All Forum Posts by: Kelly Smith

Most gap lenders we work with are expensive (is a very risky investment) and have stipulations which most new investors find counter intuitive because the goal is to decrease the cash to close. However most gap lenders take equity/profit once closed (up to 50%), charge almost hard money interest rates (13%), roll all interest payments into the loan, charge points (up to 4%) upfront, have a more rigorous due diligence requirement than the 1st lien hard money lender and lend up to CLTV 70%. So when it is all said and done it is expensive money for smaller loans.

However, I have watched gap lenders and borrowers both achieve great profits in larger loan sizes... a good lender will work with you to make certain it "makes sense".  I am often underwriting 2nds to accompany our 1st lien but gap money is starting to dwindle because of the great risk.  Networking to find more is a goal of mine when I mean PMLs.