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Raymond, I would guess the investor you mentioned has not done very many retail deals. If you can buy at 65 70% of ARV you should be able to pay hard money rates and make a healthy profit.
Individual hard money lenders have more leeway Roshe Run Size 4.5
How do you feel about using a hard money loan for your
IMO, whether or not to use HML depends on the ROI you are getting on your own money. If you have $100k sitting in your saving account earning 1%, then I wouldn use HML and I would use my own money to invest. Because instead of paying a HML 12%, I would rather make the additional 12% on my money. OTOH, if you have your money invested in high ROI projects, then by all means I would use HML.
Hard money lenders have to charge certain rates to make their spread to pay off their funders returns.
I think 12% is a pretty good for a hard money loan. Are there any points in addition to the 12%, because if you have to pay 5 8% points and get a 12% loan for maximum 9 months, then it not really a 12% loan. At least that what I am noticing in my market.
I went to a presentation tonite by a HML in denver who with rates of 10.5 11%, 2 3 points, but a LTV of 60%. The length was 30 months or five years. Residential only, and he prefers investors to owner occs, but says there are lot of self employed out there with credit scores over 700 but can get loans anyway; thats not really big news. He prefers to lend in his own backyard of colorado.
I have a few sources who I have relationships with for private money.
He also mentioned to get references from others who have closed loans with a particular HML, as some are less capable, etc. Other presentations I been to usually have rates of 15%, but a higher LTV.
That being said, I think your logic is incorrect if he is a brand new investor. Doing a hard money loan is not safer. He creates an extra 10k in expenses (at least) that he needs to make up by getting a better deal.
That being said, the lowest HML in Houston I found is at 13.99% with 0 pts Nike Roshe Mens Clearance
down lending on 70% LTV on a 6 month term.
Originally posted by Raymond Pistilli:So I am wondering how do you feel about using a hard money loan? Do you prefer it for the reasons I stated above or is a maximum profit your number one goal?
You werent specific what youre doing, but 12% plus points is pretty typical right now in southern California for flips. Longer term money for buy and holds is cheaper.
The highest I seen here is 16% with 3 pts down lending on 70% LTV on a 6 month term.
I just did a rehab using hard money, but here is what paid off more: Making friends in the lending community. I been offered an unsecured line of credit with a 5.5% interest rate with 20% down on everything I do now.
Our regular HM loans are 16%, 2 points, 6 months, and 70%. We just released a new loan that I love though. We call it the land lord loan. It loans at 100% ARV same terms as above, and the down payment is 10k, or half the repair value, which ever is higher. Will pay the repairs back out of an escrow 5k at a time, but that down payment is also placed in an escrow. Once the buyer refinances into a conventional loan we will then return that original down payment. I sure we aren the only ones doing this. You should look into it.
I have a investor who says it is ridiculous to pay 12% interest on a hard money loan. I tried to explain to them that leveraging your funds is a great way to protect yourself from further risk and that using hard money loans will allow you to do multiple deals at the same time not putting all your eggs in one basket. So I am wondering how do you feel about using a hard money loan? Do you prefer it for the reasons I stated above or is a maximum profit your number one goal? I appreciate the discussion.
Do you have specific investment criteria or goals that your investor understands and agrees to? These take the emotion out of the decisions.
Some advocate talking to your dentist and others you believe have cash earning 1% and offering them 8% on up. I dont view this as viable if youre doing many deals, and turning properties on a monthly basis, but of course I dont know your dentist : ). Plus, maybe youre not there yet. Good luck.
If it were me, I would try my best to avoid paying the hard money fees. They can add up quick. It is good to have a relationship with a hard money lender, as if the need arises, I can make a move on a property quickly.
Hard money makes sense for Nike Roshe Run Running Shoes certain types of deals. If you going to hold the house, then obviously you would go a different route.
I assume you are speaking from a real estate agents shoes. So why not break the profit down with him and show him he can make money at 12%.
For the first deal, if he has cash, he should use cash and not try to scale his business.
but big companies usually have set guidelines to follow.
with your investor.
Feelings have nothing to do with any of it, Raymond. Your goal is not to minimize the profits of your lender, but to maximize your own and those of your investor. Its about numbers, not feelings " a conversation you might have Nike Roshes Women Tribal
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