation of this theme, at least from what I've seen and used in Utah, California and Nevada. Many private lenders will reduce the origination fee and the APR on your 2nd or 3rd deal with them. Again, ask about this up front. finding a good, reliable, fair money source is crucial to success.

My last deal with hard money looked like this:
60K purchase price
45K borrowed - Hard Money
2% origination = $900
12% APR or 1% per month payment =$900 for 2 months
No renovation costs
Sold in under 60 days for 78K
Net gain = 11K after commissions, closing costs, loan carry.

Have fun and Make Your Own Luck!