Quote from @Rick Pozos:
If you are putting a 2nd on several properties, 5% sounds reasonable. BUT why would you put a lien on several properties?? Just put one lien on one property. Sure you will pay higher interest rate, but you keep the other properties with only 1 lien.
2nds are usually higher interest rate. I would think 2nds are about 12% interest rate. Personally, I pay 8 to 10% for 1sts.
Of course, its all relative. If someone is getting half a percent on their money on a 3 year CD, and now they can get 4%, they might think 6% is great. But most real investors are going to want 12 to 15% on a 2nd. AND it depends on how the people know you and trust you. Its a matter of risk.
Reason to do a single note is just to cut down on closing costs, each note is another fee to the lawyers. Plus wanted to target staying at 75% LTV across the board to lower the risk profile as well.
10-12% rate is just not feasible for rental properties nor would it be commensurate of the risk (well managed and seasoned). Rentals in Austin stay full and my capital reserves for rainy day are excellent. The risk here is actually lower than buying a 10 year treasury!
For the borrower (me), this is just a way to avoid doing a cash out refinance as the 1st mortgage rates are super low (sub 4%). Texas does not allow financial institutions to do 2nds on rentals so it has to be done through private lending.
