Hard Money Loans Explaination

[Will Biestek]

Hello Bigger Pockets world. I was hoping someone can help breakdown what a hard money loan would look like. I know that every deal is different and everything can be negotiated but how does a hard money loan generally work? For example: $100,000 @ 12%. Are there monthly payments? If so, when do they start? Do I simply take $112,000 of profits and pay it as a lump sum back to the lender? Any tips or discussion would be greatly appreciated.

[John Thedford]

Most HML are going to want monthly interest payments. Some may ask for points in advance. They usually only want 1st position and want you to have skin in the game (money). Generally, when the property is flipped you get paid off. Terms are usually short, often as little as one year. DO NOT pay advance fees. Those are almost always con games. They get your money and you will never get the loan.