Rental Property Investor · Bayonne NJ · Member since 2015 · 18 posts · 2 votes
Hey guys, so I recently met a few investors who were willing to fund my first deal, I’m most likely going to do all the work and there just going to provide the capital, some told me they would fund my deal and go 50/50 on the profits.
This would be my first time ever borrowing a large amount of money so I wanted to ask you guys what are some good terms on hard money? What numbers should I be looking for when borrowing this money?
I’m sure any investor who wants to make money will lend me the capital for the deal. i just want to know whats a good deal for me and know the difference between getting taking advantage of and a good deal. Also most of these investors are first time investors meaning this would be their first deal.
REI Pro · Boise, ID · Member since 2014 · 380 posts · 93 votes
11y
When I first got started I used a hard money lender. They loaned 65% LTV on the purchase price. 5 points, 12% interest. Once I did a few loans they were negoable on the points. I had to come up with the 35% and the costs of the rehab.
Investor · Washington, DC · Member since 2014 · 71 posts · 25 votes
11y
The lowest I have ever heard of is 2 points and 12 %. The highest should be 5 points and 16%. What you described is more commonly called a joint venture when the lender gets an equity split. Look up some Hard Money Lenders online to see what terms are normal. I can suggest Lima One, Visio Financial, Rehab Financial, Dominion and Advance America. BP also has a directory by state. Look for someone local, if possible, and after a few loans you may be able to get better terms. First time investors may charge less interest and private lenders will be happy with 8-10%. Also avoid monthly interest payments and try to pay a balloon payment after you sell the property. Good luck.