What are good terms when using hard money ???

[Charles Smith]

I found a 21k foreclosure that needs 10k with an ARV over a 100k.... how do I attempt to structure a win win with a hard money lender??? Any help is greatly appreciated

[Ryan Blake]

@Charles Smith There is some wiggle room for you to negotiate a win-win but mostly they will just tell you what their rates are. The big thing is to just budget those costs into the rehab and then make sure that it leaves you with enough profit and extra reserves for something bad to happen (it almost always does). I always think of it like this, $15k in profit but I have $12k in financing costs is better than having $0k in profit and $0k in financing costs because I couldn't do the deal.

That being said, the terms are going to vary based on your position and needs. If you are a new investor or have never worked with that particular HML, then you may end up paying a premium until you have a relationship built with them. Also, what are you looking for in terms of lending? 100% of purchase and repairs? That typically costs extra as well. What is the minimum of the groups you are looking at? Most HMLs have minimum to their loans ($50k) is the most common I have seen.

I can only truly speak to what I know as an HML in Texas. We lend at 100% of purchase and repairs for 3 - 4 points at 12 - 14% interest. That is pretty common in this area if lending 100%. If you have a great deal and are only going to finance 80% you can get your rates down a bit.