I have never dealt with a HML before and have been considering it for my RE deals.When dealing with them,do you make monthly payments or do you repay on the back end with all the additional fees and points? How much time do they give you to repay the loan? If I were looking to borrow $75k,realistically,how much could I expect to repay to a HML?
Can anyone reccommend a HML that is rather favorable and fair? I am located in NJ.
Thnak you for your replies.
Hard Money Varies. There are many ways to skin the cat. Typically there will be an upfront fee… but it can be deferred. Payments are almost always interest only… again, can be deferred. And there are definitely teeth in the rates if you miss getting them their money back.
Your best bet… ask the hard money lenders!
True - no one HML has the same terms/rates AND this will vary depending on your established relationship, and/or the deal at hand.
Many HMLs will loan ~65% of ARV, charge upfront points (sometimes as many as 15), and an interest rate that is double/triple what the bank charges. Many will defer all payments for six months with the ability to extend another six months.
So, why would someone pay these fees? Convenience and speed. (It’s sort of like paying more at a 7-11 convenience store even though you know the grocery stores are cheaper - convenience and speed). Once you have an established relationship with a HML, you can get money VERY FAST.
Often times the best deals are when you can REALLY tell an owner that you can close within 7 days and w/a HML this is possible!
The best way to find HMLs is to find the investors who are using them.
Chris